The Rise of Middle Class Luxury Consumption in China

Abstract

This thesis explores what motivates middle class Chinese to consume expensive, imported luxury products. China’s middle class is larger than the population of the United States and is expected to more than double within the next decade. Despite China’s unprecedented economic growth over the past generation, per capita income is still relatively low. In addition, growing income inequality has widened the gap between China’s wealthy and the rest of the population. Nonetheless, middle class Chinese are demanding luxury goods with premium price tags and steep import taxes. Based on questionnaire responses of nearly 200 Chinese shoppers, this paper seeks to understand the relationship between luxury consumption and social status.