Beijing’s New Luxe Life

BEIJING—A few weeks ago, I was riding in the back of a taxi along Beijing’s congested West Chang’an Avenue, edging past the enormous Gucci flagship store, when I did a double-take: Hadn’t we just passed Gucci? As the driver swerved to avoid an old woman riding a bicycle, I realized my error — the huge, glowing logo I had registered earlier belonged to one of the other Gucci stores that have recently come to grace China’s capital. In a city where the average monthly income is still less than the cost of a Prada “East-West” metallic tote bag, Gucci has six shops.

“If you build it, they will come.” This seems like the guiding principle — or last hope — for luxury retailers setting up shop in China today, at a time when the rest of the world is thinking twice about spending serious money on logo-covered luggage and platinum watches. Here in Beijing, developers are building 24 hours a day, and shoppers are coming in droves. According to recent reports, China has now surpassed America to become the world’s second-largest consumer of luxury goods, accounting for 25 percent of the global market as of January of this year. This is perhaps why, in a March 2009 interview with the Wall Street Journal, Bernard Arnault, president and CEO of luxury giant LVMH, called China “the most interesting part of the world for me now.” China is big business for LVMH, whose portfolio of over 70 luxury brands includes two of the country’s favorites, Louis Vuitton and Hennessy. “I go there two or three times a year, most recently in Dalian, where we’ve just opened in a new mall,” Arnault continues. “There are so many people who are getting to the stage where they want to consume, who want to be part of a club.” Obviously, this club is an exclusive one — both here and everywhere else that LVMH and other luxury brands operate. But in Beijing, the contrast between those who can and can’t afford the membership dues is striking.

As in other segments of the luxury market, Beijing is proving to be a boomtown for high-end automakers. BMW, for example, has reported that sales have increased in China by nearly 32 percent this year, despite a global decline of 19 percent. A quick look around the parking lot in the apartment complex where I live seems to bear this out, with its disproportionate number of new European sedans. Just a few meters away, on the other side of a high concrete wall, people are living in a warren of squat brick buildings that once served as factory barracks, sharing an outhouse. On a short walk along the nearby canal, passing an expensive residential compound called “Upper East Side,” I see cornstalks growing on a tiny piece of land wedged between two upscale apartment blocks, one half full, the other half finished. A moment later, a horse pulling a cart of fruit trots by. Call it uneven development, or economic polarization, but such disjunctions are sewn into the fabric of the city. As an opinion piece that appeared last month in China’s People’s Daily reminded readers, “We should also notice there are several million people in China who live on less than a dollar a day. The rapid growth of China's consumption of luxury goods may also reflect the further widening gap between China's rich and poor.”

Still, it’s fascinating to witness the cult of luxury here, particularly as brands begin to create products and host events targeting Chinese consumers. In the fashion wars, it seems, victory requires not only annexing customers’ pocketbooks, but also winning their hearts and minds. In 2007, Fendi transformed a strip of the Great Wall into catwalk for the presentation of a China-inspired fashion collection. A crowd of 500 VIPs watched as models in stilettos gracefully scrabbled up the steep incline of the Wall — the symbol most often used to evoke China’s enduring strength and sweeping history. "Beforehand, part of me was thinking, ‘How can you justify using the Great Wall of China in this way?’" the actress Thandie Newton, in attendance, told the press. "Seeing the show up there tonight — that is how you can justify it. You could see all of Karl [Lagerfeld]'s inspiration in the way he designed the clothes — the beautiful spheres, the belt that was reminiscent of the actual construction of the Wall. It was all there, so I felt like it was Fendi's gift back to China.”