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Part 1 research paper: luxury in china

Par   •  14 Septembre 2018  •  2 748 Mots (11 Pages)  •  100 Vues

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The purpose of remembering is to analyse and understand under what circumstances and since when we see the rise of the luxury market in the current Chinese economy.

So, it will be a question of who are the consumers of luxury in China, what do they consume and for what purpose?

The questions of companies related to this subject are the following: How to understand the luxury sector and what part does it have in the emergence of the economy of this second world power, in order to implant effectively in the " Global economy currently?

First of all, the preamble will allow us to analyse the overall situation in China at the economic, financial and social level. We will then see what problems arise when we are a second global economic power in transition.

In addition, we will trace its history linked to its culture which for centuries radiates on the world. And we will discuss some personal experiences that we experienced during our travels referring to the ubiquitous luxury in China in the city center.

First, we will study the structure of the luxury market in China.

We will define, through a market study, supply, namely luxury companies, demand, which are the consumers of luxury and the environmental factors that play in favor or disadvantage of the sector.

We will also look at the regulations that make up this sector, particularly on imports and counterfeiting. Then we will analyse the trends of the luxury sector in china to know today where the market is positioning in the Chinese economy.

Secondly, we will focus on the behaviour of the economic actors of luxury. It will involve understanding how consumers consume luxury and for what purpose. Then we will see how companies are functioning and taking their place in this market, with the increasing arrival of Chinese companies in this luxury market.

Third, we will be particularly interested in the results that these companies obtain in the Chinese luxury market.

Thus, we will study the case of a French company having successfully established itself in China and another Western company.

Finally, we will also detail the case of a Chinese company and another Chinese company to understand who is the sector in China with the best competitive advantage in this market.



China is one of the oldest civilizations in the world, dating back more than five millennia, and possessing the longest uninterrupted civilization, with the most stable cultural development in the history of mankind.

Beyond its territorial immensity, China has nearly 1.3 billion inhabitants, about one sixth of the world's population, making it the most populous country in the world.

1. In a global dimension of its situation

For some years China has experienced impressive growth but lately, this economy is somewhat upset at all levels, added to this paradox between reality, sometimes changed government figures, and the weight of political lobbying.

a) At the economic level

Since 2010, China has become the world's second largest economic power, China's GDP amounted to $ 5,878.6 billion in 2010. With GDP growth of more than 10%.

According to the IMF data, which appear in the World Economic Outlook of October 2016 (Global Perspectives) published in October 2016, China's GDP (in purchasing power parity) represents 17,3% of the world GDP, against 15.8% for the United States, the euro zone weighing 12%.

The IMF itself does not name China as the world's leading economic power, but the United States instead, since the creation of the organization in 1944, is the dominant power. They are the first shareholder of the international organization, with a "share" of the capital of 17.47%, and a voting right of 16.54%, which gives them the right of veto.

China's economic development is one of the fastest in the world.

However, by 2015, growth in the world's second-largest economy stood at 6.9%, the lowest ever recorded in a quarter of a century. China has seen its growth decelerate for months: with an increase in gross domestic product (GDP) of 6.8%.

The increase in labour costs is attributable to the aging of the population and the cost of hidden pollution. It is 1,400 billion dollars a year, according to an OECD report in early 2016.

Also, the slowdown in Chinese exports is notable. They depend on the growth of Europe and the United States to export its products. However, China remains the world's largest exporter. What makes China's economic strength is a surplus trade balance, thanks to government intervention, to regulate imports.

b) From the financial point of view

In 2015, on Monday, August 24, the Asian markets fell sharply, and the Shanghai stock exchange lost 8.5% at its closing, its largest decline in session since 2007, according to a World article.

This results in the loss of investor confidence in the Chinese economy, deciding that Chinese listed securities no longer have the same values.

The consequence is that large Chinese companies see their stock market value fall. In total, the Shanghai Stock Exchange had surged 150% in the space of a year, boosted by debt and in a way totally disconnected from the real economy.

This is called a "bubble": Chinese investments in their relatively recent market do not reflect the value of the companies that are listed there.

According to the BIS, the bank of international settlements, the "difference between China's credit ratio and its long-term trend" reached 30.1% in the first quarter of 2016. This indicator is meant to measure "financial overheating And potential financial difficulties "(beyond 10% the BIS believes that a country is facing a banking risk). A much higher rate than the US had achieved in 2008 before the speculative bubble burst. Hence, the risk put forward by the BIS of a financial crisis in China over the next three years.

In the end, total debt, including households, businesses (excluding banks), the State and local authorities, has already risen from 151% to 255% of GDP between the end of 2006 and the end of 2015. This is the highest Level of indebtedness.



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