tag:theconversation.com,2011:/fr/topics/luxury-goods-12546/articles
luxury goods – The Conversation
2023-10-25T11:52:15Z
tag:theconversation.com,2011:article/214164
2023-10-25T11:52:15Z
2023-10-25T11:52:15Z
Izikhothane: a deeper history of a South African youth subculture where luxury items are trashed
<p>In South Africa, a skhothane is a young, fashionably dressed black urban resident who engages in destructive conspicuous consumption. This involves regular get-togethers on weekends in which groups of izikhothane – most likely male teenagers – gather to compete in mock battles where luxury items are often destroyed. The name is derived from a word in the Zulu language, <em>ukukhotha</em>, meaning “to lick”, but in urban slang it means to boast.</p>
<p>There’s no consensus about when exactly this “<a href="https://slate.com/news-and-politics/2014/07/sowetos-skhothanes-inside-the-south-african-townships-ostentatious-youth-subculture.html">youth craze</a>” emerged. But there’s reason to believe the ukukhothana subculture can be <a href="https://www.tandfonline.com/doi/abs/10.1080/02500167.2015.1093322">traced</a> as far back as 2005, first in the townships of the East Rand of Gauteng province before spreading to other provinces. In South Africa, townships are human settlements established outside towns and cities by the white minority <a href="https://www.sahistory.org.za/article/history-apartheid-south-africa">apartheid</a> government as areas for people categorised as black to live in. </p>
<p>At ukukhothana events, izikhothane show up wearing expensive designer labels such as Rossimoda shoes, DMD shirts and Versace jackets and suits. They also bring what, in the township context, is considered expensive junk food, such as KFC and Debonair’s Pizza. Alcohol such as Bisquit, Hennessy and Jameson, traditionally associated with affluent people, accompanies the food.</p>
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<p>What makes the events interesting is what happens to these costly items once there’s an audience and loud music. The expensive clothes are at times torn, burnt or trampled on. The food is thrown on the ground and at each other in a playful and boastful manner. The alcohol is both consumed and used to wash hands and even poured on the ground. All this is done in order to show off wealth, style and swag, and ultimately to outdo each other in attracting cheers from the audience, attention from female spectators and respect from rival crews.</p>
<p>As one would expect, a subculture like this in a developing economy like South Africa has not been well received. It’s often <a href="https://i-d.vice.com/en/article/xwd5ed/dissecting-the-backlash-against-the-skhothane">criticised</a> as wasteful and reckless by society and in the media. Prominent investigative journalist Debora Patta, for example, <a href="https://www.youtube.com/watch?v=IWEcV_Ecfl4">labelled</a> izikhothane as “bling gone obscenely mad” on national TV. The question is asked: why do izikhothane embrace conspicuous consumption despite their limited means?</p>
<p>As communications scholars we have each <a href="https://www.tandfonline.com/doi/abs/10.1080/02500167.2015.1093322">studied</a> this subculture for several <a href="https://www.proquest.com/openview/b7e0af6a24ea39bb8fda4d37b868145a/1?pq-origsite=gscholar&cbl=2026366&diss=y">years</a>. In a recent <a href="https://www.tandfonline.com/doi/abs/10.1080/14725843.2021.1913094">research paper</a> we explore the link between consumption and the idea of rehumanisation – or restoring dignity to marginalised lives. We investigate how this subculture is a form of fashion consciousness with a long history – leading on from the “diamondfield dandies” of the 1800s and the “oswenka” of the 1900s. We argue that ukukhothana is a form of expression that has the potential to reclaim a sense of selfhood and pride in the remnants of oppression in post-apartheid South Africa.</p>
<h2>Consumption and identity</h2>
<p>UK anthropologist Mary Douglas and UK economist Baron Isherwood <a href="https://www.taylorfrancis.com/books/mono/10.4324/9780203434857/world-goods-baron-isherwood-mary-douglas">suggested</a> in 1979 that consumption is a purposeful act. It’s often aimed at conveying identity, cultural values and social circumstances. The goods people consume serve as markers of social identity and carry deeper meanings. US sociologist Thorstein Veblen’s <a href="https://brocku.ca/MeadProject/Veblen/Veblen_1899/Veblen_1899_04.html">concept</a> of “conspicuous consumption” aptly captures this phenomenon. It refers to the act of displaying wealth and status through ostentatious spending.</p>
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<p>Izikhothane’s behaviour can be understood within this framework. It’s an effort to signal their defiance against adversity and assert their presence in a society that has historically marginalised those who look like them. This historical marginalisation involved the treatment of black people as less than human through the system of apartheid. Black people were dehumanised during this period.</p>
<p><a href="https://philpapers.org/rec/OELDAR">Dehumanisation</a> involves viewing others as fundamentally different and inferior, perpetuating stereotypes and hindering empathy. Interestingly, this practice affects both the dehumanised and the dehumaniser. By devaluing others’ humanity, individuals strip themselves of their own humanising qualities. This underscores the complex psychological toll of perpetuating stereotypes.</p>
<p>Reversing the process of dehumanisation and reclaiming humanity is a nuanced effort that happens through a process of rehumanisation. Sartorial expression, which involves using clothing to convey identity, can play a pivotal role in rehumanisation. </p>
<p>Material possessions hold a significant influence over how we view other people’s identities. People use belongings not only to express who they are but to construct their “best” selves. </p>
<h2>Diamondfield dandies and oswenka</h2>
<p>Izikhothane are not the first and will not be the last to do this. Various sartorial subcultures appear to have arisen under conditions of dehumanisation in South Africa. These include the diamondfields dandies of the 1880s in Kimberley and the oswenka in Jeppestown in Johannesburg in the 1950s. These fashion subcultures found themselves in dehumanising conditions of migrant labour exploitation. They used expensive clothing and competitions of display to carve out a sense of their own humanity.</p>
<p>The diamondfield dandies sought to challenge racially inscribed stereotypes by parading in expensive clothing. They rebelled against the silence of black people in a bigoted white culture and created an identity outside work. </p>
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Read more:
<a href="https://theconversation.com/sho-madjozi-the-pop-star-using-traditional-culture-to-shape-a-fresh-identity-for-young-south-africans-213599">Sho Madjozi: the pop star using traditional culture to shape a fresh identity for young South Africans</a>
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<p>Years later a different kind of dandy emerged through the oswenka (swankers), who performed menial labour for work. The oswenka subculture went beyond simply parading in expensive apparel in the form of suits; it involved competitive performance battles against other dandies.</p>
<p>In a similar way, izikhothane’s extravagant displays of consumption serve as a means of fulfilling psychological needs.</p>
<h2>Why this matters</h2>
<p>Izikhothane’s seemingly frivolous consumption rituals defy the constraints of their socioeconomic backgrounds. Their fashion choices assert their existence and protest against the enduring effects of apartheid. Their actions challenge conventional notions of rebellion and provide a poignant commentary on the complexities of identity, inequality and resistance.</p>
<p>The izikhothane of post-apartheid South Africa show us the power of consumption to challenge social norms and resist structural injustices. Their conspicuous consumption, while seemingly destructive, can be interpreted as a way of asserting identity and demanding recognition in a society that has historically treated those who look like them as invisible and less than human.</p><img src="https://counter.theconversation.com/content/214164/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mthobeli Ngcongo receives funding from the National Research Foundation. </span></em></p><p class="fine-print"><em><span>Sifiso Mnisi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
It’s about more than wasteful destruction; it’s a way of restoring dignity to marginalised young lives.
Mthobeli Ngcongo, Lecturer in Communication Science, University of the Free State
Sifiso Mnisi, Senior Lecturer in Communications and Media, University of Johannesburg
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/212569
2023-09-06T21:48:14Z
2023-09-06T21:48:14Z
The price of love: Why millennials and Gen Zs are running up major dating debt
<figure><img src="https://images.theconversation.com/files/546762/original/file-20230906-40532-qq86zj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Are you looking for love in all the wrong places?</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/the-price-of-love-why-millennials-and-gen-zs-are-running-up-major-dating-debt" width="100%" height="400"></iframe>
<p><a href="https://nypost.com/2019/09/12/heres-how-much-money-the-average-american-spends-on-dating/">The average American invests US$120,000 throughout their lifetime in pursuit of love</a>, spending significant money on romantic dinners, movie outings and thoughtful gifts, not to mention personal grooming and cosmetic products. </p>
<p>As a result, according to <a href="https://www.lendingtree.com/credit-cards/study/dating-money-inflation/">a survey by LendingTree</a>, 22 per cent of millennials and 19 per cent of Gen Z have begun to incur “dating debt.”</p>
<p>Another study by <a href="https://www.creditkarma.com/insights/i/dating-debt-young-adults-survey">Credit Karma</a> found that 29 per cent of people aged 18–34 have accrued debt for a date, with 21 per cent exceeding $500 in dating debt in a year. Reasons include accidental overspending (29 per cent), an attempt to impress dates (28 per cent) and seeking intimacy (19 per cent).</p>
<p>But another survey <a href="https://www.finder.com/unacceptable-partner-debt">by Finder</a> also reveals that 44 per cent of Gen Zs consider debt a romantic deal-breaker when considering a partner. </p>
<p>This highlights potential ties between accumulating <a href="https://doi.org/10.1111/j.1741-3729.2012.00715.x">dating-related debt and barriers to the chances of success</a> in forming meaningful romantic connections.</p>
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<img alt="A man sits on a picnic blanket and opens a bottle of champagne." src="https://images.theconversation.com/files/546426/original/file-20230905-25-1rh7hy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/546426/original/file-20230905-25-1rh7hy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=429&fit=crop&dpr=1 600w, https://images.theconversation.com/files/546426/original/file-20230905-25-1rh7hy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=429&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/546426/original/file-20230905-25-1rh7hy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=429&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/546426/original/file-20230905-25-1rh7hy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=539&fit=crop&dpr=1 754w, https://images.theconversation.com/files/546426/original/file-20230905-25-1rh7hy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=539&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/546426/original/file-20230905-25-1rh7hy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=539&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Luxury dates are leading to debt for millennials and Gen Zs.</span>
<span class="attribution"><span class="source">(Jelleke Vanooteghem/Unsplash)</span></span>
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<p>This conundrum is a problem for younger generations, where the pursuit of love and connection is intricately tied to an appetite for luxury, ultimately leading to debt accumulation. </p>
<p>The trend has implications for financial stability, emotional well-being and the very essence of modern relationships.</p>
<p>There are a few issues fuelling it, including the desire to signal status and the persuasive retail marketing of luxury as being synonymous with love, creating that false sense of connection between luxury and love.</p>
<h2>‘Costly signalling’</h2>
<p>Accumulating debt for romantic engagements has its roots in an innate human desire — namely, the urge to signal status. In a digital age where social media and online dating platforms are the norm, <a href="https://doi.org/10.1007/s11621-012-0108-7">standing out in a crowd has never been more challenging</a>, yet it’s also crucial.</p>
<p><a href="https://doi.org/10.1007/978-3-319-16999-6_3483-1">The “costly signalling” theory</a> may explain why such habits develop. It argues that humans and animals use resource-intensive or risky behaviours as genuine, hard-to-fake signals indicating their desirable traits and availability. </p>
<p>This is related to <a href="https://doi.org/10.4324/9780203936993">conspicuous consumption</a>, which is driven by a desire for status and the clear signalling of this status to onlookers. </p>
<p><a href="https://www.psychologytoday.com/ca/blog/after-service/202102/what-your-social-signals-reveal">Signalling status in relationships or social circles isn’t uncommon</a>, but it’s found a financial expression in younger generations. Young adults are increasingly associating luxury experiences and goods with a <a href="https://doi.org/10.1057/palgrave.bm.2540194">unique form of personal expression</a>. </p>
<p>Whether it’s a lavish dinner at a high-end restaurant or gifting a designer handbag, these actions become <a href="https://doi.org/10.1080/21639159.2022.2033132">markers of distinction and status</a>. While these acts add a layer of individuality to a relationship, they come with the risk of potential financial instability.</p>
<h2>Retail marketing</h2>
<p>Retailers often <a href="https://doi.org/10.1093/jcr/ucac034">employ strategic marketing tactics to link luxury with love</a>, capitalizing on the emotional connection between these two powerful concepts to entice consumers into purchasing high-end goods. </p>
<p>For instance, luxury brands often release limited-edition Valentine’s Day collections, adorned with romantic motifs and themes, ranging from heart-shaped jewellery to high-end designer fragrances. </p>
<p>Additionally, retailers leverage the allure of love in their advertisements. They often showcase couples exchanging luxury gifts in opulent settings, fostering an aspirational connection between luxury products and romantic ideals. </p>
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<img alt="A diamond engagement ring on a Tiffany blue background." src="https://images.theconversation.com/files/546439/original/file-20230905-19-g0bd2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/546439/original/file-20230905-19-g0bd2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=353&fit=crop&dpr=1 600w, https://images.theconversation.com/files/546439/original/file-20230905-19-g0bd2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=353&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/546439/original/file-20230905-19-g0bd2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=353&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/546439/original/file-20230905-19-g0bd2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=444&fit=crop&dpr=1 754w, https://images.theconversation.com/files/546439/original/file-20230905-19-g0bd2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=444&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/546439/original/file-20230905-19-g0bd2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=444&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Tiffany ‘Believe in Love’ campaign featured links to engagement ring offerings.</span>
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<p>For example, <a href="https://www.tiffany.ca/engagement/love-stories/">Tiffany & Co. released a “Believe in Love”</a> campaign featuring stories of seven couples at different stages of their relationships, and how Tiffany has played a part in their love journey.</p>
<p>Retailers create an <a href="https://doi.org/10.1093/jcr/ucac034">ambience of indulgence and luxury</a>, presenting their offerings as tokens of affection and devotion. </p>
<p>Personalized engraving services on luxury items, such as monogrammed initials or special dates, further enhance the sentimentality and connection between the product and the act of gifting, convincing consumers to spend money on these high-end, emotionally charged offerings. </p>
<p>For example, Gucci’s “<a href="https://www.lofficielbaltic.com/en/fashion/apple-of-my-eye-gucci-s-apple-print-collection-comes-in-time-for-chinese-valentine-s-day">apple of my eye</a>” limited-edition collection shows two interlocking red letter Gs that are meant to signify romantic love.</p>
<p>These strategic marketing tactics linking luxury with love contribute to more debt by enticing consumers to overspend on high-end goods with premium price tags. They promote impulse buying through limited-edition collections, foster unrealistic desires through aspirational advertising, encourage additional spending on personalized services and compel people to prioritize romantic gestures over financial responsibility.</p>
<p>This ultimately leads to the accumulation of debt as consumers strive to express their love through emotionally charged purchases.</p>
<h2>False sense of connection</h2>
<p>But there seems to be an intriguing paradox when it comes to luxury goods and their ties to social relationships. </p>
<p>While luxury items can enhance someone’s social image and boost self-perception, <a href="https://doi.org/10.1108/JCM-09-2014-1161">people also tend to view themselves more positively when they possess or experience luxury — even though they often hold a less favourable view of others who do the same</a>. </p>
<p>This sheds light on a fascinating discrepancy in self-versus-other evaluations when it comes to luxury consumption. </p>
<p>In a dating context, a person boasting about the purchase of an expensive wine on a dinner date, for example, may over-estimate whether it will actually impress their date.</p>
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<img alt="A glass of white wine sits in front of a woman at a table in a restaurant." src="https://images.theconversation.com/files/546516/original/file-20230905-31392-5c4cul.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/546516/original/file-20230905-31392-5c4cul.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/546516/original/file-20230905-31392-5c4cul.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/546516/original/file-20230905-31392-5c4cul.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/546516/original/file-20230905-31392-5c4cul.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/546516/original/file-20230905-31392-5c4cul.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/546516/original/file-20230905-31392-5c4cul.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Ordering an expensive bottle of wine on a date isn’t necessarily impressive.</span>
<span class="attribution"><span class="source">(JP Valery/Unsplash)</span></span>
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<p>Gift-givers often believe that more expensive gifts are more appreciated, assuming they convey greater thoughtfulness. But gift recipients don’t necessarily share this belief because they don’t consistently link gift price to their level of appreciation.</p>
<p><a href="https://doi.org/10.1016/j.jesp.2008.11.003">This suggests that gift-givers may not accurately predict what gifts will be meaningful to others</a>. And because they personally may connect expensive gifts with something meaningful, it may lead them to spend more, ultimately contributing to greater dating debt.</p>
<p>Interestingly, while it’s known that people use luxury items to signal their social status and earning capacity, the reactions to such gifts may be complex. Indeed, <a href="https://doi.org/10.1016/j.jesp.2019.103945">many people prioritize their independence and question the giver’s motives behind such gifts, fearing power imbalances and expectations</a>. </p>
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Read more:
<a href="https://theconversation.com/an-essential-piece-in-every-wardrobe-young-people-are-shopping-for-luxury-like-never-before-184536">'An essential piece in every wardrobe': Young people are shopping for luxury like never before</a>
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<p>Instead, they may value personal connections over materialistic displays and be cautious in the early stages of a relationship. </p>
<p>Ultimately, open and honest communication about expectations is crucial for navigating these complexities, ensuring that gift-giving aligns with the relationship’s goals and mutual desires.</p>
<p>The concept of luxury often gets mixed up with our quest for love, creating a captivating but misleading link between the two. In the realm of romantic relationships, luxury goods or indulging in extravagant experiences can sometimes make us feel closer to our partners than we really are.</p>
<p>But the ties between luxury and love can be deceiving. While luxury can certainly add to the romance, it’s important for younger generations to see the difference between flashy things and the deep, lasting connections that bring us closer to love.</p><img src="https://counter.theconversation.com/content/212569/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Genuine love holds immeasurable value, yet discovering it can pose challenges — and come with a significant price tag.
Omar H. Fares, Lecturer in the Ted Rogers School of Retail Management, Toronto Metropolitan University
Seung Hwan (Mark) Lee, Professor and Associate Dean of Engagement & Inclusion, Ted Rogers School of Management, Toronto Metropolitan University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/173204
2021-12-07T20:19:29Z
2021-12-07T20:19:29Z
Wildlife trade poses health threats to humans, but Chinese wildlife farms are profiting
<figure><img src="https://images.theconversation.com/files/435945/original/file-20211206-138695-16h9zx4.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6689%2C4476&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">White raccoon dogs are prized for their unusual fur.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 175px; border: none; position: relative; z-index: 1;" allowtransparency="" src="https://narrations.ad-auris.com/widget/the-conversation-canada/wildlife-trade-poses-health-threats-to-humans--but-chinese-wildlife-farms-are-profiting" width="100%" height="400"></iframe>
<p>In November 2021, scientists from various disciplines published a “<a href="https://doi.org/10.1016/j.biocon.2021.109341">warning to humanity</a>” on wildlife trade because of the risk of “diseases transmitted from wildlife to humans.”</p>
<p>As COVID-19 swept across China last year, the Beijing government <a href="https://www.theguardian.com/environment/2020/feb/25/coronavirus-closures-reveal-vast-scale-of-chinas-secretive-wildlife-farm-industry">closed the live-animal sections of numerous markets and shut down 20,000 wildlife farms across the country</a>. Unknown to the outside world, however, three-quarters of the sector’s value comes from <a href="https://multimedia.scmp.com/infographics/news/china/article/3064927/wildlife-ban/index.html">breeding animals for fur, traditional medicine and entertainment purposes</a>. Many of those wildlife farms <a href="https://www.theguardian.com/environment/2020/feb/25/coronavirus-closures-reveal-vast-scale-of-chinas-secretive-wildlife-farm-industry">are still in business</a>.</p>
<p>These wildlife farms have become a focal point in the search for the origins of COVID-19, and a touchy issue for the Chinese — so much so that Beijing barred <a href="https://www.washingtonpost.com/world/asia_pacific/china-covid-bats-caves-hubei/2021/10/10/082eb8b6-1c32-11ec-bea8-308ea134594f_story.html">researchers, who were part of a mission organized by the World Health Organization (WHO), from visiting wildlife farms and bat caves in southern China</a>.</p>
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Read more:
<a href="https://theconversation.com/coronavirus-has-finally-made-us-recognise-the-illegal-wildlife-trade-is-a-public-health-issue-133673">Coronavirus has finally made us recognise the illegal wildlife trade is a public health issue</a>
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<h2>Active sites</h2>
<p>In late 2020, researchers at the Belgium-based Humane Society International (HSI) <a href="https://www.hsi.org/news-media/fur-farm-investigation-reveals-distressed-foxes-raccoon-dogs-electrocuted-in-agony-and-fur-farm-carcasses-sold-for-human-consumption/">visited 13 fur farms across China</a>. The researchers found that not only were animals still being killed, but that <a href="https://www.hsi.org/news-media/fur-farm-investigation-reveals-distressed-foxes-raccoon-dogs-electrocuted-in-agony-and-fur-farm-carcasses-sold-for-human-consumption/">no measures were being taken to prevent the spread of COVID-19</a>:</p>
<p>“The fur farms we visited did not follow health and safety regulations,” says Wendy Higgins, director of international media at HSI. “Epidemic control rules were breached and our investigators were welcomed to the farms without having to follow basic biosecurity measures like disinfection stations at entry and exit points, wearing safety clothing, and having a quarantine area for ill animals,” says Higgins.</p>
<p>In March 2021, the WHO concluded that the novel coronavirus was most likely transmitted to humans through an “intermediary” rather than through <a href="https://www.who.int/emergencies/diseases/novel-coronavirus-2019/origins-of-the-virus">direct infection by bats, packaged food or a laboratory accident</a>. </p>
<p>The WHO researchers identified mink, civets and raccoon dogs as possible “<a href="https://www.who.int/emergencies/diseases/novel-coronavirus-2019/origins-of-the-virus">intermediary host species</a>,” with mink being “highly susceptible” to COVID-19. While the focus so far has been on the risk posed by humans consuming meat from these animals, the WHO report notes that direct contact with infected animals or their body waste can also spread the virus.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/origin-of-the-covid-19-virus-the-trail-of-mink-farming-155989">Origin of the Covid-19 virus: the trail of mink farming</a>
</strong>
</em>
</p>
<hr>
<h2>Livestock or wildlife?</h2>
<p>Concerns about these animals’ role in spreading COVID-19 have been fuelled by <a href="https://doi.org/10.1126/science.abe3870">outbreaks at 431 mink fur farms across Europe and North America</a>. </p>
<p><a href="https://www.hsi.org/news-media/denmark-calls-for-total-mink-cull-on-all-fur-farms-amidst-covid-19-infections/">Denmark</a> <a href="https://www.ciwf.eu/news/2020/09/white-smoke-from-warsaw-poland-set-to-ban-fur-farming">and Poland</a>, the world’s top two fur-producing countries after China, have temporarily banned mink farming because of COVID-19 concerns. British Columbia will <a href="https://globalnews.ca/news/8353156/bc-mink-farm-industry-update/">phase out mink farming by 2025</a>, and France <a href="https://www.rfi.fr/en/france/20211118-france-approves-tough-new-laws-targeting-animal-cruelty-banning-wild-animal-entertainments">recently banned mink farming</a>.</p>
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<figcaption><span class="caption">B.C. plans to end mink farming by 2025.</span></figcaption>
</figure>
<p>China farmed an estimated <a href="https://www.independent.co.uk/stop-the-illegal-wildlife-trade/covid-fur-farms-china-b1855584.html">14 million foxes, 13.5 million raccoon dogs and 11.6 million mink in 2019</a>. But rather than ban fur farming, the Chinese government classified <a href="http://forestry.gov.cn/bwwz/2784/20200513/085630366321198.html">mink, foxes and raccoons as livestock</a>, explicitly excluding them from the wildlife ban.</p>
<p>“Virologists are concerned the virus can lay dormant at fur farms. The virus is capable of mutating so as we develop vaccines, new variants can emerge that are resistant. To leave such a potential threat untouched, just to boost the world of fashion, seems a far too great risk,” says Higgins.</p>
<p>In May 2020, Chinese authorities <a href="https://www.chinanews.com/gn/2020/05-16/9186245.shtml">offered buyouts to farmers who raise wildlife for food</a>, but the same incentive was not offered to fur farmers. Recent data is hard to come by, but in 2016, fur farming was valued at an <a href="https://multimedia.scmp.com/infographics/news/china/article/3064927/wildlife-ban/index.html">estimated 389 billion Chinese yuan (US$55 billion), as opposed to only 125 billion yuan (US$17 billion) for wildlife food production</a>.</p>
<h2>Luxury and profits</h2>
<p>As a result of the closure of fur farms in other parts of the world, Chinese producers <a href="https://www.reuters.com/article/us-health-coronavirus-china-mink-idUSKBN28D0PV">experienced a price hike of 30 per cent</a> in December 2020. </p>
<p>Wildlife is considered a luxury product affordable only to a small but <a href="https://www.brookings.edu/wp-content/uploads/2020/07/8_Felbab-Brown_China_final.pdf">growing segment of consumers</a>. A World Wildlife Fund survey found that <a href="https://globescan.com/wp-content/uploads/2021/05/WWF-GlobeScan-COVID19_One_Year_Later-Highlights_Report-May2021.pdf">in China, 10 per cent of respondents had purchased wild animals at an open market in 2019</a>. </p>
<p>Worryingly, scientists found that banning wildlife markets has “<a href="https://doi.org/10.1016/j.envres.2020.110439">not discouraged online wildlife trade</a>.”</p>
<p>Besides food and fur, wild animal parts are also used in traditional Chinese medicine, a growing market actively promoted by the government. Chinese consumers were <a href="https://www.theguardian.com/environment/2020/may/26/its-against-nature-illegal-wildlife-trade-casts-shadow-over-traditional-chinese-medicine-aoe">expected to spend US$420 billion annually on these items by the end of 2020</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/436039/original/file-20211207-141178-gta8uc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="older women sit in front of a window display of a traditional Chinese medicine shop" src="https://images.theconversation.com/files/436039/original/file-20211207-141178-gta8uc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/436039/original/file-20211207-141178-gta8uc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/436039/original/file-20211207-141178-gta8uc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/436039/original/file-20211207-141178-gta8uc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/436039/original/file-20211207-141178-gta8uc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/436039/original/file-20211207-141178-gta8uc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/436039/original/file-20211207-141178-gta8uc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">A group of women sit in front of a window display of a traditional Chinese medicine shop. The growing demand for traditional Chinese medicine has fed the legal and illegal trade in exotic animal parts.</span>
<span class="attribution"><span class="source">(AP Photo/Ng Han Guan)</span></span>
</figcaption>
</figure>
<p>China legalized the use of <a href="https://www.nationalgeographic.com/animals/article/wildlife-watch-news-china-rhino-tiger-legal">rhino horn and tiger bone in traditional medicine in 2018</a>. It went further last year with a <a href="https://www.theguardian.com/world/2020/jun/03/beijing-draws-up-plans-to-outlaw-criticism-of-traditional-chinese-medicine">law criminalizing any public criticism of traditional medicine</a>. More recently, the government started <a href="https://www.nationalgeographic.com/animals/article/chinese-government-promotes-bear-bile-as-coronavirus-covid19-treatment">promoting the use of traditional medicine to cure COVID-19</a> without any evidence to that effect.</p>
<h2>Mitigation and policy</h2>
<p>The government’s policy towards wildlife farming echoes its actions during the SARS outbreak in 2003. It initially <a href="https://doi.org/10.1016/S1473-3099(06)70676-4">shut down wildlife markets</a> when the disease was traced to animals, but after two years, enforcement “<a href="https://www.brookings.edu/wp-content/uploads/2020/07/8_Felbab-Brown_China_final.pdf">lessened as the wildlife trade industry lobbied against it and pointed out the economic and job contributions to the country</a>.” </p>
<p>The WHO continues its search for the definitive origin of COVID-19. It recently announced the formation of a <a href="https://www.who.int/news-room/articles-detail/public-notice-and-comment-on-proposed-new-scientific-advisory-group-for-the-origins-of-novel-pathogens-(sago)-members">scientific advisory group to further the investigation</a>, and has <a href="https://www.who.int/emergencies/diseases/novel-coronavirus-2019/origins-of-the-virus">recommended conducting “targeted surveys of fur farms” as one line of inquiry</a>.</p>
<p>Despite close encounters with Ebola, SARS-CoV-1, Middle East Respiratory Syndrome and H1N1, and decades of warnings from <a href="https://doi.org/10.1089/vbz.2020.2652">infectious diseases specialists</a>, stricter regulation and additional mitigation strategies are needed.</p><img src="https://counter.theconversation.com/content/173204/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anrike Visser does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
In China, the wildlife trade is thriving, driven by the increased demands for luxury goods and traditional medicine. But there is real concern about the threat of diseases that can cross over to humans.
Anrike Visser, Dalla Lana Global Journalism Fellow, University of Toronto
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/162055
2021-11-23T16:27:30Z
2021-11-23T16:27:30Z
Western luxury brands are entering a risky pact with China’s influencers
<p>French cosmetics giant L'Oréal has been going through a <a href="https://www.saltwire.com/nova-scotia/business/loreal-offers-vouchers-to-end-spat-with-chinas-l1lipstick-brother-100660292/">massive retail row</a> in China after two leading social media influencers sold large quantities of the company’s beauty face masks to consumers while inaccurately claiming it was the cheapest deal available anywhere. </p>
<p>Influencers <a href="https://www.businessinsider.com/china-lipstick-king-sold-17-billion-stuff-in-12-hours-2021-10?r=US&IR=T">Austin Li Jiaqi</a> and <a href="https://www.scmp.com/lifestyle/health-wellness/article/3114905/5-chinese-social-media-stars-using-their-influencer-fame">Wei Ya</a> regularly reach tens of millions of shoppers on their two e-commerce livestreams, and the November 11 “singles day” festival has become one of their most eagerly anticipated broadcasts. This year, among the many products they were each selling on that evening was the supposedly special offer of batches of 50 L'Oréal masks for ¥429 (£49.85). But it emerged shortly after that the same deal was available direct from L'Oréal for ¥258. </p>
<p>Li, known as China’s “lipstick king” for his ability to sell masses of product online, and Wei, a former pop star who rose to fame as the winner of China’s equivalent of Pop Idol, started receiving large volumes of complaints from furious shoppers. </p>
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<p>Both influencers issued apologies. After L'Oréal did not immediately say it would compensate those who had bought the masks, the influencers said they would no longer showcase the company’s products. </p>
<p>Now L'Oréal <a href="https://www.globalcosmeticsnews.com/loreal-china-apologises-over-singles-day-blunder/">has apologised</a> and <a href="https://www.globaltimes.cn/page/202111/1239262.shtml">confirmed</a> it will provide compensation. In <a href="https://www.reuters.com/business/loreal-says-it-reached-agreement-with-chinese-influencers-2021-11-18/">a statement</a>, the company blamed its “overly complicated sales mechanism” and said it had “found a constructive and satisfactory solution to address the recent customers complaints in relation with singles day promotion”.</p>
<p>The row has not been pleasant for anyone involved, but it shows how important influencers have become as endorsers of luxury goods in China. So how has the market changed, and what does it mean for customers?</p>
<h2>Changing face of luxury retail</h2>
<p>China is the <a href="https://www.globaltimes.cn/page/202106/1225748.shtml">most important market</a> in the world for luxury goods, with Chanel, Dior, Cartier and Hermès among the <a href="https://finance.yahoo.com/news/chanel-dior-top-china-luxury-115032266.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAMffASnLXnES4huvR6bYrO0Ncj1Z-sZmFlBDChWxD6up578J-wViP93sUD8HiNHKdT7kcyakp_0QMC0EEzVwIeQ4nxcwuC497Ek1YX3xicVxXlKo3f72l1qrsDiuvzahZGrgX5HqTJp5_zQbdQiS6_AapnlAHbDQeqLGzN3wMY3u">leading brands</a> in the country. The market has been doing strong business during COVID. For example, major Hong Kong-based luxuries retailer Chow Tai Fook <a href="https://www.statista.com/statistics/681236/annual-revenue-of-chow-tai-fook-enterprises/">has reported</a> an annual revenue increase of nearly 24% in its 2021 financial year, mostly from mainland China. </p>
<p>Luxury brands have traditionally relied on flagship stores in the best shopping districts to connect with their customers. The number and size of stores has continued increasing in leading malls like <a href="https://wwd.com/business-news/retail/plaza-66-shanghai-sales-surge-1234718385/">Plaza 66</a> in Shanghai and <a href="https://wwd.com/business-news/retail/skp-beijing-replaces-harrods-tops-global-retail-sales-1234723843/">SKP Beijing</a>, where all the top luxury brands have large external facades and dazzling logo displays. They also use historical buildings, such as the ones situated at the north of the <a href="https://www.chinahighlights.com/shanghai/attraction/the-bund.htm">Shanghai Bund</a> waterfront district. </p>
<p>But while physical stores are still important, most brands seek to extend their reach online. A major part of this is through using the internet as a way to communicate their relationships with celebrities. </p>
<p>Cartier, for example, invites Chinese movie stars to attend its promotional events. These would include star actors like <a href="http://www.wongkarwai.net/tony-leung-talks-about-the-grand-master-at-a-cartier-event/">Tony Leung</a>, and more recently actor <a href="https://www.gettyimages.co.uk/detail/news-photo/actor-chang-chen-attends-cartier-event-on-january-19-2018-news-photo/907029558">Chang Chen</a> and actor/singer <a href="https://www.tatlerasia.com/style/jewellery/cartier-presents-juste-un-clou-campaign-with-lu-han">Lu Han</a>, who would be described as “good friends of Cartier” to highlight the brand’s prestige through these connections.</p>
<p>But when Cartier has tried to use social media to promote these celebrity attachments, consumers have reacted badly. I have read thousands of comments (in Chinese) from people ridiculing the watchmaker for referring to its endorsers as “friends”, claiming that this detracts from the importance of their favourite stars. Most Chinese people would say that “guest” is a more respectful choice of word than “friend”.</p>
<p>Perhaps partly because of such experiences, luxury brands have turned to social media influencers to help communicate their messages. For example, Dior <a href="https://garage.vice.com/en_us/article/qv343m/dior-angelababy-brand-ambassador">hired Angelababy</a>, a famous actor and internet celebrity from Hong Kong, as a brand ambassador in 2017. The relationship has continued to the present day, with the actor <a href="https://radiichina.com/virtual-angelababy-dior/">appearing in virtual form</a> at Shanghai Fashion Week in April. </p>
<p>Yet using Angelababy in this way <a href="https://www.sohu.com/a/191988605_754311">was questioned</a> by Dior’s customers online, as she is an agent of the brand rather than an independent influencer. This means she is seen as not being in a position to speak on behalf of Dior’s customers and fans in the way that she might otherwise have done. </p>
<h2>Unpredictable behaviour</h2>
<p>Just like celebrities, influencers come with the additional problem that brands have no direct control over their behaviour. Whatever exactly happened in the case of L'Oréal and its influencers, for instance, they have not been speaking in unison since the debacle with the face masks. </p>
<p>When it comes to the dangers of individual behaviour, the only consolation is that it can sometimes work in the brand’s favour. This happened to Dior, for instance, when footage surfaced in which Angelababy <a href="https://www.jaynestars.com/news/angelababy-tried-to-protect-17-year-old-actress-from-kris-wus-clutches/">was perceived as</a> speaking up for an actress in an encounter with pop star Kris Wu, who was subsequently arrested on <a href="https://www.theguardian.com/world/2021/aug/16/pop-star-kris-wu-arrested-beijing-suspicion-rape">suspicion of rape</a> in relation to a separate incident. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/433434/original/file-20211123-13-ateqcg.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Margaret Zhang out walking in Paris" src="https://images.theconversation.com/files/433434/original/file-20211123-13-ateqcg.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/433434/original/file-20211123-13-ateqcg.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=760&fit=crop&dpr=1 600w, https://images.theconversation.com/files/433434/original/file-20211123-13-ateqcg.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=760&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/433434/original/file-20211123-13-ateqcg.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=760&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/433434/original/file-20211123-13-ateqcg.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=956&fit=crop&dpr=1 754w, https://images.theconversation.com/files/433434/original/file-20211123-13-ateqcg.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=956&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/433434/original/file-20211123-13-ateqcg.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=956&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Margaret Zhang.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/paris-france-march-04-2018margaret-zhang-1081980992">Mauro del Signore</a></span>
</figcaption>
</figure>
<p>At any rate, L'Oréal’s recent problems show that while influencers are potentially more objective moderators than traditional celebrities (particularly if you don’t use them as brand ambassadors), online marketing still presents great risks. </p>
<p>In an era where millennials engage mainly online, an incident like the one with Li and Wei can spread quickly and stick in consumers’ minds much more than the glitzy marketing narratives that are pushed by the luxury brands. A fan exposed to a debacle like L'Oréal’s can turn hostile overnight to the brand they loved.</p>
<p>Perhaps the ideal relationship between brands and influencers arises from <a href="https://www.vogue.com/article/vogue-china-margaret-zhang-editor-in-chief">Vogue China’s</a> decision earlier this year to appoint famous 27-year-old blogger Margaret Zhang as editor-in-chief. Even though she never trained in journalism, she is well accepted by consumers of high fashion, and her endorsement is now arguably one of the most valuable to brands in the business.</p><img src="https://counter.theconversation.com/content/162055/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samuel Kwok does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
A disagreement between L'Oréal and two leading Chinese influencers shows how brands can run into difficulties in the modern era.
Samuel Kwok, Associate Professor of Transdisciplinary Studies, Xi'an Jiaotong-Liverpool University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/165187
2021-08-10T16:06:30Z
2021-08-10T16:06:30Z
Can luxury fashion brands ever really be inclusive?
<figure><img src="https://images.theconversation.com/files/415425/original/file-20210810-21-1iidg56.jpg?ixlib=rb-1.1.0&rect=67%2C8%2C2910%2C1913&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/bhJfx7t4QUA">Unsplash/Armen Aydinyan</a></span></figcaption></figure><p>Luxury goods tend to be associated with exclusivity rather than inclusivity. But thanks to the universal scrutiny of social media and consumer activism, high-end brands are under increasing pressure to be seen as companies who care. </p>
<p>Some have spent large sums on initiatives which address environmental concerns, or used their expertise to help deal with the pandemic. </p>
<p>The Kering group (which owns Yves Saint Laurent and Alexander McQueen) has, for example, <a href="https://www.voguebusiness.com/sustainability/kering-shines-light-on-sustainability-efforts-luxury">set a target</a> to reduce greenhouse gas emissions by 50% by 2025. </p>
<p>In response to COVID-19, <a href="https://www.bbc.co.uk/news/uk-england-leeds-52415983">fashion house Burberry donated</a> more than 100,000 pieces of PPE to the NHS and healthcare charities. Meanwhile, luxury firm LVMH used its perfume manufacturing facilities to <a href="https://www.forbes.com/sites/richardkestenbaum/2020/03/15/lvmh-converting-its-perfume-factories-to-make-hand-sanitizer/">make free hand sanitiser</a> for the healthcare system in France. </p>
<p>Yet it remains unclear whether consumers can reconcile the exclusive nature of luxury brands – selling at prices many cannot afford – with a public image of sustainability and environmental or social awareness. A <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781351287807-8/luxury-purchasers-really-insensitive-sustainable-development-jean-no%C3%ABl-kapferer-anne-michaut-denizeau">range</a> of <a href="https://doi.org/10.1016/j.jbusres.2016.10.029">studies</a> has shown that consumers are ambivalent about such efforts. <a href="https://link.springer.com/article/10.1057/s41262-019-00165-7">Research</a> into millennials’ attitudes showed that younger consumers even see the concepts of luxury and sustainability as contradictory.</p>
<p>This is understandable, for some brands’ apparent attempts to tackle societal challenges have come after they received widespread criticism for their own apparent failings. </p>
<p>Gucci for example, has a US$1.5 million (£1 million) <a href="https://hypebeast.com/2020/6/gucci-equilibrium-initiative-environmental-profit-loss-report-2019">plan</a> to support young designers from underrepresented backgrounds. But it was launched after the brand faced <a href="https://www.theguardian.com/fashion/2019/feb/07/gucci-withdraws-jumper-blackface-balaclava">accusations of racism</a> over a jumper design. </p>
<p>And while Prada has spoken out against racial injustice on social media, the company has also been <a href="https://www.nbcnews.com/news/us-news/prada-was-slammed-over-merchandise-deemed-racist-now-it-will-n1131466">forced to apologise</a> for merchandise that was deemed racist. Dior, meanwhile, launched a message of support and solidarity accompanied with a black background. But again, it comes after allegations of <a href="https://www.businessoffashion.com/articles/news-analysis/dior-pulls-sauvage-campaign-from-instagram-after-facing-appropriation-backlash">cultural appropriation</a>. </p>
<p><div data-react-class="InstagramEmbed" data-react-props="{"url":"https://www.instagram.com/p/CA5rKt_IZ3i/?hl=en","accessToken":"127105130696839|b4b75090c9688d81dfd245afe6052f20"}"></div></p>
<p>A <a href="https://www.nytimes.com/2021/03/04/style/Black-representation-fashion.html?smid=tw-share">New York Times report</a> showed that among top designers and creative directors in the fashion world, only four are black. Models and photographers from diverse backgrounds are also <a href="https://www.highsnobiety.com/p/black-representation-fashion/">severely underrepresented</a> in the luxury fashion industry.</p>
<p>Designer Virgil Abloh, head of men’s fashion at Louis Vuitton, is one of the few black figures to have reached the summits of a luxury brand. He <a href="https://www.numero.com/en/mode-homme/virgil-abloh-louis-vuitton-off-white-diversite-interview">has commented</a>: “Diversity isn’t just a question of gender and ethnicity. It’s a question of experience. It brings new ideas to the table. And it would be good if the fashion industry actually listened and took them on board.” </p>
<h2>Mutually exclusive?</h2>
<p>Against this complex backdrop, we asked members of the British public for their thoughts on inclusivity campaigns from luxury brands. Overall, consumers – particularly those on lower incomes – had a negative response.</p>
<p>The majority of the people we surveyed (87%) believe luxury brands would fare better at becoming more inclusive by focusing on fair pay and workers’ rights. </p>
<p>Efforts towards climate change initiatives were also popular (79%), as were work aimed at reducing racial and gender inequality. </p>
<p>Respondents also welcomed the idea of luxury brands selecting partners and suppliers in response to social and political situations. For instance, <a href="https://www.campaignasia.com/article/nike-adidas-burberry-uniqlo-ensnared-in-xinjiang-cotton-controversy/468578">Burberry’s</a> decision to boycott cotton from the Xinjiang region of China over <a href="https://www.gov.uk/government/news/uk-government-announces-business-measures-over-xinjiang-human-rights-abuses">alleged human right abuses</a>.</p>
<p>Overall, our survey suggests that – despite some progress – much remains to be done by luxury brands. And the question remains over whether an industry which revels in exclusivity can embrace inclusivity in a way that drives real societal change? </p>
<p>As consumers increasingly demand transition towards an inclusive society, a unique window has opened for luxury brands to become better agents of social change by aligning their missions, values and strategies to social purpose. Luxury brands are in a key position to lead business action by leveraging their cultural authority. </p>
<p>They have an opportunity to use their influence and actions to advance public debate and accelerate behavioural change. If they don’t take it, any gestures towards inclusivity risk being seen as nothing more than an opportunistic exercise in public relations and image.</p><img src="https://counter.theconversation.com/content/165187/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Companies should focus on fair pay and workers’ rights, our survey suggests.
Paurav Shukla, Professor of Marketing, University of Southampton
Dina Khalifa, Senior Research Associate, University of Cambridge
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/165016
2021-08-03T15:23:03Z
2021-08-03T15:23:03Z
Why Accra’s property boom hasn’t produced affordable housing
<figure><img src="https://images.theconversation.com/files/414148/original/file-20210802-15-1ngnrvy.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ghana's real estate boom has focused on luxury housing</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Luxury_Villa_House_(South_Ghana).jpg">Remy Mboku/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>African cities are among the <a href="https://www.brookings.edu/blog/africa-in-focus/2018/10/05/figure-of-the-week-africa-is-home-to-fastest-growing-cities-in-the-world/">fastest growing</a> in the world, leading to rising demand for urban housing. <a href="https://www.tandfonline.com/doi/full/10.1080/17502977.2012.655560">Housing policies</a> promoted by international organisations such as the World Bank since the 1980s have stimulated housing markets in order to address this demand. As a result, many of Africa’s major cities are being transformed by investment in urban real estate. But many also face a shortage of affordable housing for low-income residents. </p>
<p>In Ghana’s capital Accra, for example, there is an <a href="https://ama.gov.gh/documents/Accra-Resilience-Strategy.pdf">estimated deficit</a> of 300,000 housing units. This is despite a construction boom in the city centre. Over 300 acres (about 120 hectares) of state-owned land have been privatised and redeveloped since the 1990s. </p>
<p>The explanation lies in the mismatch between costs in the formal housing market and incomes in the informal economy. In <a href="https://www.african-cities.org/wp-content/uploads/2021/06/ACRC_Accra-City-Scoping-Study.pdf">Accra</a>, an estimated 74% of the workforce works in the informal economy. Informal workers typically have very low and unstable incomes and can’t access housing finance. Most of the city’s residents are locked out from formal housing markets: 58% live in informally-built housing, with 65% of households occupying a single room. </p>
<p>My <a href="https://www.research.manchester.ac.uk/portal/en/publications/the-real-estate-frontier(38ee1af4-b787-4012-963f-79839f884a76).html">research</a> on urban redevelopment in Accra shows that policies intended to encourage a real estate boom by selling off state-owned land have failed to provide affordable housing. Instead, profit-seeking by developers and the use of land as a patronage resource have resulted in a glut of under-occupied luxury real estate. </p>
<h2>Urban redevelopment in Accra</h2>
<p>Prior to the 1980s, state-owned enterprises and informal self-builders dominated housing production in Accra. After Ghana adopted neoliberal <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1541-0064.2001.tb01500.x">structural adjustment policies</a> in the 1980s, the government pursued a <a href="https://www.tandfonline.com/doi/full/10.1080/02673030902719763">market-based approach</a> to housing. It privatised public housing and redefined the role of the state as “enabling” private sector investment. It did this through incentives such as tax breaks for developers. </p>
<p>This policy shift increased the role of commercial real estate developers in housing production. Suburban <a href="https://www.tandfonline.com/doi/abs/10.2747/0272-3638.26.8.661">gated estates</a> proliferated in Accra. But the expansion of the real estate sector was limited by conflicts over ownership of land. Customary land tenure, where land is communal property that is controlled by traditional leaders and family heads, is widespread in Ghana. Disputes are common, and this has deterred real estate investment. </p>
<p>The answer seemed to lie in providing state-owned land for private development. Since the 1990s, hundreds of acres of state-owned land in the central neighbourhoods of Airport Residential, Cantonments and Ridge have been allocated to developers. This land was previously occupied by colonial-era bungalows on large plots and planners saw it as underutilised. The proposed solution was for the private sector to redevelop these plots to achieve greater density and increase the supply of housing. </p>
<p>According to official policy, plots would be openly advertised and allocated on the basis of competitive bids to ensure value for money for the public. In reality, however, there was a ‘land grab’. The public bidding process was disregarded and valuable plots were <a href="https://www.modernghana.com/news/299686/statement-on-the-allocations-a-of-government-lands.html">allocated</a> to powerful government supporters at below-market prices. Due to fierce <a href="https://academic.oup.com/afraf/article/115/458/44/2195222">electoral competition</a> between political parties in Ghana, governments often use resources to secure short-term political support rather than for long-term development. Land grabbing demonstrates that state-owned land is an important patronage resource in this context. </p>
<p>The privatisation of state-owned land had the desired effect of unleashing a construction boom in central Accra. Bungalows were demolished and replaced with gated estates of townhouses and blocks of luxury apartments. But it also worsened housing inequalities in the city. The new properties are typically marketed from upwards of US$80,000 and are far beyond the means of the majority of Ghanaians. Wealthy individuals often buy these properties as rental investments and lease them to the employees of global corporations. </p>
<p>Developers argue that the high cost of construction leads them to focus on the upper end of the market where the greatest profits can be made. As a result, these developers are all competing for the same small market segment. The outcome is an overproduction of luxury real estate, with many properties unoccupied. </p>
<p>Despite this, capital continues to be attracted to real estate. It offers the opportunity to speculate on rising land values. And there are few alternative investment opportunities in productive sectors such as manufacturing. In addition, as government and industry are increasingly <a href="https://www.ghanaweb.com/GhanaHomePage/business/Criminals-concealing-money-laundering-activities-in-the-real-estate-market-GIABA-1221757">recognising</a>, high-end real estate plays a central role in laundering illicit money. </p>
<h2>The affordable housing challenge</h2>
<p>What are the possible solutions to the problem of empty properties in a city needing 300,000 housing units? Government, civil society and international organisations have experimented with <a href="https://www.tandfonline.com/doi/full/10.1080/10511482.2017.1324892">participatory initiatives</a> where community groups take a leading role in improving the housing conditions in Accra’s informal settlements. But it is difficult to achieve this on a large scale (although current efforts in <a href="https://journals.sagepub.com/doi/full/10.1177/09562478211011088">Nairobi</a> are encouraging). </p>
<p>In the formal real estate industry, there is an emerging <a href="https://knightfrank.digital-hub.global/knight-frank-the-africa-report-2020/p/7">narrative</a> that affordable housing deficits in African cities represent a vast untapped market. Governments have encouraged this shift in focus, initiating public-private partnerships to build large-scale ‘affordable’ housing projects on relatively cheap land in peri-urban areas such as <a href="https://www.tandfonline.com/doi/abs/10.1080/13563475.2019.1664896">Ningo-Prampram</a> in Greater Accra. </p>
<p>Many of these projects focus on subsidised home ownership, rather than social rents. This means they are unlikely to be affordable to low-income groups. For the urban poor, therefore, informality is likely to remain the norm for the foreseeable future.</p><img src="https://counter.theconversation.com/content/165016/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Gillespie receives funding from the British Academy with Leverhulme (SG163008). </span></em></p>
In the formal real estate industry, there is an emerging narrative that affordable housing deficits in African cities represent a vast untapped market
Tom Gillespie, Hallsworth Research Fellow, University of Manchester
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/127268
2021-05-17T11:10:31Z
2021-05-17T11:10:31Z
The history of sneakers: from commodity to cultural icon
<figure><img src="https://images.theconversation.com/files/303723/original/file-20191126-180279-gvmxgl.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6989%2C4892&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sneakers have become highly covetable collectors' items. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/great-sneaker-made-different-little-sneakers-1252581049">Zarya Maxim Alexandrovich/ Shutterstock</a></span></figcaption></figure><p>Sneakers (or trainers if you’re British), once the symbol of athleticism, have transcended their primary function to become commercial and fashionable objects of desire. From sportswear and street style to catwalk fashion, sneakers have made their mark as cultural commodities.</p>
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<p><em>You can listen to more articles from The Conversation, narrated by Noa, <a href="https://theconversation.com/uk/topics/audio-narrated-99682">here</a>.</em></p>
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<p>The global sneaker market valued at approximately <a href="https://www.statista.com/statistics/1017918/sneakers-market-value-forecast-worldwide/">US$79 billion</a> (£56 billion) in 2020 and is predicted to reach US$120 billion (£85 billion) by 2026. With such huge growth, it is unsurprising that <a href="https://www.forbes.com/sites/callyrussell/2019/08/22/adidas-or-nike-which-retail-giant-is-winning-the-sneakers-war/#231d028212b7">they are considered big business</a>. </p>
<p>Such are the strides in the sneaker industry that a new exhibition at <a href="https://designmuseum.org/exhibitions/sneakers-unboxed-studio-to-street">London’s Design Museum</a> explores how the shoe became an undisputed cultural symbol of our times.</p>
<h2>Comfort is king</h2>
<p>The last decade has seen a huge shift in how sneakers are worn. Donning a pair is no longer frowned upon in the workplace or on more formal occasions. Even British etiquette experts <a href="https://www.debretts.com/">Debrett’s</a> have given their seal of approval, deeming them socially acceptable for <a href="https://www.telegraph.co.uk/news/2019/08/10/white-trainers-acceptable-wear-workplace-say-etiquette-experts/">smart casual occasions</a>. </p>
<p>The continued dominance of the <a href="https://www.telegraph.co.uk/news/2019/08/10/white-trainers-acceptable-wear-workplace-say-etiquette-experts/">athleisure trend</a> has had a significant impact on the growing sales of sneakers – along with the pursuit of <a href="https://www.cnbc.com/2018/05/18/sneaker-sales-are-growing-as-sales-of-high-heels-tumble.html">comfort</a>. This only grew more during the pandemic as lockdowns made people <a href="https://www.voguebusiness.com/consumers/comfort-and-wellness-set-to-define-luxury-in-2021">further prioritise comfort</a>, which resulted in a rise in sales of loungewear, athleisure and flat shoes, like sneakers.</p>
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<p>As such, sneakers have moved from the niche to become coveted as fashionable objects. Footwear is now the <a href="https://www.businessinsider.com/millennials-sneakers-status-symbol-luxury-footwear-style-2019-3?r=US&IR=T">biggest selling category</a> in the online luxury market and sneakers have made a significant contribution to this growth.</p>
<p>High fashion brands from Gucci to Balenciaga are setting the pace in the luxury sneaker market. In 2017, Balenciaga’s Triple S <a href="https://www.highsnobiety.com/p/luxury-sneakers-2017-trend/">became the biggest seller in the luxury sneaker market</a> and its popularity <a href="https://hypebeast.com/2019/5/balenciaga-fall-winter-2019-collection-drop-01-release">seems unstoppable</a>. </p>
<p>To understand how the sneaker has emerged to become a footwear phenomenon, it is important to trace its legacy from function to cultural icon.</p>
<h2>From tennis shoes to track</h2>
<p>The earliest sports shoes were created by <a href="https://www.independent.co.uk/life-style/flash-of-genius-1339404.html">The Liverpool Rubber Company, founded by John Boyd Dunlop</a>, in the 1830s. Dunlop was an innovator who discovered how to bond canvas uppers to rubber soles. These were known as sandshoes and worn by Victorians on their beach excursions. </p>
<p>Historian <a href="https://www.bloomsbury.com/uk/the-sports-shoe-9781474281805/">Thomas Turner</a> defines the latter decades of the 19th century as a time when industrial progress and social change were twinned with a growing enthusiasm for sporting pursuits, in particular lawn tennis. This resulted in the need for a more specialised type of footwear, which Dunlop’s rubber sole could fulfil. Dunlop launched their now iconic, Green Flash model in 1929, which was worn by <a href="https://www.telegraph.co.uk/news/uknews/1310957/Designer-dirt-doubles-price-of-tennis-shoes.html">tennis legend Fred Perry</a> at Wimbledon. </p>
<p>Other significant sports shoes of the 20th century included the <a href="https://www.converse.com/uk/en/our-story/about-us.html">Converse All Star</a>, designed for basketball. However, it is Adidas and Nike that have both shaped the sneaker’s evolution from sport to style. </p>
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<img alt="" src="https://images.theconversation.com/files/303798/original/file-20191126-112499-1j4wq8y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/303798/original/file-20191126-112499-1j4wq8y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/303798/original/file-20191126-112499-1j4wq8y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/303798/original/file-20191126-112499-1j4wq8y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/303798/original/file-20191126-112499-1j4wq8y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/303798/original/file-20191126-112499-1j4wq8y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/303798/original/file-20191126-112499-1j4wq8y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Cortez is Nike’s original running shoe, designed by co-founder Bill Bowerman and released in 1972.</span>
<span class="attribution"><span class="source">2p2play/ Shutterstock</span></span>
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<p>Founded by <a href="https://www.adidas-group.com/en/group/history/">Adi Dassler in Germany in 1924</a> as “Gebrüder Dassler Schuhfabrik”, the company later rebranded as Adidas in 1949. The brand created the first track shoe with a complete leather sole and hand-forged spikes, which was <a href="https://www.adidas-group.com/en/media/news-archive/press-releases/2000/adidas-olympic-history/">worn by Jessie Owens at the 1936 Berlin Olympics</a>.</p>
<p>Nike was created by Bill Bowerman and Phil Knight in <a href="https://www.businessinsider.com/history-of-nike-facts-about-its-50th-anniversary-2014-11?r=US&IR=T">1964 as Blue Ribbon Sports</a> and became Nike Inc. in 1971. This coincided with the <a href="https://www.runnersworld.com/advanced/a20782193/how-the-running-boom-began/">running craze</a> that hit America. Nike’s first commercial design was the Cortez, cushioned for running. The Cortez was worn by <a href="https://footwearnews.com/2017/fn-spy/entertainment/forrest-gump-shoes-nike-cortez-388967/">Tom Hanks in Forrest Gump</a>, securing Nike’s cultural status. </p>
<h2>The commercialisation of cool</h2>
<p>Research by the sociologist <a href="https://www.bloomsbury.com/uk/sneakers-9780857857224/">Yuniya Kawamura</a> on sneakers defines three waves of the phenomenon. The first wave in the 1970s was defined by an underground sneaker culture and the emergence of hip-hop. Adidas’ Samba design, as a key example, <a href="https://www.highsnobiety.com/p/terrace-footwear-sneaker-history/">became a key part of</a> <a href="https://outsons.com/the-ultimate-guide-to-terrace-fashion/">Terrace Fashion</a> within football fan subculture. In 1986, Run-DMC released the song My Adidas, leading to a sponsorship deal with the brand. This forged the sneaker’s deep-rooted place in popular culture. </p>
<p>The second wave of the phenomenon began in 1984 with the <a href="https://www.seattletimes.com/business/how-michael-jordan-became-a-brand-even-though-he-almost-skipped-the-meeting-with-nike/">launch of Nike Air Jordans</a>. This gave rise to the commodification of sneakers and their desirability as status items, fuelled through celebrity endorsements. For <a href="https://www.bloomsbury.com/uk/sneakers-9780857857224/">Kawamura</a> the third wave is marked by the digital age and the resulting growth in sneaker marketing and resell culture.</p>
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<p>The global sneaker resale market was valued at US$6 billion (£4.6 billion) in 2019 and is forecast to be worth <a href="https://www.cowen.com/insights/sneakers-as-an-alternative-asset-class-part-ii/">US$30 billion</a> (£21 billion) by 2030.</p>
<p>The growing presence of <a href="https://www.forbes.com/sites/mattpowell/2014/05/21/sneakernomics-are-s">“sneakerheads”</a> who collect and trade sneakers have ensured that they maintain cult status. Nike and Adidas routinely release <a href="https://stockx.com/">limited editions shoes</a> associated with a celebrity, hip-hop star or athlete.</p>
<p>It is not unusual for people to go to extreme lengths to get their hands on these rare models, <a href="https://theconversation.com/designer-fashion-nostalgia-magnet-whats-behind-the-rise-and-rise-of-the-sneaker-123766">queuing through the night</a>. Examples include <a href="https://stockx.com/air-yeezy-2-red-october?gclid=CjwKCAiA3OzvBRBXEiwALNKDP76_9yrsw02CQ2_oaZTDuWfBk6SrJcHxQuYfktFpmX2wNid6PqfStRoCYdsQAvD_BwE">Nike Air Yeezy 2 “Red October”,</a> and <a href="https://stockx.com/air-jordan-1-retro-high-off-white-chicago?gclid=CjwKCAiA3OzvBRBXEiwALNKDP9-aj27xohoVB-QTDWxN14onETO5Dp0bW73WO8_VhXBjE88ByivWqxoC9cIQAvD_BwE">Air Jordan x 1 Off-White “Chicago”</a>. </p>
<p>These shoes have a retail value of US$190 to US$240 (£135 to £170) and are reselling for between <a href="https://www.forbes.com/sites/leighsteinberg/2018/09/17/the-profitable-hidden-sneaker-market/#1999e2045925">US$1,695 and US$6,118</a> (£1,202 and £4,339). The lucrative sneaker resale market has created a new cult of <a href="https://www.cnbc.com/2016/09/30/the-16-year-old-sneaker-don-whose-clients-include-odell-beckham-jr-and-dj-khaled.html">sneaker enthusiasts</a> who through entrepreneurial spirit are generating significant hype along with personal income. </p>
<p>From sport to fashion, sneakers dominate the consumer market. Yet, despite their adoption by the mainstream, sneakers retain their coolness as cultural icons.</p><img src="https://counter.theconversation.com/content/127268/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Naomi Braithwaite does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
As sneakers have gone from sportswear to fashion item, the market for the shoe has exploded.
Naomi Braithwaite, Senior Lecturer in Fashion Marketing and Branding, Nottingham Trent University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/144392
2020-11-03T11:15:05Z
2020-11-03T11:15:05Z
Luxury goods: why elite brands are weathering the pandemic better than high street retailers
<figure><img src="https://images.theconversation.com/files/366684/original/file-20201030-17-1q70ka1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Masters of il-Louis-ion.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/milan-february-25-woman-poses-pink-389751781">andersphoto</a></span></figcaption></figure><p>Clothes shops are among the worst hit retailers from the coronavirus pandemic. Sales in the UK are <a href="https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/september2020">still well down</a> on pre-March levels. Big players such as <a href="https://www.bbc.com/news/business-54369802">H&M</a> and <a href="https://www.personneltoday.com/hr/gap-may-close-all-clothing-stores-in-europe/">Gap</a> are closing stores, and jobs are <a href="https://www.thesun.co.uk/money/12888062/peacocks-jaeger-collapse-jobs/">being lost</a>. Strikingly, luxury brands appear to be weathering the conditions relatively well. </p>
<p>Certainly, <a href="https://www.standard.co.uk/business/how-has-the-coronavirus-crisis-hit-luxury-retailers-a4465476.html">they have</a> been <a href="https://www.bain.com/insights/luxury-after-coronavirus/">enduring losses</a>, but we have not seen – and are unlikely to see – much in the way of permanent store closures or huge discounting of products at leading brands such as Louis Vuitton, Gucci and Hermes. All three have in fact <a href="https://www.voguebusiness.com/companies/price-increase-china-louis-vuitton-chanel-gucci-covid-19">raised their prices</a> by a few percentage points over last year. So why this difference?</p>
<h2>Lifting the veil</h2>
<p>The issue could well be one of control. Whereas high street retailers do not typically own their supply chains, the same is not true of luxury brand conglomerates such as <a href="https://www.lvmh.com/">LVMH</a>, <a href="https://www.kering.com/en/">Kering</a>, <a href="https://www.chanel.com/en_GB/">Chanel</a> and <a href="https://www.richemont.com/">Richemont</a>. </p>
<p>As these groups have increased their product offer across their brands over the past 20 years, they have pursued a meticulous strategy <a href="https://ww.fashionnetwork.com/news/Luxury-industry-mergers-acquisitions-up-22-in-2018-according-to-deloitte,1122928.html">of acquiring</a> the <a href="https://www.thefashionlaw.com/lvmh-a-timeline-behind-the-building-of-a-conglomerate/#:%7E:text=2016%3A%20Rimowa%20%E2%80%93%20LVMH%20acquired%20an,in%20a%20%2413.1%20billion%20deal">companies in</a> their <a href="https://www.themds.com/companies/chanel-keeps-integrating-suppliers-buys-stake-in-three-manufacturers.html#:%7E:text=Chanel%20expands%20its%20portfolio.,as%20French%20clothing%20manufacturer%20Grandis.">supply chains</a>. They now oversee an ecosystem that is virtually self-sufficient. They are able to set their own prices, from raw materials to labour to what customers pay for their products. </p>
<p>The manufacturing and distribution in these supply chains is not much different from the high street fashion chains. Though overall production costs may be higher and quality better, the economics work on similar principles: the cheaper the production, labour and raw materials, the higher the potential profit. </p>
<p>One important difference is in how the luxury groups justify the value of their goods to their customers. These brands put lots of emphasis on heritage. They typically date back more than a century – Louis Vuitton founded in 1854, Kering’s Boucheron in 1893, Richemont’s Cartier in 1847 and Chanel in 1910. </p>
<p>The underlying premise has always been that the goods under these brands are luxury as defined by craftsmanship and the raw materials. These ideas continue to add value to the brands – especially <a href="https://www.beautyindependent.com/retail-markup-beauty-product-fur-oil-shark-tank/">where pricing</a> is <a href="https://www.economist.com/1843/2016/07/28/demand-curve">concerned</a> – and mark ups have <a href="https://www.cbsnews.com/news/what-would-a-luxury-handbag-cost-without-the-markup/">reportedly been</a> up to 20 times the cost. </p>
<p>Yet while customers are told about the manufacturing process through the companies’ marketing campaigns, sometimes they only get part of the story. For instance, Louis Vuitton, which is owned by LVMH, had a <a href="https://www.campaignlive.co.uk/article/louis-vuitton-hand-made-campaign-falls-foul-asa/1005786">2010 advertisement banned</a> by the UK Advertising Standards Authority for suggesting that bags were hand-stitched when the company would not say how much of the work was done by hand.</p>
<p>When we see into the manufacturing processes, in some instances it can raise questions about the sales pitch. An example would be Chanel’s supply chain acquisitions <a href="https://www.vogue.co.uk/article/chanel-acquires-barrie-knitwear">included Barrie Knitwear</a> of Hawick in the Scottish borders in 2012. <a href="https://www.forbes.com/sites/ceciliapelloux/2018/04/24/inside-barrie-knitwear-and-chanel-metiers-darts/#17235712e31f">Barrie now makes</a> high-quality knitwear both under its own name and for Chanel: a cashmere beanie under the Barrie label retails at <a href="https://www.barrie.com/product/cashmere-beany-c104812/">just over £200</a>, whereas a relatively similar one with the Chanel brand <a href="https://www.chanel.com/en_GB/fashion/p/hea/aa7301b04641/aa7301b04641n9871/beanie-cashmere-white-black.html">goes for £375</a>. I know from having visited the Barrie factory that the raw materials and production methods are the same. This not a question of quality, simply cost. </p>
<p><strong>Which is which?</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/366744/original/file-20201030-21-dx1ugn.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Barrie and Chanel white beanie hats" src="https://images.theconversation.com/files/366744/original/file-20201030-21-dx1ugn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/366744/original/file-20201030-21-dx1ugn.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=320&fit=crop&dpr=1 600w, https://images.theconversation.com/files/366744/original/file-20201030-21-dx1ugn.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=320&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/366744/original/file-20201030-21-dx1ugn.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=320&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/366744/original/file-20201030-21-dx1ugn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=403&fit=crop&dpr=1 754w, https://images.theconversation.com/files/366744/original/file-20201030-21-dx1ugn.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=403&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/366744/original/file-20201030-21-dx1ugn.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=403&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">(Barrie to the left, Chanel to the right)</span>
</figcaption>
</figure>
<p>In some cases, production costs are low. Take Louis Vuitton’s Texas factory, which produces the iconic plasticised canvas bags, accessories and luggage featuring the LV logo that define the brand. This is no artisan studio, but a factory more conducive to <a href="https://www.wsj.com/articles/why-your-next-louis-vuitton-bag-may-hail-from-texas-11571332220">mass production</a>. The <a href="https://www.thefashionlaw.com/louis-vuitton-opens-up-shop-in-texas-marking-its-third-manufacturing-outpost-in-the-us/">starting salary</a> for workers was reportedly US$13 per hour in 2019. </p>
<p>Similarly, Louis Vuitton has <a href="https://www.theguardian.com/business/2017/jun/17/revealed-the-romanian-site-where-louis-vuitton-makes-its-italian-shoes">used a shoe factory</a> in Romania in recent years, where the labour costs could be expected to be cheaper than in western Europe. All but the soles are produced in Romania, handmade in large quantities. They are then finished in France or Italy.</p>
<p>As well as mass production and low wages, bulk buying of raw materials also significantly reduces costs – just like for your average high street retailer. No wonder these <a href="https://uk.fashionnetwork.com/news/Gucci-remains-kering-s-main-cash-generator-in-2018,1067496.html">companies achieve</a> profit margins that are among the highest in the corporate world. </p>
<h2>Stock options</h2>
<p>One challenge for luxury conglomerates has always been how to cope with unsold stock. <a href="https://www.theguardian.com/business/2018/sep/06/burberry-to-stop-burning-unsold-items-fur-after-green-criticism">Burberry disclosed</a> in 2018 that it had burned £105 million-worth of stock over five years to protect its brand, for instance, but said that it would stop doing so. </p>
<p>Cartier, meanwhile, <a href="https://www.theguardian.com/business/2018/may/18/richemont-destroys-nearly-500m-of-watches-in-two-years-amid-buyback-policy">reportedly dismantled</a> £400 million-worth of watches it did not want to sell at a discount over a period of two years.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/366698/original/file-20201030-15-1t9kuvy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Hand holding up Cartier watch" src="https://images.theconversation.com/files/366698/original/file-20201030-15-1t9kuvy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/366698/original/file-20201030-15-1t9kuvy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/366698/original/file-20201030-15-1t9kuvy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/366698/original/file-20201030-15-1t9kuvy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/366698/original/file-20201030-15-1t9kuvy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/366698/original/file-20201030-15-1t9kuvy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/366698/original/file-20201030-15-1t9kuvy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Smashing watches.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/moscow-russia-october-10-2018-fashion-1199853841">Papin Lab</a></span>
</figcaption>
</figure>
<p>The French government <a href="https://www.theguardian.com/world/2020/jan/30/france-passes-landmark-law-to-stop-unsold-goods-being-thrown-away">has introduced</a> a wide-ranging <a href="https://www.forbes.com/sites/katematthams/2019/06/06/france-moves-to-ban-the-destruction-of-unsold-luxury-goods-in-favor-of-recycling/#231b4f65334e">anti-waste law</a> banning “designer clothes and luxury goods companies from destroying unsold or returned items”. This will come into effect in 2023. </p>
<p>Yet in an <a href="https://www.businessoffashion.com/articles/news-analysis/france-seeks-to-stop-fashion-brands-from-destroying-unsold-goods">apparent contradiction</a>, luxury brands <a href="https://www.thefashionlaw.com/france-to-ban-the-destruction-of-unsold-fashion-products-with-a-concession-for-luxury-brands/">will in effect be spared</a>, on the basis of protecting their intellectual property rights. LVMH, Kering and Richemont all make <a href="https://luxurysociety.com/en/articles/2014/02/inside-frances-168-billion-luxury-goods-market/#:%7E:text=France%20is%20also%20arguably%20the,economy%20(Bain%20%26%20Co).">substantial contributions</a> to the French economy. </p>
<p>A new answer that looks to be catching on is to supply online retailers dedicated to second-hand luxuries – <a href="https://www.forbes.com/sites/richardkestenbaum/2020/10/05/the-most-important-effect-of-guccis-new-partnership-with-the-real-real/#1f01adb3d8f8">Gucci’s recent supply deal</a> with The Real Real site is an example. Such deals will potentially give these groups even more control over their operation. It means they can resell products without discounting – sometimes even increasing prices as “vintage” often sells for more than new. </p>
<p>In general, however, in an era of increasing customer interest in the production of goods, luxury brands would be sensible to be as open as possible. Not only would this force change in an industry that guards its secrecy, it would increase consumers’ understanding of what luxury really is.</p>
<hr>
<p>A spokeswoman for Chanel said that prior to its acquisition of Barrie in 2012, the two companies had been working together for over 25 years. “Through this acquisition, we have reaffirmed our commitment to traditional know-how and craftsmanship, thus ensuring the preservation of a historic brand and our desire to support their development.</p>
<p>"Like all the métiers d’art supported by Chanel, Barrie works with other leading fashion names. The creation of the Barrie brand in 2015 has reinforced this commitment, by allowing the offer of very specific products, with their own identity and price positioning.”</p>
<p>Louis Vuitton did not respond in time for publication.</p><img src="https://counter.theconversation.com/content/144392/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Shaun Borstrock received funding from British Council and the Daiwa Foundation. He is affiliated with creative industries federation and the all party parliamentary design and innovation group. </span></em></p>
Conglomerates like LVMH, Richemont and Kering are the masters of supply chain control.
Shaun Borstrock, Associate Dean of School, Design, Business and Innovation, Head of Creative Ideas, HertsPropeller, The Digital Hack Lab and In Pursuit of Luxury, University of Hertfordshire
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/145267
2020-09-17T13:05:07Z
2020-09-17T13:05:07Z
How the decline in Chinese tourists around the world has hit the luxury sector
<figure><img src="https://images.theconversation.com/files/358571/original/file-20200917-16-p4chh9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Not your average souvenir shop.</span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/SsBI9pweAeA">Melanie Pongratz via Unsplash</a></span></figcaption></figure><p>Large groups of Chinese visitors have become a pillar of the global tourism industry. Coronavirus has not only put paid to this enormous source of income for major cities and sights around the world, it is having a massive knock-on effect for the luxury goods business. </p>
<p>For any tourist, buying souvenirs is a key part of the holiday experience. They might be trinkets such as keyrings or fridge magnets, a T-shirt emblazoned with the slogan “I ❤ NY” or a Russian matryoshka doll. But a significant number of Chinese tourists prefer to spend large sums on luxury items, such as designer clothes and accessories, when they travel overseas. </p>
<p>Roughly one-third of global spending on luxury goods was credited <a href="https://www.voguebusiness.com/consumers/chinese-consumers-luxury-purchases-growth-bain">to Chinese consumers in 2018</a>. Consultants at Bain predict this <a href="https://jingdaily.com/bain-company-chinese-consumers-will-make-up-half-of-global-luxury-purchases-by-2025/">to rise to 50% by 2025</a>. Before the coronavirus pandemic, nearly all of this £85 billion worth of spending (92%) was done <a href="https://www.mckinsey.com/%7E/media/mckinsey/featured%20insights/china/how%20young%20chinese%20consumers%20are%20reshaping%20global%20luxury/mckinsey-china-luxury-report-2019-how-young-chinese-consumers-are-reshaping-global-luxury.ashx">outside the Chinese mainland</a> .</p>
<p>What’s more, most of this overseas shopping is done by women between the ages of 19 and 29, according to a 2018 survey of <a href="http://223.27.21.115/%7Eallegiantmediaco/wp-content/uploads/Documents/CN-Travel-Shopper-White-Paper-Final.pdf">over 750 million Chinese people</a>. From our interviews <a href="https://www.emerald.com/insight/content/doi/10.1108/TR-08-2019-0335/full/html">with many of these women</a>, it seems clear that as the Chinese economy recovers from coronavirus they will return to spending. Where they are able to travel and spend will have a big impact on economic recoveries from the pandemic.</p>
<h2>The awakened generation</h2>
<p>In China, demographic cohorts are defined by decades. Rather than millennials or generation Z, in China it is the post-90s generation (those born in the 1990s) that have become the core driver of growth for many industries, including luxury, leisure and travel retail. </p>
<p>China’s post-90s generation are the direct beneficiaries of the country’s economic reform that began in the 1980s, which opened up the Chinese market to the rest of the world and spurred enormous economic growth through the 1990s to today. Girls, in particular, benefited from growing up at a time when China was more connected with the rest of the world and experienced significant cultural changes, including a decline in the <a href="https://link.springer.com/article/10.1007/s10834-011-9277-9">historic preference for sons</a>. The one-child policy played a part in this, too. </p>
<p>Compared with previous generations, which are more family-centred and self-effacing, post-90s Chinese women are self-confident, independent and well-educated. They are also keen to express themselves through consumerism. This was evident in the conversations we had with high-spending young women. For them, buying luxury goods was a key part of their identity and self-expression. When travelling, it was one of the most important parts of their holiday, if not the actual purpose for their trip.</p>
<figure class="align-center ">
<img alt="Three women smiling at smartphone in shopping mall." src="https://images.theconversation.com/files/358573/original/file-20200917-18-1kqv5an.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/358573/original/file-20200917-18-1kqv5an.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/358573/original/file-20200917-18-1kqv5an.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/358573/original/file-20200917-18-1kqv5an.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/358573/original/file-20200917-18-1kqv5an.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/358573/original/file-20200917-18-1kqv5an.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/358573/original/file-20200917-18-1kqv5an.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Shopping is an important form of self-expression for lots of young Chinese women.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/happy-young-woman-watching-smart-phone-425547400">Tom Wang / Shutterstock</a></span>
</figcaption>
</figure>
<p>Around the world, people buy and display luxury goods – from fancy cars to expensive watches and handbags – as status symbols. This is especially the case for the post-90s Chinese woman who seeks to distinguish herself from others in various ways. Vivian*, who’s 30, has a master’s degree and works in finance, told us:</p>
<blockquote>
<p>Buying luxury branded products is very personal. It’s <em>my</em> handbag. I do not want to look like everyone else.</p>
</blockquote>
<p>Travelling further afield to Europe is a way to buy luxury goods that distinguish themselves from their peers, as different designs are available to those in China. As well as the premium shopping experience, the people we spoke to repeatedly talked about the importance of having unique items. Ava, a 23-year-old student, said:</p>
<blockquote>
<p>Those special designs somehow are much more beautiful than those basic items that are available everywhere [in China]. They also reflect my lifestyle as a well-travelled person. When I carry it around, people know I am special.</p>
</blockquote>
<p>We also found that for the post-90s Chinese woman who travels abroad, buying designer items in the country where they originated from was seen as part of the authentic experience. As Emma, who is 23 and works in fashion, put it:</p>
<blockquote>
<p>Buying handbags in Paris makes me feel like a French lady. It’s a fun and authentic experience. It is a very different experience to purchasing them in Shenzhen.</p>
</blockquote>
<h2>‘Revenge spending’</h2>
<p>The coronavirus pandemic has not reduced this appetite among China’s wealthy post-90s generation to travel and spend. A survey from <a href="https://blog.globalwebindex.com/chart-of-the-week/coronavirus-reshaping-the-luxury-market/">April this year found</a> that almost 60% of this group who had delayed their purchase plans would return to spending once the outbreak was over in China. And a number of luxury businesses reported a <a href="https://edition.cnn.com/2020/06/11/business/global-luxury-sales-china-coronavirus-intl-hnk/index.html">big rise in spending</a> following the easing of lockdown restrictions in China, including jewellery brand Tiffany and fashion house Burberry. </p>
<p>While overseas travel restrictions will significantly reduce the outbound tourist market for the time being, many brands will be hoping for a similar bout of so-called <a href="https://www.cnbc.com/2020/05/13/revenge-spending-by-the-rich-could-drive-luxury-recovery.html">“revenge spending”</a>, as people make up for the time spent cooped up in lockdown.</p>
<p>Having been the first to be hit by coronavirus, China is the first major economy to show a recovery. And as the world’s largest (and still growing) source of travellers and luxury shoppers, China will be the engine of the post-pandemic recovery for both these sectors. Both should be aware of what motivates this younger generation to spend in order to tap into it. Growing tension between the west and China, along with struggles to contain the pandemic in the west, may see other Asian countries as the first to benefit from outbound Chinese tourists.</p>
<p>* <em>Names have been changed.</em></p><img src="https://counter.theconversation.com/content/145267/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Research reveals why Chinese millennials love to spend overseas on luxury brands.
Xiaoqing Chen, Lecturer in Management, University of Aberdeen
Carol Zhang, Assistant Professor in Tourism Marketing and Management, University of Nottingham
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/135669
2020-06-19T12:07:31Z
2020-06-19T12:07:31Z
Python skin jackets and elephant leather boots: How wealthy Western nations help drive the global wildlife trade
<figure><img src="https://images.theconversation.com/files/340402/original/file-20200608-176538-le18fi.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5112%2C3410&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Protesters hold signs outside women's fashion designer Eudon Choi in London during Fashion Week in 2017.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-england-september-15-2017-man-720967780">Elena Rostenova/www.shutterstock.com</a></span></figcaption></figure><p>Three-quarters of new and emerging infectious diseases in humans <a href="https://www.cdc.gov/onehealth/basics/zoonotic-diseases.html">originate in wildlife</a>. COVID-19, SARS and Ebola all started this way. The COVID-19 global pandemic has drawn new attention to how people think about wild animals, consume them and interact with them, and how those interactions can affect public health.</p>
<p>Any activity that puts people in close proximity to disease-prone animals is risky, including wildlife trade and the <a href="https://ensia.com/features/covid-19-coronavirus-biodiversity-planetary-health-zoonoses/">destruction of natural habitats</a>. In response to the current pandemic, <a href="https://www.businessinsider.com/china-bans-wildlife-trade-consumption-coronavirus-2020-2">China</a> and <a href="https://www.theguardian.com/environment/2020/mar/18/billion-dollar-wildlife-industry-in-vietnam-under-assault-as-law-drafted-to-halt-trading">Vietnam</a> have instituted bans on wildlife consumption. <a href="https://www.theguardian.com/world/2020/apr/06/ban-live-animal-markets-pandemics-un-biodiversity-chief-age-of-extinction">Global leaders</a> and <a href="https://www.theguardian.com/environment/2020/apr/15/mixed-with-prejudice-calls-for-ban-on-wet-markets-misguided-experts-argue-coronavirus">U.S. policymakers</a> are calling for a ban on wildlife markets worldwide. </p>
<p>We study <a href="https://www.environmentalgovernance.org/">global environmental governance</a> and human security. As we see it, banning the wildlife trade without action to reduce consumer demand would likely <a href="https://www.independent.co.uk/environment/coronavirus-pandemic-nature-illegal-wildlife-trade-market-china-a9483761.html">drive it underground</a>. And curbing that demand requires recognizing that much of it comes from wealthy nations.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/aoPBaoWfE08?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Exotic animals are regularly smuggled into the U.S. as pets and for display at roadside zoos.</span></figcaption>
</figure>
<h2>A complex and mostly legal trade</h2>
<p>Global commerce in wildlife affects billions of animals and plants, and operates through both legal and illegal channels. The <a href="https://www.unenvironment.org/">United Nations Environment Programme</a> estimates the value of the legal trade at <a href="https://www.grida.no/resources/7309">US$300 billion annually</a>. <a href="https://www.traffic.org/">TRAFFIC</a>, a leading nongovernmental organization, estimates that the illegal wildlife trade is worth <a href="http://www.wwf.de/fileadmin/fm-wwf/Publikationen-PDF/FightingIllicitWildlifeTrafficking_KeyFindings.pdf">$19 billion annually</a>. Illegal wildlife trafficking is one of the <a href="https://gfintegrity.org/report/transnational-crime-and-the-developing-world/">largest drivers of transnational crime</a> worldwide.</p>
<p>Discussions about wildlife consumerism often ascribe consumption to a false, all-encompassing archetype of an “<a href="https://www.researchgate.net/publication/337403945_Margulies_Wong_Duffy_The_imaginary_'Asian_Super_Consumer'_A_critique_of_demand_reduction_campaigns_for_the_illegal_wildlife_trade">Asian super consumer</a>” with “weird” appetites for exotic animals. This perspective focuses on newly wealthy Asians who want to buy ivory, rhino horn or, more recently, pangolin.</p>
<p>Another common trope depicts poachers as male, greedy, gun-toting <a href="https://www.wiley.com/en-us/Gender+and+the+Environment-p-9780745663838">African criminals</a>. In fact, poaching and hunting for “<a href="https://www.fws.gov/international/wildlife-without-borders/global-program/bushmeat.html">bush meat</a>,” or meat from wild animals, are more often symptoms of poverty and a <a href="https://theconversation.com/why-poachers-persist-in-hunting-bushmeat-even-though-its-dangerous-95047">lack of other income-generating opportunities</a>.</p>
<p>These false stories can result in blinkered policy decisions that ignore the real motivations driving both consumption and poaching. In particular, consumer demand in the United States and Europe is a significant driver of wildlife trade. And wildlife products appeal to Western consumers for many of the same reasons that drive demand in other parts of the world.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/340411/original/file-20200608-176550-3x5vml.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/340411/original/file-20200608-176550-3x5vml.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/340411/original/file-20200608-176550-3x5vml.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/340411/original/file-20200608-176550-3x5vml.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/340411/original/file-20200608-176550-3x5vml.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/340411/original/file-20200608-176550-3x5vml.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/340411/original/file-20200608-176550-3x5vml.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/340411/original/file-20200608-176550-3x5vml.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A customs officer stands near sacks of seized pangolin scales in Hong Kong in 2019.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/photos/pangolin?events=775291474&family=editorial&phrase=pangolin&sort=best#license">ANTHONY WALLACE/AFP via Getty Images</a></span>
</figcaption>
</figure>
<h2>The roles of gender, class and culture</h2>
<p>According to a 2017 study, between 2000 and 2015 the United States imported <a href="https://doi.org/10.1007/s10393-017-1211-7">more than 5 million shipments of live and dead wildlife</a>. They included mammals, birds, fish and reptiles purchased as exotic pets, along with timber, plants and animal parts. The number of shipments declared each year more than doubled between 2000 and 2015. </p>
<p>Consumption reflects social values, and consumer preferences vary by culture, class and gender. What do a <a href="https://www.youtube.com/watch?v=Z7n6_YHLufE">150-ounce steak</a> in the United States and <a href="https://blog.nationalgeographic.org/2014/04/29/tigers-in-traditional-chinese-medicine-a-universal-apothecary/">tiger penis wine</a> in China have in common? The culturally symbolic belief that they exemplify and promote male virility. Similarly, luxury wear items – such as exotic giraffe leather boots in Texas, python skin jackets in Milan and fur coats in Florida – are a way of dressing to impress others. </p>
<p>What people consume and how is influenced by socially conditioned roles and responsibilities, <a href="http://scholar.harvard.edu/files/kristenghodsee/files/wsif1150.pdf">reinforced by television and advertising</a>. Conceptions of gender most often determine the <a href="https://www.researchgate.net/publication/337403945_Margulies_Wong_Duffy_The_imaginary_'Asian_Super_Consumer'_A_critique_of_demand_reduction_campaigns_for_the_illegal_wildlife_trade">perceived value of the product</a> and shape consumption preferences. </p>
<p>For example, products like fish swim bladder – also known as <a href="https://www.theguardian.com/environment/radical-conservation/2016/jan/11/china-aquatic-cocaine-vaquita-totoaba-mexico-endangered-extinct">aquatic cocaine</a> – and cosmetics containing <a href="https://doi.org/10.1007/s10592-019-01221-0">shark liver oil</a> appeal to perceptions of female beauty, targeting aging women with false promises of eternal youth. In Asia, ground pangolin scales are marketed as a <a href="https://www.cnn.com/interactive/2014/04/opinion/sutter-change-the-list-pangolin-trafficking/">treatment for lactation problems</a>. Trophy hunters’ photographs and showrooms with taxidermied lions or elephant tusks appeal to perceptions of masculinity. </p>
<p>Poaching of elephants for ivory has received wide coverage in Western media, but their skins <a href="https://elephant-family.org/what-we-do/raising-awareness/in-the-news/press-releases/skinned_new_investigative_report">turn up in boots</a> that are <a href="https://www.nationalgeographic.com/news/2017/12/wildlife-watch-zimbabwe-elephant-skins-trade/">legally marketed in wealthy nations</a>. <a href="https://www.nytimes.com/2018/08/23/science/giraffe-sales-humane-society.html">Giraffe skins</a> are also legal goods that may be sold as expensive décor, boots or Bible covers. U.S. demand for <a href="https://www.nationalgeographic.com/animals/2019/07/pangolin-poaching-leather-boots/">boots sheathed with the scales of pangolins</a> – the <a href="https://www.traffic.org/what-we-do/species/pangolins/">world’s most-trafficked mammal</a> and a <a href="https://theconversation.com/study-shows-pangolins-may-have-passed-new-coronavirus-from-bats-to-humans-135687">suspected source of COVID-19</a> – has contributed to this species’ decline. </p>
<p>Performing a quick online search, we identified more than 30 retailers selling elephant leather products in the United States, mainly exotic boots. Their ads promote virility — “Just a hard-working, tough as nails, pair of American made cowboy boots” — and promise that others will be impressed, with messages like “No ignoring these elephants when they’re in the room.” </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/340405/original/file-20200608-176585-ql69sl.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/340405/original/file-20200608-176585-ql69sl.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/340405/original/file-20200608-176585-ql69sl.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=445&fit=crop&dpr=1 600w, https://images.theconversation.com/files/340405/original/file-20200608-176585-ql69sl.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=445&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/340405/original/file-20200608-176585-ql69sl.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=445&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/340405/original/file-20200608-176585-ql69sl.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=560&fit=crop&dpr=1 754w, https://images.theconversation.com/files/340405/original/file-20200608-176585-ql69sl.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=560&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/340405/original/file-20200608-176585-ql69sl.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=560&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">An outfitter markets elephant-skin boots with a play on words promising that people who wear them will get attention.</span>
<span class="attribution"><a class="source" href="https://www.instagram.com/p/BV70s6Shr2E/?utm_source=ig_embed">From Instagram</a></span>
</figcaption>
</figure>
<h2>Targeting the fashion industry</h2>
<p>Western countries <a href="http://dx.doi.org/10.1007/s10393-017-1211-7">mostly import</a> wildlife goods, which can make the effects of this trade seem far removed. However, media exposés are making it hard for wealthy consumers and businesses to deny its impact.</p>
<p>While many question <a href="https://theconversation.com/can-asia-end-its-uncontrolled-consumption-of-wildlife-heres-how-north-america-did-it-a-century-ago-137343">whether Asians will stop eating wild animals</a>, we question whether Western consumers will stop wearing them. The global fashion industry, with an <a href="https://fashionunited.com/global-fashion-industry-statistics/">estimated annual valuation of US$3 trillion</a>, is an important target for change. </p>
<p>Some companies have responded to campaigns by advocacy groups like People for the Ethical Treatment of Animals, which has crashed runways and solicited celebrities. PETA has claimed victory for its <a href="https://www.cnn.com/style/article/peta-naked-fur-campaign-ends/index.html">30-year campaign</a>, “I’d Rather Go Naked Than Wear Fur.” “Nearly every top designer has shed fur, California has banned it, Queen Elizabeth II has renounced it, Macy’s is closing its fur salons, and now, the largest fur auction house in North America has <a href="https://www.peta.org/features/id-rather-go-naked-than-wear-fur-campaign-ends">filed for bankruptcy,”</a> said PETA senior vice president Dan Mathews when the campaign ended in 2020. </p>
<p>Still, the industry has far to go. “Despite some modest
progress, fashion hasn’t yet taken its environmental responsibilities
seriously enough,” the consulting firm McKinsey observed in a recent report, noting that many younger consumers were <a href="https://www.mckinsey.com/%7E/media/mckinsey/industries/retail/our%20insights/the%20state%20of%20fashion%202020%20navigating%20uncertainty/the-state-of-fashion-2020-final.ashx">demanding “transformational change</a>.” </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1271115333164765185"}"></div></p>
<p>Now animal welfare advocates are focusing on leather and wool production. Fashion houses including Chanel, Nine West and Victoria Beckham are banning the use of exotic leathers. California has also banned them from being sold.</p>
<p>Many brands source fur, feathers and skins from <a href="https://www.dw.com/en/conservation-and-fashion-what-is-the-impact-of-using-exotic-animal-skins/a-49156030">factory farms</a> that raise exotic species and <a href="https://www.nytimes.com/2017/06/05/science/animal-farms-southeast-asia-endangered-animals.html">legally trade captive-bred endangered species</a> that are illegal to source from the wild. The absence of strong regulatory measures allows for illegally obtained skins to be passed off as legal. </p>
<p>Better quality control of fashion materials could make it harder for companies to work with these suppliers. Learning from <a href="http://awsassets.wwfnz.panda.org/downloads/draft_blockchain_report_1_4_1.pdf">seafood industry systems</a> that trace products from origin to consumption could ensure transparency and bring order to complex supply chains.</p>
<h2>Changing consumer preferences</h2>
<p>Ultimately, reducing demand for wildlife products will require regulation as well as educating consumers about the consequences of their choices. Helping people understand the harmful impacts of products ranging from <a href="https://www.nytimes.com/2020/05/27/climate/plastic-alternative-business.html">plastic bags and plastic straws</a> to <a href="https://doi.org/10.1016/j.trd.2014.10.010">gasoline-powered cars</a> is the first step in persuading them to consider alternatives. And when they do, and policies change, producers listen and shift supply.</p>
<p>We see targeted campaigns as an effective way to unearth consumption biases and mobilize action for public and planetary health. In our view, more brands and designers banning wildlife products, and greater peer pressure for behavior change, will promote more sustainable consumption patterns that benefit both humans and wildlife.</p><img src="https://counter.theconversation.com/content/135669/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
The COVID-19 pandemic has cast a harsh light on global commerce in wildlife. But many accounts focus on demand from Asia, ignoring the role of US and European consumers.
Maria Ivanova, Associate Professor of Global Governance and Director, Center for Governance and Sustainability, John W. McCormack Graduate School of Policy and Global Studies, UMass Boston
Candace Famiglietti, Doctoral Student, Global Governance and Human Security and Research Associate, Center for Governance and Sustainability at John W. McCormack Graduate School of Policy and Global Studies, UMass Boston
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/138137
2020-05-13T14:52:07Z
2020-05-13T14:52:07Z
How the Covid-19 crisis could remodel the luxury industry
<p>The Covid-19 crisis has hit the luxury and fashion industry hard. According to a study conducted by the <a href="https://www.linkedin.com/pulse/covid-19-recovery-scenarios-fashion-luxury-brands-javier-seara/">Boston Consulting Group</a>, sales in these two sectors could drop by 25% to 30% compared to 2019.</p>
<p>The economic and health crisis could also have long-term repercussions on purchasing behaviour, trends and trigger tremendous changes in the luxury field.</p>
<h2>A sector at a standstill</h2>
<p>Laudably, the main luxury houses have reallocated their production tools to produce hydroalcoholic gels (LVMH, Hermès), manufacture face masks and lab coats (Kering, Chanel, Louis-Vuitton). They also decided to provide financial support to <a href="https://r.lvmh-static.com/uploads/2020/03/pr_lvmh-masques-210320-va-def.pdf">health services</a> and to their <a href="https://finance.hermes.com/var/finances/storage/original/application/3ca935d5fcad69a9655e16584215c307.pdf">employees</a>.</p>
<p>Some companies, such as <a href="https://www.reuters.com/article/hermes-dividend/update-1-french-luxury-group-hermes-reduces-proposed-dividend-over-coronavirus-idUSL8N2BN8TH">Hermès</a>, have proposed a reduction in the dividend paid to shareholders and no raise in management remuneration. On April 16, LVMH CEO, Bernard Arnault announced that he would give up <a href="https://www.marketscreener.com/LVMH-MOET-HENNESSY-LOUI-4669/news/LVMH-Moet-Hennessy-Louis-Vuitton-Executives-and-Board-Cut-Pay-for-April-May-30423139/">two months’ salary</a>.</p>
<p>Beyond these immediate measures, luxury goods companies have no choice but to rethink their strategies to face a more severe crisis for the sector than the financial crisis of 2007.</p>
<p>According to Javier Seara of the Boston Consulting Group, luxury goods sales could plunge by <a href="https://www.linkedin.com/pulse/covid-19-recovery-scenarios-fashion-luxury-brands-javier-seara/">65% to 80% in March and April 2020</a> compared to 2019 before rebounding at the end of the year. The impact will not be the same in all countries, according to the US firm: In Western Europe, it could fall by 30% to 40%; in Northern Europe, from 32% to 38%, in North America from 23% to 34% and China from 24% to 30%.</p>
<p>The drop in sales is among others correlated with the difficulties in selling the spring-summer 2020 collections. In China, some luxury brands were able to make online sales (notably thanks to the WeChat application) but not all firms have deployed an omnichannel strategy and nor are they able to ensure deliveries. In Europe the lockdown came later. The end of Chinese tourism and the closing of stores small and large as well as department stores will have disastrous effects on end-of-year inventory levels and on income. In the United States, the same trend is looming and several historic players, including Neiman Marcus and JC Penney, may be filing for bankruptcy </p>
<p>Companies suffer not only on the sales side, but they also have to cope with a supply issue.</p>
<p>According to a study led by Mckinsey & Company, <a href="https://www.mckinsey.com/industries/retail/our-insights/a-perspective-for-the-luxury-goods-industry-during-and-after-coronavirus">40% of the world’s production</a> of luxury goods occurs in Italian factories. Most of these are medium-sized or family businesses and have not restarted yet despite a gradual easing of restrictions.</p>
<p>As the major luxury brands still produce mostly in their country of origin or nearby, Europe with its main manufacturing sites and workshops in France and Italy is particularly affected.</p>
<h2>A new era for luxury?</h2>
<p>In the longer term, significant changes are to be considered. Here are five main trends that we may see:</p>
<p><strong>1. A ramping up of digitalization</strong></p>
<p>To dispose of their inventories during the closure of their stores, luxury houses will strive to offer an online service with a first-class customer experience. It should be a flawless process from the product offering through to the secured payment and timely delivery. Luxury groups will have to attract many more customers (at least temporarily) to their digital platforms and create a new customer journey.</p>
<p>In the short term, if they do not already have their own platform, some players may collaborate with existing marketplaces (i.e., merchant websites managed by a third-party provider of goods or services), for example, Farfetch. But they will also have to roll out their own online sales channels to fully control the customer experience and preserve their brand image. This will involve initiatives such as the creation of virtual stores or ephemeral “pop-up shops”, as some players have already done on WeChat.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/328465/original/file-20200416-192689-1t4lrwh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/328465/original/file-20200416-192689-1t4lrwh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=325&fit=crop&dpr=1 600w, https://images.theconversation.com/files/328465/original/file-20200416-192689-1t4lrwh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=325&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/328465/original/file-20200416-192689-1t4lrwh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=325&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/328465/original/file-20200416-192689-1t4lrwh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=408&fit=crop&dpr=1 754w, https://images.theconversation.com/files/328465/original/file-20200416-192689-1t4lrwh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=408&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/328465/original/file-20200416-192689-1t4lrwh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=408&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Farfetch marketplace offers the sale of luxury products of various brands.</span>
<span class="attribution"><span class="source">Screen capture</span></span>
</figcaption>
</figure>
<p><strong>2. A second-hand market boom</strong></p>
<p>Before the Covid-19 crisis, consulting firms BCG and Altagamma predicted that the <a href="http://media-publications.bcg.com/france/True-LuxuryGlobalConsumerInsight2019--Plenary--vMedia.pdf">second-hand market</a>, estimated at 22 billion euros in 2018, would grow by 12% by 2021. The emergence of <a href="http://media-publications.bcg.com/france/True-LuxuryGlobalConsumerInsight2019--Plenary--vMedia.pdf">ethical and ecological considerations</a> among consumers is thus a favourable prospect for sites like <a href="https://us.vestiairecollective.com/">Vestiaire Collective</a>, founded in France and which has become one of the world’s largest online marketplaces to buy and sell pre-owned designer clothes and accessories.</p>
<p>In difficult times, customers may turn even more to these second-hand goods. Consumers with luxury items and in need of cash will offer their items for sale, thus expanding supply, albeit at lower prices which could stimulate demand. This trend seems to be gaining momentum even in <a href="https://jingdaily.com/hong-kong-recession-sustainable-second-hand-luxury-market/">Hong Kong</a>.</p>
<p><strong>3. A shift in consumer behaviour toward more responsible luxury</strong></p>
<p>On April 11, Hermès reopened its Guangzhou flagship store and reportedly achieved a <a href="https://wwd.com/fashion-news/fashion-scoops/hermes-hauled-in-2-7-million-in-one-china-store-on-saturday-sources-1203559738/">$2.7 million turnover</a> in a single day. Will the phenomenon of <a href="https://www.bloomberg.com/news/articles/2020-03-12/luxury-shoppers-in-china-emerge-from-quarantine-to-buy-again">revenge spending</a> observed in China spread to other countries? Or does it illustrate the attractiveness of Hermès in particular?</p>
<p>While it is too early to draw conclusions, the example is interesting. It can be seen as an aspiration for timeless luxury and for an ethically committed house. This trend was evident even before the start of the pandemic, in particular among millennials (those born between the early 1980s and the late 1990s): <a href="http://media-publications.bcg.com/france/True-LuxuryGlobalConsumerInsight2019--Plenary--vMedia.pdf">64% indicated that would be influenced</a> by sustainability in their buying behaviour.</p>
<p>Still, many consumers and resellers will face a reduction in their financial resources and could put a hold on their purchases. This situation may force luxury houses to reduce the number of collections and products offered each year. Consumers could even reconsider the <a href="https://www.mckinsey.com/%7E/media/McKinsey/Industries/Retail/OurInsights/TheStateofFashion2019Ayearofawakening/The-State-of-Fashion-2019-final.ashx">concept of ownership</a> and shift toward rental services.</p>
<p><strong>4. A probable cut in communication and public relations budgets spending</strong></p>
<p>In the current context, brands will have to review the way they communicate. In particular, fashion weeks in their traditional format – and whose June editions have now been <a href="https://www.vogue.com/article/milan-paris-mens-fashion-week-couture-fashion-week-2020-canceled">cancelled in Paris and Milan</a> – must be revisited. They could be replaced by virtual experiences and more <a href="https://twitter.com/BFMParis/status/1243644306809851904">“private” events</a>. In the coming months, the organisation of large gatherings will indeed remain limited. Faced with the crisis, it is self-evident that luxury companies will have to restrict spending and that communication and events budgets will be the first to be impacted.</p>
<p><strong>5. Consolidations in the luxury industry</strong></p>
<p>With the financial difficulties, many players, and in particular the smallest, will become more-affordable targets. The most financially solid players such as LVMH, Kering or Chanel will no doubt have the option of buying out competitors, subcontractors and even suppliers.</p>
<p>Confronted with the lasting effects of the crisis and taking into account the observed consumption trends, significant changes in the industry are to be expected. Concentration of ownership in the luxury sector will intensify, the shift to digital will become absolutely crucial, and efforts in terms of sustainable development will be expected from consumers. The new business models linked to second-hand and luxury goods rental should also come out as winners.</p>
<p>This crisis, which forces us all to reconsider our purchasing decisions could bring the era of “slow luxury” and trigger a new awareness of the <a href="https://www.ellenmacarthurfoundation.org/circular-economy/concept">circular economy</a>.</p><img src="https://counter.theconversation.com/content/138137/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Isabelle Chaboud ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>
An acceleration of digital development, of the second-hand market and of concentration movements are notably to be expected in the sector.
Isabelle Chaboud, Professeur associé d’analyse financière, d’audit et de risk management - Directrice de Programme pour le MSc in Fashion Design & Luxury Management- Responsable de la spécialisation MBA "Brand & Luxury Management", Grenoble École de Management (GEM)
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/124869
2020-01-13T13:55:38Z
2020-01-13T13:55:38Z
Restricting trade in endangered species can backfire, triggering market booms
<figure><img src="https://images.theconversation.com/files/308132/original/file-20191220-11919-12j417i.jpg?ixlib=rb-1.1.0&rect=34%2C34%2C3777%2C2363&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Rosewood, the name for several endangered tree species that make beautiful furniture, being loaded in Madagascar. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/toamasina-madagascar-april-12-2014-loading-733827985">Pierre-Yves Babelon/Shutterstock</a></span></figcaption></figure><p>Every year humans buy and sell hundreds of millions of wild animals and plants around the world. Much of this commerce is legal, but <a href="https://theconversation.com/where-is-all-the-ivory-from-using-forensic-science-and-elephant-dna-to-stop-poachers-43443">illegal trade and over-harvesting</a> have driven many species toward extinction.</p>
<p>One common response is to adopt <a href="https://theconversation.com/explainer-what-is-cites-and-why-should-we-care-65510">bans on trading</a> in threatened or endangered species. But research shows that this approach can <a href="http://dx.doi.org/10.1038/447529a">backfire</a>. Restricting high-value species can actually <a href="https://doi.org/10.1177/194008291200500302">trigger market booms</a>.</p>
<p>I study <a href="https://scholar.google.com/citations?user=P-E002UAAAAJ&hl=en&oi=ao">environmental globalization</a> and have spent nearly 10 years analyzing trade between Madagascar and China in rosewood, or hong mu in Mandarin. Chinese people use this term to describe <a href="http://www.chinatimber.org/news/64202.html">29 species</a> of very expensive hardwoods, <a href="https://theconversation.com/global-timber-trafficking-harms-forests-and-costs-billions-of-dollars-heres-how-to-curb-it-93115">many of which are endangered</a>. </p>
<p>In my research, I’ve seen the complexities of endangered species protection. On both the supply and demand sides, restricting international trade in high-value endangered species like rosewood can sometimes cause more harm than good. </p>
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<a href="https://images.theconversation.com/files/308734/original/file-20200107-123389-19d3f0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/308734/original/file-20200107-123389-19d3f0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/308734/original/file-20200107-123389-19d3f0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/308734/original/file-20200107-123389-19d3f0p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/308734/original/file-20200107-123389-19d3f0p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/308734/original/file-20200107-123389-19d3f0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/308734/original/file-20200107-123389-19d3f0p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/308734/original/file-20200107-123389-19d3f0p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Rosewood furniture and boards fill a southern China warehouse.</span>
<span class="attribution"><span class="source">George Zhu</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<h2>Treaties trigger speculation</h2>
<p>The main global treaty governing wildlife trade is the <a href="https://www.cites.org/">Convention on International Trade in Endangered Species of Wild Fauna and Flora</a>, or CITES. CITES members meet every two to three years to adjust trade restrictions on target species. In today’s speculative markets, CITES rulings can set off damaging market dynamics. </p>
<p>Since the early 2000s, markets for certain high-value endangered species – <a href="https://doi.org/10.1016/j.biocon.2014.09.020">elephants</a>, <a href="https://doi.org/10.1016/j.biocon.2016.08.001">rhinoceros</a>, <a href="https://www.environment.gov.za/sites/default/files/docs/publications/bankingextinction_endangeredspecices_speculation.pdf">tigers</a> and <a href="https://doi.org/10.1080/24694452.2019.1613955">rosewood</a> – have fundamentally transformed. Consumer purchases no longer trigger market booms. Speculative investments do. </p>
<p>Investors are buying endangered species not to use and own, but in anticipation that their prices will rise. This shift explains why international trade restrictions often do not protect endangered species.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/308387/original/file-20200102-11929-zwutec.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/308387/original/file-20200102-11929-zwutec.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/308387/original/file-20200102-11929-zwutec.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=373&fit=crop&dpr=1 600w, https://images.theconversation.com/files/308387/original/file-20200102-11929-zwutec.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=373&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/308387/original/file-20200102-11929-zwutec.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=373&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/308387/original/file-20200102-11929-zwutec.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=469&fit=crop&dpr=1 754w, https://images.theconversation.com/files/308387/original/file-20200102-11929-zwutec.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=469&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/308387/original/file-20200102-11929-zwutec.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=469&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Rosewood has become the most trafficked group of endangered species in the world, according to data covering 2005-2014.</span>
<span class="attribution"><span class="source">Annah Zhu, data from UN Office on Drugs and Crime</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Rosewood speculation has surpassed big animals</h2>
<p>China is a <a href="https://www.nytimes.com/2018/11/19/science/wildlife-trafficking-china.html">big player</a> in the illegal wildlife trade and the primary destination for many trafficked species. The Chinese economy is also subject to rampant speculation that manifests in erratic housing and stock market prices. Rosewood and many other endangered species, it turns out, are subject to these speculative dynamics as well.</p>
<p>Rosewood has been used for centuries to make traditional Chinese furniture that dates back to the Ming and Qing dynasties. Now, due to a revitalization of this style, the wood has become the world’s <a href="https://www.unodc.org/documents/data-and-analysis/wildlife/World_Wildlife_Crime_Report_2016_final.pdf">most trafficked group of wildlife</a>, surpassing ivory, rhino horn and big cats combined. Some species of rosewood are valued at <a href="http://finance.sina.com.cn/money/collection/jjmq/20101102/14208886674.shtml">nearly their weight in gold</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/308391/original/file-20200102-11904-1wxtf17.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/308391/original/file-20200102-11904-1wxtf17.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/308391/original/file-20200102-11904-1wxtf17.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=395&fit=crop&dpr=1 600w, https://images.theconversation.com/files/308391/original/file-20200102-11904-1wxtf17.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=395&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/308391/original/file-20200102-11904-1wxtf17.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=395&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/308391/original/file-20200102-11904-1wxtf17.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=496&fit=crop&dpr=1 754w, https://images.theconversation.com/files/308391/original/file-20200102-11904-1wxtf17.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=496&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/308391/original/file-20200102-11904-1wxtf17.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=496&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Unfinished rosewood chests in a furniture manufacturing facility in Zhongshan, China.</span>
<span class="attribution"><span class="source">George Zhu</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Over the past decade, rosewood has become a type of stock exchange – “<a href="http://www.china.org.cn/business/2011-01/17/content_21756641.htm">a playground for investors</a>,” as one account described it. China Central Television has condemned rosewood market speculation as “<a href="https://wechat.kanfb.com/bussiness/3399">more ferocious than real estate</a>.” </p>
<p>Similar dynamics have been documented for ivory and rhino horn. As with rosewood, the speculative value of these resources comes more from their rarity than their cultural appeal.</p>
<h2>The ‘Madagascar phenomenon’</h2>
<p>In this speculative climate, international trade restrictions under CITES heighten demand, as I learned while interviewing timber importers in Shanghai in 2014, 2015 and 2017.</p>
<p>The CITES meeting in 2013, which imposed new restrictions on rosewood trade, provoked “<a href="http://collection.sina.com.cn/jjhm/2016-10-11/doc-ifxwrhpm2900127.shtml">strong earthquakes</a>” in the rosewood market. As soon as news of the regulations reached Chinese timber markets, prices of the targeted species climbed to record highs. The same thing happened after CITES meetings in <a href="http://blog.sina.com.cn/s/blog_ae5e121c0102wsmm.html">2016</a> and <a href="http://www.guwan.com/hangqing/100034811.html">2019</a>, where trade in additional timber species were restricted. </p>
<p>Indeed, CITES is considered a “<a href="http://collection.sina.com.cn/jjhm/hmsc/2016-12-29/doc-ifxzczfc6563439.shtml">fuse</a>” that ignites new rounds of market speculation. The effect has been so pronounced for rosewood from Madagascar that Chinese timber importers call it “<a href="http://collection.sina.com.cn/jjhm/2016-10-11/doc-ifxwrhpm2900127.shtml">the Madagascar phenomenon</a>.” </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"687678268829515776"}"></div></p>
<h2>President Xi Jinping’s fight</h2>
<p>After taking office in 2013, President Xi Jinping embarked on a massive <a href="https://www.scmp.com/topics/xi-jinpings-anti-corruption-campaign">anti-corruption campaign</a> that hit many Chinese luxury markets hard. New laws unrelated to the environment have done more to reduce traffic in rosewood and other valuable endangered species than most international trade restrictions. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/308136/original/file-20191220-11951-6vg7cx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/308136/original/file-20191220-11951-6vg7cx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/308136/original/file-20191220-11951-6vg7cx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/308136/original/file-20191220-11951-6vg7cx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/308136/original/file-20191220-11951-6vg7cx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/308136/original/file-20191220-11951-6vg7cx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/308136/original/file-20191220-11951-6vg7cx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Chinese President Xi Jinping initiated an anti-corruption campaign that has unexpectedly reduced demand for certain endangered species such as rosewood.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/China-Macao/12a9125d7bc54bb89a117ef631b5d463/5/0">AP</a></span>
</figcaption>
</figure>
<p>The Chinese timber importers I interviewed estimated that Xi’s anti-corruption campaign had reduced rosewood sales by 30%-50%. Businesses stopped courting politicians with luxury rosewood furnishings. Sales of <a href="http://english.sina.com/p/2013/0901/624432.html">shark fin soup </a> and other delicacies derived from threatened species also sharply declined.</p>
<p>This effect was largely accidental. Endangered species just happen to be a primary tool for bribing politicians in China. </p>
<p>China has also pursued more direct measures, such as a successful <a href="https://www.washingtonpost.com/news/worldviews/wp/2015/12/08/lifeline-for-elephants-ivory-price-halves-in-china-after-xi-pledges-ban/">domestic ban on ivory trade</a> adopted in 2017. Unlike international trade bans, which the Chinese are less likely to follow at home, domestic bans send signals to investors that prices will drop in the future. </p>
<p>Such domestic bans have weakened the speculative potential of ivory, rhino horn and tiger parts. Investors offload stocks in anticipation of the prohibitions, potentially leading to “<a href="https://doi.org/10.1016/j.ecolecon.2017.05.017">fire sales</a>.” Prices then plummet, and investors don’t want to speculate. </p>
<h2>Rosewood plantations</h2>
<p>In response to exorbitant rosewood prices and dwindling supplies, the Chinese government and private investors are pursuing another strategy: establishing rosewood plantations across southern China. </p>
<p>I visited three of these plantations in Guangdong Province in 2018, including a 2,000 hectare government-run <a href="https://baike.baidu.com/item/%E8%82%87%E5%BA%86%E5%8C%97%E5%B2%AD%E5%B1%B1%E6%A3%AE%E6%9E%97%E5%85%AC%E5%9B%AD">demonstration plantation</a>. They were replete with endangered hardwoods from across Asia, as well as “understory economies” of goods raised below the trees, such as premium teas, herbs for Chinese medicine and free-range chickens, which provide financial support for growing the trees. These plantations are being promoted as an ecological and economical way to sustain the species. </p>
<p>Reporters in China assert that the country is “<a href="http://finance.sina.com/bg/investment/sinacn/20120924/2048602308.html">at the forefront of the world</a>” in establishing endangered hardwood plantations. Few other countries promote this type of forestry on a comparable scale. International conservation organizations typically focus instead on restricting logging and trade.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/308394/original/file-20200102-11924-4ub28b.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/308394/original/file-20200102-11924-4ub28b.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/308394/original/file-20200102-11924-4ub28b.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=451&fit=crop&dpr=1 600w, https://images.theconversation.com/files/308394/original/file-20200102-11924-4ub28b.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=451&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/308394/original/file-20200102-11924-4ub28b.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=451&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/308394/original/file-20200102-11924-4ub28b.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=567&fit=crop&dpr=1 754w, https://images.theconversation.com/files/308394/original/file-20200102-11924-4ub28b.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=567&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/308394/original/file-20200102-11924-4ub28b.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=567&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A government-run demonstration plantation nurtures some of the trees collectively known as rosewood.</span>
<span class="attribution"><span class="source">Annah Zhu</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>However, I believe that people living in places where rosewood still grows are <a href="https://doi.org/10.1016/j.geoforum.2017.08.010">more likely to be receptive</a> to investments in sustainable forestry than to trade restrictions and funding for <a href="https://time.com/4288287/china-thailand-rosewood-environment-logging/">anti-logging conservation militias</a>. Focusing only on restricting the logging and trade of rosewood often <a href="https://doi.org/10.1016/j.polgeo.2017.06.014">empowers a small group of elite exporters</a> who have illicit access to overseas demand, without benefiting the wider community. The <a href="https://doi.org/10.1016/j.biocon.2019.01.013">same dynamic</a> plays out in the economies of other endangered resources, including ivory, rhino horn and tiger parts. </p>
<p>Efforts to reduce the trade in endangered species will be more effective if they come from within China, rather than being internationally imposed. For rosewood in particular, I see creative policies that encourage reforestation and sustainable forestry as a more promising path forward than international trade restrictions backed by militarized conservation campaigns. </p>
<p>[ <em>Get the best of The Conversation, every weekend.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklybest">Sign up for our weekly newsletter</a>. ]</p><img src="https://counter.theconversation.com/content/124869/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Annah Lake Zhu does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
For decades nations have worked to curb international sales of endangered plants and animals. But in countries like China, with high demand and speculative investors, that strategy fuels bidding wars.
Annah Lake Zhu, Postdoctoral Researcher, University of California, Berkeley
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/128479
2020-01-08T10:32:33Z
2020-01-08T10:32:33Z
Birkin bags, Swiss ski resorts and Louis Vuitton: how super-rich Delhi housewives strive to be part of a global elite
<figure><img src="https://images.theconversation.com/files/308684/original/file-20200106-123368-1x59y70.jpg?ixlib=rb-1.1.0&rect=14%2C63%2C2481%2C1766&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The glacier express train in Switzerland: on the bucket list for rich Indians. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/zermattswitzerland05282019-photo-glacier-express-train-switzerland-1465008047">marlys grisson/Shutterstock</a></span></figcaption></figure><p>When Akash Ambani, son of Mukesh Ambani, one of the <a href="https://www.indiatoday.in/business/story/mukesh-ambani-is-13th-richest-in-world-forbes-1471001-2019-03-05">richest men in the world</a>, decided to host a pre-wedding event in February 2019, he chose <a href="https://www.hindustantimes.com/travel/inside-akash-ambani-shloka-mehta-s-luxurious-pre-wedding-celebration-destination-st-moritz-see-pics-videos/story-C8GIQKudbBq1XeufQvj5VK.html">St Moritz</a> in Switzerland. While St Moritz is a popular ski destination for the international jetset, it was not a prominent holiday destination for Indian elites. </p>
<p>But through my research with super-rich housewives of Delhi, I’ve discovered that since the Ambani winter gala, Swiss ski destinations such as St Moritz have become a part of the lexicon of the Indian elite. India’s cricket captain Virat Kohli and his wife, the actress Anushka Sharma, as well as other Bollywood celebrities, recently <a href="https://sports.ndtv.com/cricket/virat-kohli-anushka-sharma-celebrate-new-year-with-kareena-kapoor-saif-ali-khan-varun-dhawan-2157057">celebrated new year</a> in Switzerland.</p>
<p>By choosing St Moritz, the Ambani family seemed to signal that they are at ease with the way of life of the international super-rich, and are comfortable with both an Indian way of being elite as well as a global one. This ambition, desire and anxiety to be a part of the global elite was clear among the subjects of my <a href="https://www.routledge.com/Money-Culture-Class-Elite-Women-as-Modern-Subjects/Bhandari/p/book/9780815358886">new book</a>, the super-rich women in Delhi who call themselves housewives.</p>
<p>There are <a href="https://www.oxfam.org/en/india-extreme-inequality-numbers">119 billionaires in India</a> and the top 1% of people took 73% of the wealth generated in the country in 2017. My research looks at how Indian business elites use their money and explains both how their life is structured around luxury and privilege and marred by anxieties of class, money and race. </p>
<h2>A global wedding</h2>
<p>I spent some time with a bride-to-be, Soha*, who returned from the UK aged 23 after completing a masters programme and was set to marry Akshay, a man from a renowned Delhi business family. The match had been suggested by a famous marriage broker.</p>
<p>Soha was excited about her wedding, especially because her university friends, most of them non-Indians, were going to attend and they were looking forward to what she called a “<a href="https://theconversation.com/inside-the-big-fat-indian-wedding-conservatism-competition-and-networks-70678">big fat Indian wedding</a>”. Soha had promised them a gala affair, but also warned them that she was not a typical Indian bride. </p>
<p>She saw herself as a sophisticated Indian and wanted her wedding to incorporate Indian traditions – but also appeal to a <a href="https://scroll.in/article/904652/curated-to-be-globally-indian-from-virushka-to-nickyanka-a-sociologists-view-of-celeb-weddings">global palette</a>. This meant, she told me, that the aesthetics and ambience of her wedding would not be “too loud”, by which she meant ornate decor with bright colours of red and orange. Instead, the colour scheme would be pastel to exude a sophisticated vibe. In fact, for her bridal wear too, Soha chose a <a href="https://www.wedmegood.com/blog/5-brides-who-slayed-in-a-white-lehenga-on-their-wedding-day/">golden beige outfit</a> over red, a traditional colour for Punjabi brides. </p>
<p>With soft colour palettes, an international spread of food choices, afternoon teas, Spanish dancers and music, and a white-gold wedding outfit, Soha successfully communicated the international sensibility of her taste.</p>
<h2>The Hermès Birkin bag</h2>
<p>One symbol of global eliteness that has been embraced by super-rich Indian women is the Hermès Birkin bag. The competition among them does not end at owning a Birkin. It also centres around whether the bag has been purchased from the Hermès showroom in India or from a city abroad, its colour and whether it’s made of “regular” calfskin, or an “exotic” leather such as crocodile skin. </p>
<p><div data-react-class="InstagramEmbed" data-react-props="{"url":"https://www.instagram.com/p/Bm09IcJBDZ-/?utm_source=ig_web_copy_link","accessToken":"127105130696839|b4b75090c9688d81dfd245afe6052f20"}"></div></p>
<p>The level of this competition struck me when these women discussed the “thrill” and patience involved in buying a <a href="https://www.architecturaldigest.in/content/hermes-celebrates-its-rich-heritage-through-a-fascinating-exhibition-in-delhi/">Rouge Hermès</a> Birkin. These red versions of the bag are available in limited Hermès showrooms around the world and there is a waiting list to buy one. These women assess who among them has the best fashion sense and is most “in” with international trends, based on who has the most number of Birkins, in which colour and leather, and bought from which cities of the world. Notwithstanding this sort of one-upmanship, they all agreed that Arab women are always a step ahead of them, buying not one but several Birkins, made of the most exotic leathers which are unavailable in the Indian subcontinent.</p>
<h2>Anxieties of travel</h2>
<p>For Indian super-rich families, a summer vacation abroad is a necessary signal of being part of the global elite. The super-rich women explained to me that since the middle class also travel widely nowadays, they need to develop strategies of distinction to set them apart from middle or upper middle-class Indians. </p>
<p>The first strategy is to avoid, what one super-rich woman, Reena called, “touristy” destinations such as Barcelona, Rome or Singapore. Instead, the super-rich look for more <a href="https://qz.com/india/1602059/crazy-rich-indians-enjoy-coldplay-porsche-ronaldos-yacht/">“exotic” or expensive destinations</a> such as St Moritz, St Tropez in France, or Bora Bora islands in French Polynesia. Reena explained that since these destinations are very expensive – with only five-star hotels and high-end restaurants – the Indian middle class are discouraged from visiting. Moreover, these destinations are also visited by the super-rich of other countries, so they offer a chance for the Indian super-rich to mingle with other global elites.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/308685/original/file-20200106-123385-1fsamuv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/308685/original/file-20200106-123385-1fsamuv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/308685/original/file-20200106-123385-1fsamuv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/308685/original/file-20200106-123385-1fsamuv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/308685/original/file-20200106-123385-1fsamuv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/308685/original/file-20200106-123385-1fsamuv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/308685/original/file-20200106-123385-1fsamuv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Louis Vuitton in London: Indian elites fear being mistaken for less wealthy shoppers.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-february-2018-louis-vuitton-shop-1019503132">Willy Barton/Shutterstock</a></span>
</figcaption>
</figure>
<p>A second strategy is to make sure they wear visible, high-end brands on holidays. Aarti, another super-rich housewife, recalled that a salesman at a luxury shop in London once mistook her for a middle-class Indian tourist – someone who cannot afford branded clothes and only window shops. As a result, she told me the salesperson responded halfheartedly and rudely to her queries and Aarti believed this was because she was dressed casually and not wearing clothes from any high-end brands. She thought she’d been treated in this way not only because of her race and nationality, but also because the salesman didn’t see her as a member of the global elite who buy high-end fashion products.</p>
<p>Since this incident, she makes sure that when she goes shopping anywhere in the world, she wears her Louis Vuitton or Gucci scarf, clothes from Burberry and carries her Louis Vuitton, Dior, or Chanel bag. She wants to be instantly recognised as wealthy. </p>
<p>Adorning high-end luxury products, then, is not just about conspicuous consumption but also a way to assuage anxieties about not being recognised as elite in a global context. In a way, it seems that high-end luxury consumption, for these women, is a “membership fee” to be a part of a global network of elites.</p>
<p><em>* All names have been changed to protect the anonymity of the research participants.</em></p><img src="https://counter.theconversation.com/content/128479/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Parul Bhandari does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Rich Indian women are anxious about being recognised as members of an international elite.
Parul Bhandari, Assistant Professor of Sociology, O.P. Jindal Global University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/115739
2019-05-05T19:35:36Z
2019-05-05T19:35:36Z
The profane and the sacred: why luxury firms rushed to support Notre-Dame
<p>The April 2019 fire at the <a href="https://theconversation.com/notre-dame-de-paris-from-searing-emotion-to-the-future-rebirth-of-a-world-heritage-site-115612">Notre-Dame de Paris Cathedral</a> came as an immense shock to the people of France, as well as throughout Europe and in countries across the world.</p>
<p>Even while the fire was still smoldering, a spontaneous effort to resist the blow dealt by fate quickly took hold. In three days, more than <a href="https://www.lemonde.fr/societe/article/2019/04/18/deja-850-millions-d-euros-de-dons-promis-pour-la-reconstruction-de-notre-dame_5452116_3224.html">850 million euros</a> were pledged. Some of the first were three big names of France’s luxury industry, the Pinault, Arnault, and Bettencourt families, whose Kering, LVMH and l’Oréal groups dominate the global market – the amounts pledged by each family were in the hundreds of millions of euros. The movement was also reflective of the symbolic significance of a fire that came close to reducing the edifice to ashes – an edifice which alone embodies the entire history of France and is an integral part of European heritage.</p>
<h2>Rich in controversy</h2>
<p>So why has the world of luxury been leading the drive to donate in order to rebuild Notre-Dame? Given the likely cost of the restoration work, the pledges of support are certainly welcome, but the context in France is complex, to say the least: the <a href="https://theconversation.com/why-frances-gilets-jaunes-protesters-are-so-angry-108100">“gilets jaunes” movement</a> erupted in late 2018 and has grown increasingly angry, with many of the demands centring on rising inequality and the imbalance between Paris and “forgotten” rural regions. Europe’s migrant crisis continues, as does rise in <a href="https://www.bbc.co.uk/news/resources/idt-sh/Paris_homeless">homelessness in big cities like Paris</a>. Claims that the wealthy donors were motivated more out of a hunger for positive press or a desire for tax breaks immediately surfaced. “The simplest thing would be for them to pay their taxes”, said the <a href="https://www.lemonde.fr/politique/article/2019/04/17/incendie-de-notre-dame-lancement-d-un-concours-international-d-architectes-pour-la-fleche_5451615_823448.html">senator Esther Benbassa</a>, a member of France’s Green Party.</p>
<p>Such explanations are not enough in themselves, assuming they have any basis at all – after all, two of the biggest donors, the Pinault and Arnault families, stated that they were already at the limit for charitable tax deductions and so would be <a href="http://www.leparisien.fr/culture-loisirs/franck-riester-les-dons-iront-a-notre-dame-pas-a-autre-chose-01-05-2019-8064177.php">giving the funds outright</a>.</p>
<p>But whatever the specifics, questioning why luxury firms would give such immense sums overlooks the deep historical roots of the industry.</p>
<h2>From the sacred to the profane</h2>
<p>While luxury firms may now be seen as the epitome of worldly excellence, luxury started out in the pursuit of the sacred. Since time immemorial, the most skilled artisans have invented and crafted exceptional goods out of the most valuable materials, worked on for countless hours, as priceless offerings to the Gods, whether to win them over before a battle, thank them for a victory, or to celebrate a good harvest. A recent example is the grave of a Celtic prince, unearthed in 2015 in Lavau, a town just a few hours south of Paris, which contained a <a href="https://www.livescience.com/50069-celtic-prince-tomb-uncovered.html">gold-tipped drinking vessel</a>. The immense cost of such goods is precisely why they were offered, in the literal sense of <em>sacri-fice</em> (“the act which makes holy”).</p>
<p>This explains in part why temples were covered with gold, why churches were adorned with the most beautiful artifacts. After the gods came the demigods, the kings and the aristocrats who would deny themselves nothing.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/269850/original/file-20190417-139120-awtnlx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/269850/original/file-20190417-139120-awtnlx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/269850/original/file-20190417-139120-awtnlx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/269850/original/file-20190417-139120-awtnlx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/269850/original/file-20190417-139120-awtnlx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/269850/original/file-20190417-139120-awtnlx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/269850/original/file-20190417-139120-awtnlx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">At the origins of luxury, we find the labour force mobilized for religious reasons.</span>
<span class="attribution"><span class="source">Jorisvo/Shutterstock</span></span>
</figcaption>
</figure>
<p>The French Revolution of 1789 marked the end of privileges of birth, but not the end of the right to the beautiful and the sublime by virtue of wealth – in other words, by virtue of one’s wealth and good fortune. Restorations and republics came and went, but luxury remained. The communist revolutions in Russia and China began by ostensibly eliminating inequalities, but they too eventually gave free rein to the process of liberalisation that re-created the inequalities they’d once banished.</p>
<p>Luxury feeds on inequality. Whatever the source of their wealth, legitimate or otherwise, rising social classes throughout the world have always sought to have their new-found wealth and status recognised. Hence the <a href="https://altagamma.it/media/source/WORLDWIDE%20LUXURY%20MARKET%20MONITOR_BAIN.pdf">extraordinary growth of the luxury industry today</a>.</p>
<p>While the sustained growth of the industry is the result of the emergence of successive waves of <em>nouveaux riches</em>, first from Japan, then from Russia and finally China today, to view luxury consumption merely as the expression of an interest in appearance and ostentation would be a mistake. While this may be true at the initial stage of their wealth, customers can come to see the cultural and sacred dimension of the ornate goods they purchase at such great expense. The paradox of luxury is that as well as raising the standing of buyers in the eyes of others, it elevates the customer. In the best of cases, he or she wears an incomparable item that captures the spirituality and living culture of a country, its history and its art, and rises above the mere material.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/269848/original/file-20190417-139110-1qrlsks.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/269848/original/file-20190417-139110-1qrlsks.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/269848/original/file-20190417-139110-1qrlsks.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/269848/original/file-20190417-139110-1qrlsks.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/269848/original/file-20190417-139110-1qrlsks.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/269848/original/file-20190417-139110-1qrlsks.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/269848/original/file-20190417-139110-1qrlsks.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Louis Vuitton Foundation in Paris was inaugurated in 2014.</span>
<span class="attribution"><span class="source">Oliverouge 3/Shutterstock</span></span>
</figcaption>
</figure>
<p>Luxury sees space, history and blood as the very foundations of its standing and quest for supremacy. Hence the importance of “made in” used by <a href="https://theconversation.com/hermes-behind-the-scenes-of-the-french-luxury-gem-80551">brands such as Hermès</a>, the cult of origins and of the legacy of designers such as <a href="http://theconversation.com/what-karl-lagerfeld-brought-to-the-fashion-of-today-and-tomorrow-112329">Karl Lagerfeld</a>. Longevity is precisely what lies at the heart of why luxury goods firms refuse to see themselves as makers of ordinary objects.</p>
<p>In its heart, the luxury industry itself aspires to be sacred. After all, luxury also has its own rituals, clerics and ranks. Its brands speak of their “icons” and build cathedrals in capitals throughout the world dedicated to the splendour of the brand and to developing the community of believers. It is thus easy to understand the affinity between the industry and Notre Dame, the legacy of a history that goes well beyond France, the embodiment of the sacred for eight centuries.</p>
<h2>The families, not the brands</h2>
<p>In the past, the patrician families of Florence and Venice sought to promote the arts, a role later performed by monarchs. Then the state became the custodian of culture by developing museums, art schools and academies. But in an era of fiscal limitations, nation-states cannot do everything, and with the means and the know-how, the luxury industry has become a key patron of the arts. Hence the proliferation of collaborations with contemporary artists, the sponsorship of spectacular exhibitions dedicated to fashion designers such as <a href="https://www.vam.ac.uk/exhibitions/dior-designer-of-dreams">Christian Dior</a>, and the creation of museums such as the Louis Vuitton Foundation. What this does is to change our perception of luxury items as products derived from art. It thus stands to reason that the major luxury brands should immediately run to the rescue of Notre-Dame, an immensely important symbol of history and culture at the heart of Paris.</p>
<p>It is worth emphasising that the donations made by the Pinault, Arnault and Bettencourt families were made through their foundations rather than their their well-known brands. After all, the symbolic impact would have been quite different. To showcase a brand would be to do business, to reintroduce the merchants in the Temple at a time when the edifice itself was fragile and when any notion of short-term interest needed to be set aside. Above all, that would have been to depart from the sacred.</p><img src="https://counter.theconversation.com/content/115739/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jean-Noël Kapferer ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>
The biggest names in France’s luxury industry have given millions of euros to help rebuild Notre Dame. Questioning why they would do so overlooks the deep historical and religious roots of the industry.
Jean-Noël Kapferer, Professeur Senior, INSEEC Grande École
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/113553
2019-04-29T01:46:22Z
2019-04-29T01:46:22Z
It’s the luxuries that give it away. To fight corruption, follow the goods
<figure><img src="https://images.theconversation.com/files/270358/original/file-20190423-15210-1x0m2f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">For individuals engaged in corruption, the luxury sector is an attractive vessel to launder illicit funds.</span> <span class="attribution"><span class="source">Shutterstock.com</span></span></figcaption></figure><p>There is disquiet about the <a href="https://www.latimes.com/fashion/la-ig-notre-dame-fire-repair-restore-paris-fashion-brands-20190416-story.html">French owners</a> of the luxury brands Luis Vuitton, Christian Dior, Givenchy and Gucci giving a whopping €300 million to the rebuilding of Notre Dame Cathedral. Such largesse, critics say, could be better used for humanitarian causes. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-are-we-so-moved-by-the-plight-of-the-notre-dame-115555">Why are we so moved by the plight of the Notre Dame?</a>
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<p>This is more than a rhetorical point. It is almost certain that some of the profits made by all sellers of luxury goods come from criminals who have siphoned off government funds. Rather than being spent on health, education and other social welfare programs, the money has been spent on luxury goods. </p>
<p>Luxury goods are used to facilitate corrupt transactions and launder dirty money. Using <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/kykl.12188">data for 32 high-income and emerging economies</a>, we have found a strong correlation between luxury item expenditure and societal corruption.</p>
<p>Our findings confirm previous research, such as <a href="https://journals.sagepub.com/doi/abs/10.1177/0973801014531135">luxury car sales being substantially higher</a> in OECD countries with higher perceived corruption levels. </p>
<p>We are not saying that luxury brands are doing anything criminal. Nonetheless they could make a great gift to the world by pitching in to build the institutional architecture needed to combat corruption.</p>
<h2>Corrupt figures</h2>
<p>Anecdotal evidence of the connection between corruption and luxury items is easy to find. </p>
<p>Right now, Malaysia’s former prime minister, Najib Razak, is on trial over the looting of billions of dollars from government accounts. Police raided his multiple homes and collected 280 boxes of luxury items estimated to be <a href="https://qz.com/1315601/malaysian-police-seized-luxury-goods-worth-some-273-million-from-the-homes-of-former-prime-minister-najib-razak-and-his-wife-rosmah-mansor/">worth more than US$270 million</a>. This included 12,000 pieces of jewellery worth up to US$220 million, 423 watches worth US$19.3 million and 567 handbags worth more than US$10 million.</p>
<p>Last year, Brazilian customs officials found luxury watches worth an estimated <a href="https://www.bbc.com/news/world-africa-45546655">US$15 million in the bags</a> of the entourage of Teodorin Obiang, vice-president of Equatorial Guinea. The son of Teodoro Obiang Nguema Mbasogo, president since 1979, he was convicted of corruption <a href="https://www.hrw.org/news/2017/10/29/equatorial-guinea-presidents-son-convicted-laundering-millions">by a French court</a> in 2017. </p>
<p>Swiss authorities seized his fleet of luxury cars, including a Koenigsegg One:1 (one of just seven built, worth US$2 million) in 2016. The same year Dutch authorities seized his <a href="https://yachtharbour.com/news/76m-ebony-shine-seized-by-dutch-authorities-1319">US$120 million super-yacht</a> at the request of a Swiss court. </p>
<p>Equatorial Guinea, meanwhile, ranks 141 out of 189 nations on the UN’s <a href="http://hdr.undp.org/en/countries/profiles/GNQ">Human Development Index</a>.</p>
<p>The list goes on and on. When the Viktor Yanukovych was deposed as Ukrainian president in 2014, for example, his <a href="https://www.bbc.com/news/world-europe-26307745">palatial home</a> revealed wealth far in excess of his official income. So too did the home of his attorney-general, Viktor Pshonka, which included a nest of <a href="https://www.gizmodo.com.au/2014/02/tour-the-opulent-evacuated-mcmansions-of-ukraines-fallen-leaders/">Fabergé eggs</a>.</p>
<h2>Calculating the correlation</h2>
<p>Our analysis covers all countries for which annual data on luxury spending per capita are obtainable, from 2004 to 2014. The sample includes the major emerging economies (Brazil, China, India, Russia and South Africa) and major high-income countries (US, Japan and Germany). Collectively the 32 sample countries represent about 85% of the world’s GDP.</p>
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<a href="https://images.theconversation.com/files/270859/original/file-20190425-121245-ktj2dp.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/270859/original/file-20190425-121245-ktj2dp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/270859/original/file-20190425-121245-ktj2dp.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=885&fit=crop&dpr=1 600w, https://images.theconversation.com/files/270859/original/file-20190425-121245-ktj2dp.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=885&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/270859/original/file-20190425-121245-ktj2dp.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=885&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/270859/original/file-20190425-121245-ktj2dp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1112&fit=crop&dpr=1 754w, https://images.theconversation.com/files/270859/original/file-20190425-121245-ktj2dp.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1112&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/270859/original/file-20190425-121245-ktj2dp.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1112&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>We have cross-referenced these data with two corruption measures: the World Bank’s Control of Corruption Index, and Transparency International’s <a href="https://www.transparency.org/research/cpi/overview">Corruption Perceptions Index</a>. </p>
<p>Our calculations make allowances for variables such as relative wealth and spending by tourists. Greater spending on luxury goods is to be expected in richer nations and in international travel hubs such as Singapore, Hong Kong and Dubai. We have also controlled for factors such as inequality, with demand for luxury goods increasing as the income gap widens. </p>
<p>Our results suggest stronger anti-corruption controls reduce luxury spending. More press freedom and information transparency help too, presumably because this increases the chance of corruption being exposed.</p>
<h2>Conspicous consumption</h2>
<p>In countries where paying bribes to government officials to secure government contracts or operating licences is common practice, luxury goods are often used instead of direct monetary payments. Such “gifts” do not leave a transaction trail so are less likely to result in legal action against corrupt officials. </p>
<p>Another explanation for the link between corruption and luxury spending is that corrupt individuals send signals about their “services” by demonstrating a lavish lifestyle beyond their official source of income. It is a form of <a href="https://en.wikipedia.org/wiki/The_Theory_of_the_Leisure_Class">conspicuous consumption</a> – buying something not for its intrinsic utility but as a signal to others.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-we-are-willing-to-pay-for-mega-expensive-things-70326">Why we are willing to pay for mega expensive things</a>
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</p>
<hr>
<p>Transparency International notes in its 2017 report <a href="https://www.transparency.org/whatwedo/publication/tainted_treasures_money_laundering_risks_in_luxury_markets">Tainted Treasures: Money Laundering Risks in Luxury Markets</a>: “For individuals engaged in corruption schemes, the luxury sector is significantly attractive as a vehicle to launder illicit funds. Luxury goods, super yachts and stately homes located at upmarket addresses can also bestow credibility on the corrupt, providing a sheen of legitimacy to people who benefit from stolen wealth.”</p>
<h2>Cleaning up the luxury market</h2>
<p>We agree with Transparency International that laws, policies and practices to combat this connection are underdeveloped.</p>
<p>Anti-corruption policies need to include monitoring luxury markets and developing regulations that increase transparency in luxury gifting. </p>
<p>The merits of doing so are demonstrated by anti-corruption efforts in China.
In 2012 the Chinese government initiated plans to track corruption by looking at luxury goods ownership. As a result, consumption of luxury goods <a href="https://www.euromonitor.com/luxury-goods-in-china/report">fell</a> from US$93.48 billion in 2011 to US$73.1 billion in 2014.</p>
<p>There needs to be established global policies. The countries that host the largest luxury markets – China, France, Germany, Italy, Japan, the US and Britain – must also do more to ensure sellers of luxury goods follow due diligence and reporting requirements.</p>
<p>In Britain, for example, Transparency International reports that auction houses (such as Sotheby’s and Christie’s) filed just 15 of the total 381,882 suspicious transaction reports made to law enforcement authorities in one year. </p>
<p>In Antwerp, the largest diamond exchange in the world, suspicious transaction reports by precious stones dealers were <a href="http://www.fatf-gafi.org/media/fatf/documents/reports/mer4/Mutual-Evaluation-Report-Belgium-2015.pdf">totally lacking</a>. </p>
<p>Luxury goods dealers have too little motivation to ensure those buying their trinkets and toys are not using money gained corruptly.</p>
<p>If the contribution of France’s luxury empires to rebuild one of Christendom’s most famous churches sparks a conversation about the problems of the luxury goods market and what can be done to to fight corruption, that will be a positive. </p>
<p>More than one French icon is on the line.</p><img src="https://counter.theconversation.com/content/113553/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Data from 32 high-income and emerging economies show a strong correlation between luxury item expenditure and societal corruption.
Reza Tajaddini, Senior Lecturer in Finance, Swinburne University of Technology
Hassan F. Gholipour, Senior Lecturer in Economics, Swinburne University of Technology
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/114388
2019-04-04T20:15:10Z
2019-04-04T20:15:10Z
‘Made in Van Phuc’: How place identity can help artisans survive in a globalised world
<figure><img src="https://images.theconversation.com/files/266879/original/file-20190401-177171-1ints7z.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3264%2C1817&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An artisan is working with a silk weaving loom in her workshop</span> <span class="attribution"><span class="license">Author provided</span></span></figcaption></figure><p>The identity of luxury goods firms is often anchored in the creativity and skill of the artisans behind the objects. A case in point is Hermès, where workers spend years learning to work with precious materials such as <a href="https://theconversation.com/hermes-behind-the-scenes-of-the-frenchluxury-gem-80551">leather and silk</a>. This approach allows such companies to distinguish themselves and compete in a marketplace flooded with goods that cost less but don’t have an identity strongly connected to craft, tradition and place.</p>
<p>This approach isn’t the unique domain of just a few firms, of course – it can be extended to those that are currently less known and in more peripheral places. An eloquent example is the Vietnamese town of Van Phuc, in the Ha Dong (Hanoi) district, which has specialised in silk weaving since the 13th century. Establishing a strong place identity – how meanings attached to a locality can affect locals’ sense of self – was essential for their craftsmen to stand out from the crowd.</p>
<h2>Ancient traditions, “new” competitors</h2>
<p>Located approximately 10km from the centre of Hanoi, Van Phuc is considered the <a href="http://horizon.documentation.ird.fr/exl-doc/pleins_textes/divers12-06/010055064.pdf">oldest and best-known silk-producing village in Vietnam</a>. During our research team’s initial fieldwork, we found that in boutiques where Van Phuc silk products were sold, there were similar goods made in China. Based on the products’ variety and price, distinguishing between the two was relatively easy, and because of the craft methods used by Van Phuc’s artisans, their offerings are often much more expensive than similar ones from China.</p>
<p>In a <a href="https://www.youtube.com/watch?v=JeWtFQNl9Wg&t=102s">report</a> on Van Phuc made by the national television broadcaster of Vietnam, a storekeeper in the village stated:</p>
<blockquote>
<p>“I sold a lot of Chinese silk products, compared to Van Phuc ones, because they are cheaper and there are a wide range of products.”</p>
</blockquote>
<p>An experienced silk weaving artisan added:</p>
<blockquote>
<p>“Van Phuc’s silk patterns are not as diverse as Chinese ones because our products are made manually. Therefore our patterns are still very ‘naive’. There is something unmistakable.”</p>
</blockquote>
<p>According to a local shop owner and artisan, the price of natural silk is around 1,700,000 dong per kilogram (approximately 73 US dollars) while the price of a kilogram of polyester yarn is about 50,000 to 60,000 dong per kilogram (2 to 3 dollars).</p>
<p>Van Phuc’s products are not only made of natural silk, but they also have traditional patterns created during a sophisticated weaving process. By comparison, foreign-made goods have printed patterns and made by polyester or polyester silk fabrics. The savoir-faire of each creation has been improved for one generation to another, guaranteeing high quality.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/266682/original/file-20190331-71006-1u9keu2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/266682/original/file-20190331-71006-1u9keu2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/266682/original/file-20190331-71006-1u9keu2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=290&fit=crop&dpr=1 600w, https://images.theconversation.com/files/266682/original/file-20190331-71006-1u9keu2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=290&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/266682/original/file-20190331-71006-1u9keu2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=290&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/266682/original/file-20190331-71006-1u9keu2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=364&fit=crop&dpr=1 754w, https://images.theconversation.com/files/266682/original/file-20190331-71006-1u9keu2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=364&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/266682/original/file-20190331-71006-1u9keu2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=364&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Several Van Phuc’s silk products with traditional patterns in a retail shop.</span>
<span class="attribution"><span class="source">The authors</span></span>
</figcaption>
</figure>
<p>Still, appreciating handmade craft items and being able to pay for them is not easy for all consumers. Despite its strong place identity and the quality and creativity of its products, Van Phuc is at risk of losing ground.</p>
<p>In the village, silk fabrics and other silk products are directly sold at home-based workshops of craftsmen or retail stores, among which some are owned by artisans. Nevertheless, due to urbanisation, more and more craftsmen do not have enough space for silk weaving tools to produce their own products. The traditional silk workshops are at risk of disappearing, to be replaced by imported products from China sold at retail outlets.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/266683/original/file-20190331-177181-17tyovx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/266683/original/file-20190331-177181-17tyovx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/266683/original/file-20190331-177181-17tyovx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=313&fit=crop&dpr=1 600w, https://images.theconversation.com/files/266683/original/file-20190331-177181-17tyovx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=313&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/266683/original/file-20190331-177181-17tyovx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=313&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/266683/original/file-20190331-177181-17tyovx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=393&fit=crop&dpr=1 754w, https://images.theconversation.com/files/266683/original/file-20190331-177181-17tyovx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=393&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/266683/original/file-20190331-177181-17tyovx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=393&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Numerous retail shops in Van Phuc.</span>
<span class="attribution"><span class="source">The authors</span></span>
</figcaption>
</figure>
<p>For the moment, Van Phuc silk products still have a stable customer base. They are often bought by <a href="http://ven.vn/van-phucs-silk-targets-world-market-24231.html">foreign tourists</a> who seek out unique Vietnamese products, or by Vietnamese who prefer to use high-quality domestic goods. Residents of Vietnam often go to Van Phuc workshops directly and choose the products they like instead of buying at eye-catching retail outlets in the village.</p>
<h2>Place and identity</h2>
<p>The story of craft products threatened by mass-produced goods is not a new one, and can appear everywhere. How to arrive at a long-term solution is the real question. In the case of Hermès, its identity is tightly linked to a place – it is not just “Hermès”, but <a href="https://theconversation.com/hermes-behind-the-scenes-of-the-french-luxury-gem-80551">“Hermès Paris”.</a> Here, the associated “memories, ideas, feelings, attitudes, values, preferences, meanings, and conceptions of behaviour and experience” play a <a href="https://www.sciencedirect.com/science/article/pii/S0272494483800218">huge role</a>. Indeed, the feeling of belonging to Paris, and French elegance in general, is a significant part of what attract clients to the goods.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/267158/original/file-20190402-177181-179cow3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/267158/original/file-20190402-177181-179cow3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/267158/original/file-20190402-177181-179cow3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=424&fit=crop&dpr=1 600w, https://images.theconversation.com/files/267158/original/file-20190402-177181-179cow3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=424&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/267158/original/file-20190402-177181-179cow3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=424&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/267158/original/file-20190402-177181-179cow3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=533&fit=crop&dpr=1 754w, https://images.theconversation.com/files/267158/original/file-20190402-177181-179cow3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=533&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/267158/original/file-20190402-177181-179cow3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=533&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Silk cloth with ‘Vạn Phúc silk’ woven into its edge.</span>
<span class="attribution"><a class="source" href="https://nld.com.vn/ban-doc/ve-dau-ao-lua-ha-dong-20130324014420373.htm">Thế Anh</a></span>
</figcaption>
</figure>
<p>While <a href="https://journals.sagepub.com/doi/abs/10.1177/1470593112467268">place branding cannot be carried out for every geographic locality</a> – there’s only one Paris in the world, after all – Van Phuc’s artisans have recently perceived the importance of place identity, and on their products now feature the words “Van Phuc silk” or “Ha Dong silk”. This allows local artisans to distinguish themselves, affirm the high quality of Van Phuc’s traditional silk products, and gain or regain the confidence of Vietnamese consumers. This initial step also allows producers to “shine a light” on local products among numerous foreign ones, in particular after one of the biggest silk brands in Vietnam was found to be selling <a href="https://tuoitrenews.vn/news/business/20171213/vietnams-khaisilk-found-selling-products-with-zero-silk/43126.html">“silk” products with no silk at all</a>.</p>
<p>In the long term, if Van Phuc’s reputation can be expanded to a wider geographic scale – not just domestically but also internationally – their products will surely have a place (identity) in the market.</p><img src="https://counter.theconversation.com/content/114388/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>
Many major luxury goods firms have long made place a key part of their identity, and a visit to a traditional silk-weaving centre in Vietnam shows that the approach could work for small firms too.
Hung M. Nguyen, Postdoctoral researcher (ORCILAB project, ANR-17-CE10-0013-01), Grenoble École de Management (GEM)
Marcos Barros, Associate professor, Grenoble École de Management (GEM)
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/112329
2019-03-04T19:13:10Z
2019-03-04T19:13:10Z
What Karl Lagerfeld brought to the fashion of today and tomorrow
<figure><img src="https://images.theconversation.com/files/260420/original/file-20190222-195864-180wau4.jpg?ixlib=rb-1.1.0&rect=4%2C8%2C1484%2C990&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Karl Lagerfeld in 2012.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/73856455@N06/6823678358">Flickr / Modasplendida</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Through his solemn gestures, impenetrable gaze and distinctive and elegant dress code, Karl Lagerfeld left his mark on fashion as well as popular culture. He was such an enduring presence that we believed him to be immortal – but he is no more, having left us in February 2019 at age 85. What a paradox for a man whose calling in life led him to work around the clock in the fleeting world that we call fashion. The luxury and fashion sectors are in shock, as a true giant has left us. Here, we examine his legacy.</p>
<h2>Refining the most French of brands</h2>
<p>Karl Lagerfeld was proud of his German heritage and kept his accent. Yet at the same time, he was a man of the world in all senses – curious, cultured, fluent in four languages and open to outside influences and trends. And this despite one of the key principles of luxury being the label “made in”.</p>
<p>While the nationality of “fast fashion” brands is of little importance (it matters little that Zara is Spanish or H&M Swedish), for a luxury brand, cultural roots are absolutely fundamental. Chanel is the epitome of France. And yet, the man who saved Chanel back in 1983 was German. During the Renaissance, Leonardo da Vinci placed himself at the service of the King of France, and when French fashion was at its peak, Karl restored Chanel’s image as an iconic French brand.</p>
<p>Many comparisons have been made between the lives and careers of Karl Lagerfeld and Yves Saint Laurent. They were great rivals, in both their public and private lives. While Lagerfeld never invented a style in the way that Christian Dior, Cristobal Balenciaga, Yves Saint Laurent and Coco Chanel herself did, the Chanel brand never enjoyed as much success while Coco was alive as it did during Lagerfeld’s reign.</p>
<h2>Shaking up the status quo</h2>
<p>Karl Lagerfeld’s great talent was to bring new life, dynamism and inspiration to major fashion houses terrified of betraying the heritage of their creators. Had it not been for Lagerfeld, where would Chanel be today? As its chief designer, it was he who brought Chanel renewed success, without which it may well have fallen into obscurity and would certainly never have become the symbol of fashion and chic <em>à la française</em> that it is today.</p>
<p>How did he achieve this miraculous feat? Here lies the second lesson: by upsetting and shaking up the status quo. In effect, if too much respect is given to major fashion houses and their heritage, they become mummified, entombed, immobilised. It was this man, irreverent yet respectful, who was willing to – as he himself put it – “turn Coco Chanel in her grave"… in order to keep her name alive and highly relevant.</p>
<p>Lagerfeld inspired other gifted designers to dust the cobwebs from their institutions and transform them into the watchwords of class and elegance, such as John Galliano at Dior or, more recently, Michele Alessandro at Gucci.</p>
<h2>Expanding Chanel beyond fashion</h2>
<p>Another major legacy of Karl Lagerfeld is that he understood that today’s luxury brands need to leave their mark well beyond their specialist areas (in Chanel’s case, clothing, accessories, perfume and jewellery). To achieve this, they must maintain close links with those in cultural, artistic, musical and photographic circles – photography in particular having an increasing cultural impact on social network sites, from WeChat to Instagram – and with the crowds clamouring for beauty in a world that is strikingly less beautiful.</p>
<p>Lagerfeld was one of the first designers to produce branded content for millennials hungry for surprise and creativity, expanding Chanel beyond the designs that he had conceived in his own exacting way. He broke down the barriers separating fashion and luxury, using a degree of theatrical flair in creating his own public persona. This led some to <a href="https://www.lemonde.fr/series-d-ete-2018-long-format/article/2018/08/20/karl-lagerfeld-et-la-sensation-warhol_5344268_5325928.html">liken him to Andy Warhol</a>, whom he met in 1970.</p>
<p>For all that, the Kaiser never referred to himself as an "artist”. This wasn’t out of modesty, but rather pragmatism. At a time when many designers sought to be seen as artists to increase their sense of importance, raise their profile and escape the tag of “designer”, Lagerfeld would usually respond – in the rather scathing way for which he was renowned – that they were there to sell handbags and that their contracts would be torn up if sales failed to satisfy the shareholders. For him, things were very clear: luxury is first and foremost a business.</p>
<h2>Long-term vision</h2>
<p>This leads us to his final legacy: Karl Lagerfeld left the matter of the best governance to adopt for a luxury fashion house completely open. Under his stewardship, Chanel earned more money than it ever did before. Thus an independent, “family owned” fashion house, which is not accountable to the stock exchange and therefore has time on its side, has emerged as the best path forward when it comes to high-end luxury. This path was much more profitable in every sense than those of large consolidated groups. Karl Lagerfeld often said that he didn’t do marketing, that he had never attended a business meeting, that he let his creative instincts speak for him. Of course, those words need to be taken with a pinch of salt, as they were made to maintain the myth of luxury. But they also provide a lesson in leadership that the Wertheimer brothers, the owners of Chanel, understood.</p><img src="https://counter.theconversation.com/content/112329/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jean-Noël Kapferer ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>
Karl Lagerfeld (1933-2019) was a presence in the fashion world for so long that he seemed immortal. With his passing, we look at his impact and future legacy.
Jean-Noël Kapferer, Professeur Senior, INSEEC Grande École
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/104438
2018-10-08T10:46:29Z
2018-10-08T10:46:29Z
Versace acquisition: Michael Kors needed to boost its credibility to make it in the luxury market
<figure><img src="https://images.theconversation.com/files/239339/original/file-20181004-52695-ovabvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Lux.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/new-york-nyusa-sept-29-2018-1191799294?src=llgUmirH1aKravUm6g3vhA-1-25">Andrew Cline/Shutterstock</a></span></figcaption></figure><p>By <a href="http://uk.businessinsider.com/michael-kors-buys-versace-brand-history-2018-9">acquiring</a> the prestigious Italian fashion house, Versace, American group Michael Kors enters the luxury world, despite a lack of experience in the sector. It’s a risky move, but one that makes financial sense. </p>
<p>When we think of disruption, we tend to think that old companies disappear and new ones take over. But this is not what is happening in the luxury sector, where the opposite seems to be happening. And the Michael Kors Versace deal is one such example. This purchase is highly symbolic – independent luxury companies are increasingly struggling to make it on their own, while big groups such as Kering and LVMH are continuing to grow and get stronger. Michael Kors seems to have taken note. </p>
<p>By <a href="http://uk.businessinsider.com/michael-kors-buys-versace-brand-history-2018-9">buying Versace for US$2.1 billion</a>, Michael Kors is spending a significant amount of money precisely to grow the group – now <a href="https://fashionunited.uk/news/business/capri-holdings-an-american-in-paris-or-the-birth-of-the-first-u-s-luxury-fashion-conglomerate/2018092839199">renamed Capri Holdings</a> – around its own brand. In 2017, it also acquired Jimmy Choo, the prestigious British shoemaker, for €1 billion. </p>
<p>By acquiring the well-respected Milan-based brand, Michael Kors is not only pursuing its strategy to grow, but also a diversification geared towards luxury, a sector that is growing faster than companies selling to general consumers – where Kors is positioned today. Another objective of this diversification is to boost production of accessories and leather goods, items in which Versace has a great deal of expertise. With consolidated <a href="https://www.ft.com/content/c3582522-c0b0-11e8-95b1-d36dfef1b89a">revenues of US$6 billion</a> Michael Kors’ new group of brands will become number one in the US – bigger than Hermès or Ralph Lauren. </p>
<h2>Challenges for Versace alone</h2>
<p>From the point of view of Versace’s management, the reasons to sell are many. First, the stakes of digital transformation and globalisation are getting higher – which involves higher costs – and significant investments are needed to stay in touch with customers, before, during and after the sale of goods.</p>
<p>Above all, innovating products – one of the longstanding strong points of luxury brands – is no longer enough. Nowadays, brands must be innovative communicators as well, showing experiences that revolve around the product, communicating across numerous channels, in post-purchase experience, in loyalty schemes, and more. </p>
<p>Another reason to sell is that the house needed to continue to refresh a brand that has seen many low points since the <a href="https://www.nytimes.com/1997/07/16/us/versace-fashion-innovator-slain-in-miami-beach.html">murder of Gianni Versace in 1997</a>.</p>
<p>And finally, since Versace is a family business, Donatella stays on as artistic director, but ultimately the long-term survival of the brand will have been the most important factor for Versace’s management, who will remain involved. And let’s also not forget the substantial amount of money the family stood to make from the sale.</p>
<h2>Why sell to Capri Holdings?</h2>
<p>Kering, the French owner of Yves Saint Laurent, and Gucci among others, was also <a href="https://www.businessoffashion.com/articles/news-analysis/game-on-michael-kors-acquires-versace-for-2-billion">reportedly interested</a> in buying Versace. Therefore it seems likely that Michael Kors will have put more money on the table. According to some commentators, Michael Kors <a href="https://www.lopinion.fr/edition/wsj/michael-kors-is-overpaying-for-versace-glamour-163297">paid too much</a> for the purchase in order to grow. </p>
<p>It’s also probable that Versace didn’t want to sell <a href="https://qz.com/970211/with-the-acquisition-of-christian-dior-almost-all-of-luxury-fashion-including-gucci-and-hermes-is-now-owned-by-two-french-families-the-arnaults-and-pinaults/">to a French group</a>. The political tension between Italy and France that sparked up this summer over migrants is also quite significant. In deals like this, personal affinities <a href="http://www.iai.it/it/pubblicazioni/france-italy-reawakening-historical-rivalries">often play a big part</a> and this could have played a part between the Versace family and Capri Holdings.</p>
<h2>Strategic implications for Versace</h2>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/239341/original/file-20181004-52663-18vnoxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/239341/original/file-20181004-52663-18vnoxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/239341/original/file-20181004-52663-18vnoxr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/239341/original/file-20181004-52663-18vnoxr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/239341/original/file-20181004-52663-18vnoxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/239341/original/file-20181004-52663-18vnoxr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/239341/original/file-20181004-52663-18vnoxr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Donatella on photoshoot.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/may-2016-donatella-versace-atelier-milan-674712478">Andrea Delbo/Shutterstock</a></span>
</figcaption>
</figure>
<p>Donatella Versace, heading creation, her Brother Santo, in charge of administration, and their teams, have done an exceptional job at the reins of the company. Despite numerous struggles, they managed to keep their business going, and to resize and then reposition their brand after Gianni’s death. </p>
<p>Their latest initiatives have been profitable, such as the relaunching of parallel brands such as Versace Collection – less expensive with a younger target group – or bringing back a classic Versace style for a collection created in 2017 to honour Gianni. Today the name Versace is still very valuable, especially in rapidly developing economies such as China.</p>
<p>The future of Versace however is not necessarily that bright. Capri Holdings group doesn’t have a lot of experience in managing luxury brands. Currently, the group manufactures many products in developing countries (mostly in China) at a time when consumers, especially European ones, have lost their taste for brands that sell for high prices. But the company keeps their production costs down by manufacturing in countries where labour and goods are cheaper. In a takeover, <a href="https://wwd.com/fashion-news/designer-luxury/how-michael-kors-will-grow-versace-1202841591/">the risk</a> for the Versace brand to be diluted is real. For Michael Kors’ group and its management, the next challenge will be to build know how in the luxury sector. </p>
<p>The saying goes that fashion is an eternal new beginning. However, this is not what we see in the evolution of the fashion sector. More and more big groups are taking over and fewer young and independent houses are making a splash. This is the number one lesson of the acquisition of Versace by Michael Kors.</p><img src="https://counter.theconversation.com/content/104438/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stéphane J. G. Girod does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
The age of the independent fashion house is over, the luxury market is now about the big conglomerates.
Stéphane J. G. Girod, Professor of Strategy & Organizational Design, International Institute for Management Development (IMD)
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/101333
2018-08-09T13:53:36Z
2018-08-09T13:53:36Z
Why Elon Musk should take Tesla private
<p>Elon Musk <a href="https://twitter.com/elonmusk/status/1026872652290379776">has announced</a> that he is thinking of taking Tesla private, eight years after the automaker’s initial public offering. The news immediately created a buzz in financial markets and Tesla’s <a href="https://www.bloomberg.com/graphics/2018-teslas-crazy-day/">share price soared</a>. </p>
<p>Musk’s reasoning, <a href="https://www.tesla.com/blog/taking-tesla-private?redirect=no">outlined in an email to Tesla staff</a>, is that he wants to escape the “wild swings” in stock prices that result from Wall Street speculators. Going private would allow the company to focus on its long-term goals. There’s a big challenge here of <a href="https://www.ft.com/content/e0dfec74-9b21-11e8-9702-5946bae86e6d">finding a funder</a>, but if Musk manages it, taking Tesla private would also help the company boost its brand.</p>
<p>Going private would also offer Musk and his team much more control over the company’s future vision and daily operations. It will also allow Tesla to control the financial information that gets released to the public and so reduce public scrutiny at times when it is making losses. In doing so, Tesla will follow a number of luxury brands that are still privately owned including Chanel and Rolex. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/elon-musks-claim-that-tesla-wont-need-rescuing-is-for-the-birds-heres-why-100990">Elon Musk's claim that Tesla won't need rescuing is for the birds – here's why</a>
</strong>
</em>
</p>
<hr>
<h2>Wrong turn</h2>
<p>Since its launch, Tesla has positioned itself as a luxury car brand but this has run into trouble lately. The focus on innovative electric vehicles and self-driving technology put it squarely in the luxury bracket, as most successful luxury brands are known for being unique and innovative. And the pricetag on Tesla’s early models matched this: the Model X was priced above £70,000 and Model S priced above £65,000. </p>
<p>But then Tesla took a wrong turn. It made a strategic move that is hurting the brand’s value substantially. The new Model 3 is priced in the £30,000 range, which is where most premium cars compete and the economics of the premium market are completely different to the economics of the luxury car market. </p>
<p>Any luxury goods market thrives on <a href="https://doi.org/10.1016/j.jbusres.2017.09.025">scarcity</a>. Ferrari, for example, keeps its production limited to around 7,000 to 10,000 cars per year. When Tesla had production delays and people <a href="http://uk.businessinsider.com/tesla-model-s-and-model-x-delivery-delays-because-of-demand-2018-2">had to wait for the Model X and S</a>, customers were supportive because that’s the nature of luxury. Product scarcity increases the value of luxury and that is exactly what happened in the case of Tesla initially. </p>
<p>The premium car market, where the cheaper Model 3 sits, is not driven by this thinking, however. Buyers expect an abundance of availability. They do not want to wait for a premium product and get agitated when it is not available. This has been reflected in <a href="https://uk.reuters.com/article/uk-tesla-stock/tesla-shares-fall-on-worries-about-model-3-production-rate-idUKKCN1H9130">Tesla’s stock price this year</a>.</p>
<p>From the production side, the margins are low in the premium market, too, so profits depend on high volumes. Hence, when Musk recently boasted on Twitter that Tesla had produced 7,000 cars in seven days, Ford CEO, Steven Armstrong poked fun at it by commenting that Ford produces 7,000 cars every four hours. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1013522801834254337"}"></div></p>
<p>The Model 3 order book shows reservations in the range of half a million cars, with more than 1,800 <a href="https://money.cnn.com/2017/08/02/technology/business/tesla-earnings/index.html?iid=hp-stack-dom">being added everyday</a>. So, at present production capacity, Tesla will struggle to satisfy consumer demand any time soon. This is potentially highly damaging for a premium car brand and, with lots of competitors in this space, consumers are liable to switch. Not only does this hurt the bottom line, it fuels those that are betting on Tesla to fail (and the large number of short-sellers of Tesla stock has been a particular annoyance for Musk, as he made clear in his <a href="https://www.tesla.com/blog/taking-tesla-private?redirect=no">recent staff memo</a>).</p>
<p>Plagued with these short-term financial issues and the negative effect they are having on the Tesla brand, moving private may offer some respite. It will give greater control over the production issues and even offer the chance to play up the virtues of scarcity of production. </p>
<p>Going private will also help reestablish Tesla as a luxury brand. This kind of radical is both expected and accepted of luxury brand leaders (take Burberry, for example, <a href="https://www.theguardian.com/fashion/2018/jul/20/why-does-burberry-destroy-its-products-q-and-a">which recently destroyed £28m of its clothes and cosmetics</a> to sustain its brand position). </p>
<p>Taking Tesla private not only elevates the brand in the public consciousness, it also creates a mystique around both the CEO and the brand. Plus, by removing the company finances from the public realm, Musk can better pursue his long-term vision of delivering innovative and futuristic vehicles, rather than meeting the quarterly growth targets that financial markets demand.</p><img src="https://counter.theconversation.com/content/101333/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paurav Shukla does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Going private would help Tesla reestablish its luxury status.
Paurav Shukla, Professor of Marketing, University of Essex
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/80551
2017-07-11T19:40:01Z
2017-07-11T19:40:01Z
Hermès: behind the scenes of the French luxury gem
<figure><img src="https://images.theconversation.com/files/176869/original/file-20170705-16513-vtxm9a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Hermès building in Tokyo, designed by Renzo Piano (Ginza 5, Chuo-ku, Tokyo).</span> <span class="attribution"><a class="source" href="https://visualhunt.com/f/photo/2233042034/65b75c7ceb/">Naoya Fujii/Visual Hunt</a></span></figcaption></figure><p>Hermès is a quintessential French luxury brand. But behind the beauty, refinement and quality of its products, the company is also financially strong. What are the cornerstones of its success?</p>
<p>The group published outstanding figures for the 2016 financial year, recording sales of more than 5 billion euros (up 7.5%). While the two leading companies in the luxury market (LVMH and Richemont, according to a Deloitte study, <a href="https://www2.deloitte.com/content/dam/Deloitte/global/Documents/consumer-industrial-products/gx-cip-global-powers-luxury-2017.pdf">“Global Powers of Luxury Goods 2017”</a>) far surpass Hermès in turnover (37.6 billion euros for LVMH at the end of December 2016, and 10.6 billion euros for the Swiss company at the end of March 2017), no luxury industry group beats Hermès’ performance. In 2016, the company’s net profit represented 21.1% of sales, far above the industry average of 8.95% and ahead of both LVMH (10.5%) and the Richemont Group (11.36%). </p>
<p>In our opinion, Hermès’ four major strengths are: a real identity, the creativity and skills of its artisans, innovation, and the fact that it remains an independent family company. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/174728/original/file-20170620-30872-14kgdf7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/174728/original/file-20170620-30872-14kgdf7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/174728/original/file-20170620-30872-14kgdf7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/174728/original/file-20170620-30872-14kgdf7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/174728/original/file-20170620-30872-14kgdf7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/174728/original/file-20170620-30872-14kgdf7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/174728/original/file-20170620-30872-14kgdf7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/174728/original/file-20170620-30872-14kgdf7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Maison Hermès, Dosan Park, Seoul.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/eager/5067080349/in/photolist-9S3Afc-pqeHaS-9S6uEo-8HL7mc-FXpKS-8HPdS9-8HPevS-8HPffJ-8HPerJ-K5mSW-8HL74k-8HPfw3-8HPez9-8HL7eR-8HPeb9-8HL77B-8HL7Dk-8szJWp-8HPeCL-8HPeRd-Uo5fKq-8HPeio-8HPe15-8HPenw-8HL716-8CTQ9B-8HL6QR-8HL7si-8HL6c4-2DCKhm-8HPeEU-8HPeeQ-8HL7zP-8HPfoG-8HL69z-8HPfGS-rFmhax-HoBGKF-AqmXB4-ULrjc2-FPZVoP-ULrjk8-Uo5fEW-TFGdAo-ULrjtz-tEXRFK-8HPeUu-8HL61R-FXpJY-s8Dr5c">Forgemind ArchiMedia/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>A real identity</h2>
<p>Founded by Thierry Hermès in Paris, in 1837, the company established its identity through its products. After starting out with horse-riding and carriage accessories, today the group operates in a wide range of sectors (detailed in its <a href="http://finance.hermes.com/var/finances/storage/original/application/dfd39887394237400c6fbfbcec6245a5.pdf">2016 reference document</a>, including clothes and accessories (21% of sales), silk and textiles (10%), perfumes (5%), watches (3%) and other products (4%), including jewelry, lifestyle products and home wares. Accounting for 50% of sales, leather goods and saddlery still make up the backbone of the company. </p>
<p>The group is deeply attached to its French identity: it is not simply “Hermès”, but “Hermès Paris”. The majority of its products are still manufactured in France, with 4,300 craftspeople and 61.4% of its workforce located within the country. </p>
<p>Maintaining a large part of their manufacturing in France is a key element of Hermès strategy. This contrasts with a number of companies in the luxury sector that have looked overseas in a search for short-term profits, a phenomenon decried by Dana Thomas in her book, <a href="http://www.nytimes.com/2007/08/21/books/21kaku.html"><em>Deluxe : How Luxury Lost Its Lustre</em></a>.</p>
<p>The exceptional creativity and skills handed down from generation to generation constitute the second plank of the Hermès strategy. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/174730/original/file-20170620-30863-2q2gcb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/174730/original/file-20170620-30863-2q2gcb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/174730/original/file-20170620-30863-2q2gcb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=368&fit=crop&dpr=1 600w, https://images.theconversation.com/files/174730/original/file-20170620-30863-2q2gcb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=368&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/174730/original/file-20170620-30863-2q2gcb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=368&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/174730/original/file-20170620-30863-2q2gcb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=462&fit=crop&dpr=1 754w, https://images.theconversation.com/files/174730/original/file-20170620-30863-2q2gcb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=462&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/174730/original/file-20170620-30863-2q2gcb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=462&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Hermès ad, 1923.</span>
<span class="attribution"><span class="source">Wikipedia</span></span>
</figcaption>
</figure>
<h2>Creativity and skills of its artisans</h2>
<p>In 2007, Jean Louis Dumas, the group’s iconic chairman from 1978 to 2006, told <a href="http://www.vanityfair.com/news/2007/09/hermes200709">Vanity Fair</a>: “We don’t have a policy of image; we have a policy of product.”</p>
<p>Hermès would not be Hermès without timeless, iconic models such as <a href="http://usa.hermes.com/kelly/us">“The Kelly bag”</a> (created in 1930, renamed in 1956) and the much larger <a href="http://usa.hermes.com/birkin/us">“The Birkin Bag”</a> (1984). </p>
<p>It takes two years for an artisan to learn how to work leather and six years when it comes to precious leathers. One of Hermès’ core principles is that each bag be made by the same artisan, from start to finish. As Axel Dumas always says, “The rule of one bag, one artisan is part of our DNA”. </p>
<p>At Hermès, the idea of responsibility is very important – the artisan must master all of the different stages of fabrication. Quality begins with the choice of materials. To secure its supply of the highest-quality raw materials, Hermès purchased three Australian crocodile farms at the end of 2012. </p>
<p>The company’s third strength lies in its combination of creativity, invention and innovation. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/174731/original/file-20170620-30812-1vcs9ve.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/174731/original/file-20170620-30812-1vcs9ve.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/174731/original/file-20170620-30812-1vcs9ve.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=412&fit=crop&dpr=1 600w, https://images.theconversation.com/files/174731/original/file-20170620-30812-1vcs9ve.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=412&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/174731/original/file-20170620-30812-1vcs9ve.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=412&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/174731/original/file-20170620-30812-1vcs9ve.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=518&fit=crop&dpr=1 754w, https://images.theconversation.com/files/174731/original/file-20170620-30812-1vcs9ve.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=518&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/174731/original/file-20170620-30812-1vcs9ve.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=518&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Hermès store on Avenue George V, in Paris’ 8th arrondissement.</span>
<span class="attribution"><span class="source">Moonik/Wikipedia</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<h2>Sense of innovation</h2>
<p>To give just a few examples, Hermès launched <a href="http://stylebubble.co.uk/style_bubble/2013/11/petit-h-at-hermes-dont-throw-anything-away.html">Petit h</a> in 2010, under the direction of Pascale Mussard, whose motto is <a href="https://www.youtube.com/watch?v=NZVBC2XrAPw">“Don’t throw anything away, we will always find a use for it”</a>. The majority of these pieces are on display in a 1,500-square-meter room at <a href="https://senatus.net/article/hermes-opens-new-store-17-rue-de-sevres/">17, rue de Sèvres</a>, which opened in 2010. Formerly the pool of the hotel Lutetia, the space was listed as a historical monument in 2005. This contrasts with the boutique at 24, rue du Faubourg Saint-Honoré, which has a modern style, vast spaces, and light-colored wood. This makes for a very different, but unmistakably Parisian, atmosphere. The space also includes a florist, tea shop and bookstore.</p>
<p>Petit h shows another side of Hermès luxury, demonstrating how much the group strives to make high-quality products available while meeting clients’ expectations in terms of environmental responsibility and sustainable development. More recently, Hermès worked with Apple to create handcrafted leather bands for the <a href="https://www.imore.com/apple-watch-herm-s-launches-tomorrow-heres-everything-you-need-know">Hermès Apple Watch</a>, released October 2015. While this might seem a minor sales’ contributor (unfortunately, sales figures aren’t available), it created extensive media buzz. </p>
<p>Finally, the last plank of the Hermès strategy is its shareholding and management structures. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/174736/original/file-20170620-12807-v2qchj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/174736/original/file-20170620-12807-v2qchj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/174736/original/file-20170620-12807-v2qchj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/174736/original/file-20170620-12807-v2qchj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/174736/original/file-20170620-12807-v2qchj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/174736/original/file-20170620-12807-v2qchj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/174736/original/file-20170620-12807-v2qchj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/174736/original/file-20170620-12807-v2qchj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The group’s executive board. From left to right : Eric du Halgouët, Guillaume de Seynes, Olivier Fournier, Pierre-Alexis Dumas, Charlotte David, Wilfried Guerrand, Axel Dumas, Florian Craen.</span>
<span class="attribution"><a class="source" href="http://finance.hermes.com/Gouvernement-d-entreprise/Direction-du-groupe/Le-Comite-executif">Hermès</a></span>
</figcaption>
</figure>
<h2>An independent family company</h2>
<p>The group has been run almost exclusively by the family since its creation in 1837. At present, Axel Dumas (the sixth generation) is the sole manager. Company control has also essentially remained within the family since Hermès entered the Paris stock market in 1993. The only exception occurred between 2010 and 2014, at the time of the so-called “Hermès affair”, which was been laid out in <a href="http://www.thefashionlaw.com/home/hermes-vs-lvmh-a-timeline-of-the-drama">“Hermès vs LVMH : A timeline of the drama”</a>, in <em>The Fashion Law</em>.</p>
<p>By keeping control and capital within the family, Hermès has been able to maintain its independence and its unique long-term model. Between 2007 and 2016 the company’s turnover increased by a factor of 3.2 and their operating income quadrupled. As of July 10, 2017, the share price was valued at 442.40 euros. Hermès market capitalization was above 46.2 billion euros, which is 24 times its <a href="http://www.investopedia.com/terms/e/ebitda.asp">EBITDA</a>, or nearly nine times its turnover. </p>
<p>A perfect combination of tradition and modernity, Hermès has been able to evolve while keeping an eye on the upcoming challenges. It has also taken measures towards the vertical integration of its supply chain, controlling its retail network, continuing a policy of no licensing and creating greater geographical and product diversification, to avoid overdependence on saddlery and leather goods. </p>
<p>Yet the company must ensure it does not overly rely on diversification, offering thousands of different products. Some lines could be discontinued, such as watch-making, which is constantly losing market share. Lastly, Hermès needs to embrace the digital revolution and offer an attractive online experience as a complement to their real-world boutiques. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/174737/original/file-20170620-12940-1pz4br6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/174737/original/file-20170620-12940-1pz4br6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/174737/original/file-20170620-12940-1pz4br6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/174737/original/file-20170620-12940-1pz4br6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/174737/original/file-20170620-12940-1pz4br6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/174737/original/file-20170620-12940-1pz4br6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/174737/original/file-20170620-12940-1pz4br6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/174737/original/file-20170620-12940-1pz4br6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Rooftop sign.</span>
<span class="attribution"><a class="source" href="https://visualhunt.com/f/photo/3307500306/be8cc794a5/">twiga269/Visual Hunt</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>Some 180 years after its birth, Hermès still excites the imagination of potential clients with unparalleled products, while generating profits and cash flows. At end 2016, its cash and cash equivalents amounted to 2.3 billion euros, with hardly any debt. </p>
<p>But what will the next step be? As a publically listed company, Hermès is required to be more forthcoming than it might prefer. Given its impressive war chest, it’s possible that the family – which bought back almost 70% of the company’s capital – may one day delist it to prevent a hostile takeover. Given the stock’s current valuation it would be an extremely costly move, but isn’t out of the question for a family that has always remained true to its roots and vision.</p><img src="https://counter.theconversation.com/content/80551/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Isabelle Chaboud ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>
Case analysis of Hermès and its four strengths: a real identity, the creativity and skills of its artisans, innovation, and the fact that it remains an independent family company.
Isabelle Chaboud, Professeur associé d’analyse financière, d’audit et de risk management, Grenoble École de Management (GEM)
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/70606
2016-12-20T09:27:24Z
2016-12-20T09:27:24Z
Dodgy watches and rotgut vodka could ruin your Yuletide
<p>At this time of year, people are rushing out to buy gifts and stock up on both luxuries and essentials. This splurge of spending means inevitably that wallets and purses will be stretched – so shoppers will be looking out for a bargain. But when is a bargain actually something more sinister? The UK Intellectual Property Office has recently warned of the <a href="https://www.gov.uk/government/news/dont-have-a-fake-christmas">growing problem of counterfeit goods</a>. </p>
<p>Counterfeit products cost the global economy <a href="https://share.america.gov/whats-wrong-with-buying-counterfeit-goods">an estimated US$250 billion (£201 billion) each year</a>, with the European Union losing an <a href="http://www.beveragedaily.com/Markets/EU-economy-loses-35bn-a-year-due-to-counterfeiting">estimated €35 billion a year due to counterfeiting</a>. Customs in Hong Kong, from where many fake products enter the UK, recently confiscated <a href="http://www.scmp.com/news/hong-kong/law-crime/article/2055242/customs-seizes-hk10-million-fake-products-popular-hong-kong">£1m worth of fake goods</a> – and there have been many seizures around Britain, with <a href="http://www.bbc.co.uk/news/uk-england-35925119">Manchester, Birmingham and Newham in East London</a> emerging as hotspots.</p>
<p>The most common items are knock-off luxury handbags, watches, clothing, fashion accessories from designer labels, perfumes, tobacco, alcohol and electronics. In 2010, an investigation by luxury brand Louis Vuitton led to raids and 30,171 anti-counterfeiting procedures worldwide, resulting in the seizure of thousands of counterfeit products and the <a href="http://www.bbc.co.uk/news/uk-england-36782724">break up of criminal networks</a>. Yet complaints about the knock-off goods on social networking sites have <a href="http://www.mirror.co.uk/news/uk-news/facebook-fakes-crackdown-online-crooks-7190581">risen by 400% since 2010</a>. Recently, the voucher and deals site Groupon found itself at the centre of controversy when consumer watchdogs found that gold and sapphire jewellery and branded Ralph Lauren clothing sold by the site <a href="http://www.mirror.co.uk/money/groupon-centre-fake-goods-scandal-9268413">were in fact fakes</a>. </p>
<p>Law enforcement has been <a href="http://www.chroniclelive.co.uk/news/north-east-news/newcastle-shopkeeper-rapped-selling-fake-11656235">diligent</a> leading to <a href="http://www.gloucestershirelive.co.uk/sellers-warned-not-to-sell-fakes-as-gloucester-man-convicted-of-selling-counterfeit-goods/story-29940824-detail/story.html">convictions</a> but, as with other illegal products, it is hard to locate and cut supply chains. Earlier this year, luxury brands won a significant victory in their battle with the billion-dollar online counterfeit industry when the Court of Appeal in London ruled that brands could ask internet service providers to <a href="https://www.ft.com/content/76b67ba8-330c-11e6-bda0-04585c31b153">block access to websites selling counterfeit goods</a>.</p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/4gZPiQ99UPI?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
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<h2>Why consumers buy fakes</h2>
<p>There’s been a significant amount of research into <a href="http://www.sciencedirect.com/science/article/pii/S0148296308001550">why people buy counterfeit goods</a> and the <a href="http://www.sciencedirect.com/science/article/pii/S1053535709000407">types of people who may be more willing to do so</a>. Essentially, counterfeit products provide a status symbol at a fraction of the cost of luxury brands. High-end fakes, especially designer watches, are now so good that <a href="http://time.com/money/4207990/how-to-tell-rolex-fake">even dealers can be fooled</a>. Some consumers feel that genuine brands charge unfair prices, and may find comfort in thinking that they “<a href="http://www.open.edu/openlearn/society/the-law/criminology/why-people-buy-counterfeit-brands">beat the system</a>” by buying a convincing fake. However, if the fake is discovered then the buyer’s reputation is at risk of being dragged through the mud in front of the very same people with whom they were attempting to raise their status. </p>
<h2>Why avoid counterfeit products?</h2>
<p>Aside from moral reasons around depriving rights holders of the fruits of their labours, and the desire not to give money to the purported <a href="https://www.unodc.org/toc/en/crimes/counterfeit-goods.html">criminal enterprises supported by counterfeiting</a>, there are some practical reasons not to risk buying a knock-off.</p>
<p>Electronics are the most convincing illustration. Counterfeit Apple products such as power adapters and chargers have flooded online retailers like Amazon. Whereas an original Macbook Pro power adaptor costs £80, replicas can be found for only £27, and £19 iPhone-branded charging cables are sold for only £6. The cheaper product brings risks with it, however, as investigators found that <a href="http://www.dailymail.co.uk/sciencetech/article-3993926/Is-charger-safe-Experts-say-99-cent-fake-Apple-products-KILL-s-spot-them.html">99% of counterfeit chargers run the risk of electric shocks</a> and short-circuits that could cause fires and could <a href="http://www.bbc.co.uk/news/technology-38167551">injure or even kill</a>.</p>
<p><a href="http://www.manchestereveningnews.co.uk/news/greater-manchester-news/businessman-who-imported-dangerous-counterfeit-12316895">Counterfeit toys</a> often are incorrectly labelled, of poor quality craftsmanship, and represent <a href="http://www.cambridge-news.co.uk/news/cambridge-news/raid-cambridgeshire-home-sees-massive-12315271">potential choking hazards to young children</a>. Among the most counterfeited items are popular gadgets such as self-balancing scooters or “hoverboards” – and these have been regularly found to <a href="https://www.theguardian.com/technology/2015/dec/03/hoverboards-explosion-risk-product-recalls-trading-standards">overheat and explode</a>. </p>
<p>Another danger area is counterfeit cigarettes and alcohol. Cigarettes have been found to contain <a href="http://www.itv.com/news/central/story/2014-08-26/warnings-over-dangers-of-counterfeit-cigarettes">arsenic, mould, dead flies and even rat droppings</a>, while batches of counterfeit vodka have caused <a href="http://www.dailymail.co.uk/news/article-2697876/Deadly-fake-spirits-flooding-Britains-licences-Laced-bleach-nail-polish-anti-freeze.html">illness and even deaths</a> from the use of ethylene glycol (antifreeze) which attacks the kidneys and heart, methanol that can result in blindness, and isopropyl alcohol that can even in small quantities cause drinkers to fall into a coma. Russian authorities estimate deaths from counterfeit vodka at <a href="https://www.interpol.int/Media/Files/Crime-areas/Trafficking-in-Illicit-Goods/Against-Organized-Crime-INTERPOL-Trafficking-and-Counterfeiting-Casebook">45,000 in the early 2000s, falling to around 12,000 in 2010</a>. </p>
<p>Cosmetics sold online have been rumbled as fakes after laboratory tests and some have been associated with potential side-effects including skin irritation, swelling, rashes, burns and even <a href="http://www.itv.com/news/tyne-tees/2016-12-07/reports-of-counterfeit-cosmetics-being-sold-in-durham">long-term health problems</a>. </p>
<h2>More than meets the eye</h2>
<p>While some shoppers will willingly buy a fake, others are unwittingly scammed when their full-price products turn out to be counterfeit. Even the money we shop with can be counterfeit – <a href="http://www.dailystar.co.uk/news/latest-news/567898/fake-fiver-5-note-counterfeit-scam-christmas">fake £5</a> and <a href="http://www.gazettelive.co.uk/news/teesside-news/scales-justice-woman-court-using-12330612">£20 notes</a> are in circulation – while other scammers find ways to dupe unsuspecting users into revealing their private <a href="https://www.getsafeonline.org/blog/watch-out-for-banking-scammers/">online banking details</a>. </p>
<p>Even the documents and means we use to identify ourselves and prove that we are not fake are themselves faked: investigators recently raided a fake US embassy in Accra, Ghana, complete with US flags, photos of the president and multilingual “consular officials” that had been <a href="https://www.ft.com/content/2046ffde-bacc-11e6-8b45-b8b81dd5d080">issuing visas, travel permits, and fake identification for an unbelievable ten years</a>.</p>
<h2>How to spot a fake</h2>
<p>For luxury goods such as handbags, the recognisable logos and monograms are so well replicated that the surest way to identify a fake is in the <a href="http://www.independent.co.uk/life-style/fashion/designer-handbag-fake-real-louis-vuitton-chanel-hermes-the-realreal-a7469411.html">craftsmanship and the materials</a>. Botched logos, font mismatches or misspellings are dead giveaways. But, a good fake can be hard even for the manufacturing company to distinguish it from the real thing – it can require forensic techniques to determine technical details such as the number of stitches per inch in a seam (often a trade secret) or <a href="http://www.forbes.com/sites/deborahljacobs/2013/01/01/how-to-spot-a-fake-designer-handbag/">date markers and serial numbers</a> to determine the genuine article.</p>
<p>It’s safe to surmise a Rolex on sale for £50 is a fake. But a Rolex resold for £1,000, complete with papers and box, is a different matter. Documentation such as certificate and warranty with serial numbers, and <a href="http://www.straitstimes.com/lifestyle/fake-or-genuine-how-to-spot-a-real-luxury-watch">purchasing only from authorised dealers</a> is the best way to avoid getting scammed. The only sure method is for a watchmaker to <a href="http://www.forbes.com/sites/marcwebertobias/2012/09/19/how-to-buy-a-fake-watch-in-turkey/">examine the watch’s internal mechanism</a> as this will be <a href="http://www.timelessluxwatches.com/reviews/real-problem-fake-watches">almost impossible for the scammers to fake</a>. In general, <a href="http://www.dailymail.co.uk/news/article-1336727/Ebay-conman-Amit-Sharma-34-weeps-hes-sent-prison.html">exercise caution when buying luxury products from online marketplaces</a> such as eBay or Amazon, rather than from trusted dealers and retailers. And always remember that if a bargain seems too good to be true, it probably is.</p><img src="https://counter.theconversation.com/content/70606/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mehzeb Chowdhury does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Counterfeit goods could be the Christmas bargains that cost you dearly.
Mehzeb Chowdhury, PhD Researcher in Forensic Science & Criminal Investigations, Durham University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/47719
2015-09-30T05:25:25Z
2015-09-30T05:25:25Z
Should we help companies tailor prices to your wage packet?
<figure><img src="https://images.theconversation.com/files/96097/original/image-20150924-17074-1ka1o6b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Discretionary pricing... for scientists and surveyors</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/hiddensciencemap/5758212889/in/photolist-9LQm5z-doh5Kc-8P7GPY-2ji1G3-6bYbcP-mPhZ8N-5ENKhW-8x5acX-cxBEdC-5JvopZ-9QVQs2-cST7bG-8xw2a2-9FUKfq-6J1Kxx-6pgRiN-mPhUuu-nMQsE-mPijAW-asJeYx-Wjj6p-7od5dN-5HYiv1-2jd9BX-vrFdZg-gRjQRy-3DHzUL-doh5nB-r2RcvU-6nTcbn-7oT3PG-kQmMKG-3ccJs2-c711TY-iL6zYV-rRomc2-5hpi8C-nAyXHC-5LX6v6-91ECST-a7H8eU-fsv8RA-94zr2p-bCANkD-aFJtNa-2Q8jcg-avBKS1-eKUs5S-6BzZFn-5ENK8u">Hidden Science Map</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>There is a <a href="http://www.pewresearch.org/fact-tank/2013/11/15/the-global-consensus-inequality-is-a-major-problem/">broad consensus</a> that income inequality (within developed countries) <a href="http://www.imf.org/external/np/fad/inequality/">has increased</a> and that <a href="http://inequalitybriefing.org/brief/reducing-the-gap-between-rich-and-poor-would-be-more-popular-than-cutting-i">governments should act</a> to reduce this. </p>
<p>However, the conventional policy remedies – such as more progressive income taxes – <a href="https://yougov.co.uk/news/2014/04/30/equality-more-important-wealth/">remain divisive</a> and politicians are seeking <a href="http://www.nytimes.com/2014/11/05/business/economy/seeking-new-tools-to-address-income-inequality.html?_r=1">alternatives</a>. One tool has been overlooked: governments can enable price-discrimination by income and effectively reduce costs for poorer households.</p>
<p>Price discrimination is a simple concept. Where individuals have a different willingness to pay, firms can benefit by finding ways to charge some consumers more than others. Companies spend <a href="http://www.forbes.com/sites/gilpress/2014/12/11/6-predictions-for-the-125-billion-big-data-analytics-market-in-2015/">vast sums</a> hiring <a href="https://theconversation.com/explainer-what-is-big-data-13780">“big data”</a> consultants to find the best way to divide consumers into segments. They can then <a href="https://theconversation.com/big-data-and-personalised-pricing-consider-yourself-gamed-25076">charge them different prices</a> through targeted discounts or coupons, store-specific pricing, or internet cookies which can gauge your preferences and ability to pay. To maximise profit, firms want to identify the most you would be willing to pay – and then charge you that price.</p>
<p>Of course, a firm typically doesn’t know exactly what you would be willing to pay for its goods or services. <a href="http://www.econlib.org/library/NPDBooks/Pigou/pgEW28.html#Part%20II,%20Chapter%2017">Second-degree price discrimination</a> is where a company presents multiple products, trying to induce the higher-value consumers to choose the pricier options. They may offer both an <a href="http://www.economist.com/blogs/gulliver/2014/05/flying-first-class">excessively-luxurious</a> product and a discount version <a href="http://www.victorianweb.org/technology/railways/p1.html">designed to be inferior</a>, or that requires clipping a coupon, queuing or <a href="http://www.economist.com/news/britain/21635047-new-earlier-discount-frenzy-grips-christmas-shoppers-long-weekend">waking up early</a>. These practices bring highly-visible waste and inefficiency.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Income support. Expanding discounting to the masses.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/laurie_pink/2972173885/in/photolist-5wDaKk-owbLG4-ow7vyx-oy9pLX-oeU3fm-oeTCTJ-owovZp-owbsHY-oeU8bJ-owbozh-oeTZci-owbCCC-oumTkY-bka852-bka7Bc-bka7gB-bka7Ri-bka78M-owmFR9-bka87z-bka86K-owmJoU-bka7TP-oy9jJ2-7kER44-bka8oX-9Rm9ga-bka8j6-b3PhWv-ixj2HW-9dgKk6-fK8tS2-9dgKfK-9djRyu-9djRCW-oeXAC3-9dgKjR-9dgKfx-bjUdEJ-9yduyM-6fNEBM-7my4E2-7nHRKm-qc2SzH-pUAu8P-qbYwjL-qbRF7D-pfgXfe-pUtQhS-pfgYfa">Laurie Pink</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Then you can get <a href="http://www.econlib.org/library/NPDBooks/Pigou/pgEW28.html#Part%20II,%20Chapter%2017">third-degree price discrimination</a> which occurs where a firm charges different prices for the same products to observably different groups. They may offer special discounts to <a href="http://www.productsandservices.bt.com/products/studentspage">students</a> or <a href="http://www.theguardian.com/money/2013/feb/15/special-offers-for-over-60s">pensioners</a>, who tend to put lower valuations on products and services.</p>
<h2>The ability to pay</h2>
<p>The <a href="http://www.amazon.co.uk/Microeconomics-Behavior-Robert-H-Frank/dp/0070166749">conventional textbook</a> wisdom is that income is among the strongest determinants of willingness to pay. <a href="http://www.researchgate.net/profile/Aviv_Nevo/publication/4898718_Measuring_Market_Power_in_the_Ready-to-Eat_Cereal_Industry/links/09e415124dd54b09b3000000.pdf">Empirical work</a> typically finds that price sensitivity decreases as income rises. </p>
<p>If firms knew everyone’s income they would offer higher prices to the rich than to the poor. They would do this to profit, not to play Robin Hood. Why then, do low-income consumers not face lower prices? </p>
<p>The key is that third-degree price discrimination requires identification. While students and pensioners have university and government-issued IDs, firms cannot easily identify low-income consumers.</p>
<p>However, governments do compel people to report their income (and wealth, family status and the rest) to administer taxes and benefits and could, therefore, offer consumers a card which declares their income, or perhaps a more complex assessment of their well-being which combines a selection of data. We can call this an “OpportunityCard”. Japan recently <a href="http://www.cas.go.jp/jp/seisaku/bangoseido/english-faq.html">introduced a digital-ID</a> that encapsulated this information, but strictly limited its use mainly to the administration of taxes and benefits. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=389&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=389&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=389&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=489&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=489&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=489&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Price discrimination. Something for everyone?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/_sk/7184280111/in/photolist-bWRjbt-EqMYq-7gCKLb-4z5BbR-4z9Nv5-4z9Kkf-Go23f-w1FBn-47KB3a-RCMBx-4z5xYa-5Td3A2-727g8N-8EESRi-78SPji-DVvqB-RDYb4-DVoCx-7daNhC-5Yo5pg-4z9NVY-4z5zKV-4z5AY2-cVzDa-UDJ4M-4z9NjU-4z9Qsd-4z9Q9d-4z9QQG-4z5xaM-8Qgkp2-bEKdHx-4z9LEf-4z9SCb-b47brz-EoJVr-cedFGf-4KcWpW-ma1wPf-4z5ymX-edLav9-4z5BRP-4z5Bhr-4z9Kzm-4z5uFp-5mEBMu-4z5B84-bWRjdK-hmE7E-8yv52G">Stéphanie Kilgast</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Consumers could present this OpportunityCard to merchants, who would typically profit from charging a high base price and offering greater discounts to consumers whose cards reveal lower incomes. Discounts for lower-income OpportunityCard holders would increase their purchasing power, while the reverse is likely to hold for wealthier consumers. This will act to reduce inequality, at least in terms of consumption.</p>
<h2>Value judgements</h2>
<p><a href="http://www.labour.org.uk/index.php/leadership/detail/jeremy-corbyn">Left-of-centre politicians</a> see income inequality as a serious social ill. Centre-right politicians such as David Cameron praise the power of open markets and <a href="http://www.newstatesman.com/uk-politics/2012/01/economy-capitalism-market">criticise the “top-down, interventionist state.”</a> The OpportunityCard can make both sides happy – reducing inequality through market forces, strengthening rather than hindering the “invisible hand” of markets.</p>
<p>Naturally, price discrimination brings winners and losers. In general, groups who value a service or product more will be charged more, but not every individual within each group will have the same valuation. Because of the differential pricing, the <a href="https://docs.google.com/document/d/1m649j3eCPhGfNTLZLT9Ozay3RU3zhI4_LPoMbVAYTqc/pub">“wrong person”</a> might be drawn to part with their cash. Simply put, a purchase is made by someone who gets less out of it than another potential consumer who decides to hold fire. For the card to increase efficiency in spite of this, it must substantially increase overall output. Those net results, however, <a href="https://docs.google.com/document/d/16jos_PT9w1wGpyD5A8ZiWJ9HW6kaLOJH6EWc_AYWnkk/pub">can go in either direction</a>.</p>
<h2>Is it workable?</h2>
<p>It is also worth questioning whether people would use this – or whether it would become some stigmatised evidence suggesting (economic) underachievement? Well, for a start, we cannot predict how widely the OpportunityCard would be accepted. However, it could be made mainstream and available across a range of incomes (“the 99%”) and even the comfortably-off middle-class could get some discounts. It may be used discreetly, like supermarket loyalty cards. There is precedent: more than <a href="http://www.theguardian.com/money/2014/apr/17/food-stamps-snap-coordinators-challenges">40m low-income Americans</a> regularly use Food Stamp cards – and across the UK people claim subsidised council housing.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=264&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=264&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=264&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=331&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=331&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=331&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Old stamping ground. US citizens get help with groceries.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/chrstphre/5489717927/in/photolist-9n7eT6-ctyMho-feS18W-ctyMKm-ctyNdC-ctyLyy-ctySgN-ctyKZj-ctyJZ1-ctzBVm-ctyRBY-ctzcHb-ctzL2f-ctFrWL-ctzLMh-ctzN6u-dMQEWR-ctzymL-ctzMrE-ctzWsA-ctzyL7-or1dyj-qtQpVZ-r94mxE-yeu3hg-yeuob4-ybtCJY-ydN6A4-ydNfeM-xWcgB5-xWieD6-ybu9sW-xWbi4Y-ycTNmq-yeujR8-9HbHSR-c9Lmnj-dQuN5i-dQAobJ-qtCftC-rqwytA-rquZ1V-qtCeJw-rqBQra-823Zwz-aHARkZ-dQPvM3-o7Bu6B-nVBKAj-od7grX">chrstphre ㋛ campbell</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>You might also wonder if the wealthy would simply hire those on lower incomes to purchase goods on their behalf? We think sellers would anticipate this, and offer discounts only where they don’t expect this “arbitrage” to occur. However, for many products – such as bus passes with photo-IDs and airline tickets – arbitrage is difficult or impossible. For small-ticket items it simply isn’t worth the bother: we don’t see crowds standing outside of supermarkets trading multi-buy tissue boxes, and nor do we see people (<a href="http://www.ebay.co.uk/itm/One-Minature-Bottle-Of-Heinz-mayonnaise-/252083088950?hash=item3ab152ae36">at least, not many</a>) reselling jars of mayonnaise on eBay.</p>
<p>As we have seen, companies do try to do this in an ad hoc way with discounts and targeted branding, but they can’t go the whole hog into discretionary pricing unless government enables it through something like the OpportunityCard. The <a href="https://www.coleurope.eu/system/files_force/research-paper/gclc_wp_07-05.pdf">rules and regulations</a> for price discrimination are often <a href="http://lawreview.law.ucdavis.edu/issues/43/4/articles/43-4_Gifford-Kudrle.pdf">complicated</a> and <a href="http://knowledge.wharton.upenn.edu/article/what-consumers-and-retailers-should-know-about-dynamic-pricing/">misunderstood</a>. Verifying income is certainly cumbersome for small transactions. That is why a centralised card could solve this problem.</p>
<h2>Gaining experience</h2>
<p>While an OpportunityCard is likely to help the poor and boost profits, we don’t know whether it will be an efficient way to do this. The costs and benefits for the production and allocation of goods is uncertain. Furthermore, as with means-tested benefits, there will be an impact on the labour market. So, the traditional way for governments to play Robin Hood – taxes and benefits – may be less or more efficient. We simply do not know. We also don’t know whether issues such as stigma, fraud and arbitrage will prove serious impediments. </p>
<p>We can only learn by experience, testing and measurement. <a href="https://www.gov.uk/government/publications/test-learn-adapt-developing-public-policy-with-randomised-controlled-trials">Controlled field experiments and policy trials</a> can be run, measuring impacts on prices, demand, and output. The OpportunityCard could be gradually introduced to a random selection of consumers, regions, or industries. Distinct administration and marketing techniques should be tested, and focus-groups and surveys could gauge attitudes. Economists and policymakers could use the evidence to infer where, how and whether to introduce the card more widely. If we don’t test, of course, we risk missing out on a valuable tool for improving both equity and efficiency.</p><img src="https://counter.theconversation.com/content/47719/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Reinstein does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
If the government wants to tackle wealth inequality, then it has the tools at its disposal to help people pay a fair amount for everyday goods.
David Reinstein, Lecturer in Economics, University of Essex
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/47182
2015-09-09T07:00:43Z
2015-09-09T07:00:43Z
Three reasons why Chinese consumers love the Queen – and why Britain should too
<p>Queen Elizabeth II today becomes Britain’s longest ever serving monarch, overtaking Queen Victoria’s mammoth reign at 17.30 BST on September 9. Beyond the celebration, this has prompted a flurry of <a href="http://www.theguardian.com/commentisfree/2015/sep/01/elizabeth-monarch-queen">discussion</a> over whether the throne should be scrapped or not. This is a tired debate, so here’s a different argument as to why the monarchy is a great thing for the UK: she’s great for business. </p>
<p>Having the Queen is a distinct business advantage – and this is particularly due to reverence for the monarchy in emerging markets such as China.</p>
<h2>Brand UK</h2>
<p>The Queen is the most prominent symbol around the world of Britain’s heritage and tradition, something that UK companies can amplify when marketing their goods and services to international markets. The Queen and the royal family inject a sense of continuity and national identity in the globalised world we live in today. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/94126/original/image-20150908-4327-17tzr2q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/94126/original/image-20150908-4327-17tzr2q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=410&fit=crop&dpr=1 600w, https://images.theconversation.com/files/94126/original/image-20150908-4327-17tzr2q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=410&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/94126/original/image-20150908-4327-17tzr2q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=410&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/94126/original/image-20150908-4327-17tzr2q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=516&fit=crop&dpr=1 754w, https://images.theconversation.com/files/94126/original/image-20150908-4327-17tzr2q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=516&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/94126/original/image-20150908-4327-17tzr2q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=516&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The pinnacle of Britishness?</span>
<span class="attribution"><span class="source">Lorna Roberts / Shutterstock.com</span></span>
</figcaption>
</figure>
<p>Her well-known face instantly calls up a sense of history, giving British brands an edge that can be a distinctive advantage. Not only does the royal family <a href="http://www.telegraph.co.uk/news/uknews/7914479/Monarchy-attracts-500-million-a-year-from-overseas-tourists.html">attract £500m</a> a year from overseas tourists, but her marketability contributes to the country’s <a href="https://www.uktradeinfo.com/Pages/Home.aspx">£160 billion</a> in annual exports, especially luxury goods. The attraction of the monarchy obviously has a hold on spending patterns at home as well as on holiday.</p>
<p>In research I’ve been carrying out in 15 cities in China, I surveyed 164 high-income luxury consumers aged between 25 and 40, and 220 middle-income consumers. When asked what words they associate with Britain, top of the list was the Queen, with a quarter of people instantly thinking of her. When asked what the most important factors influencing their purchase intention of luxuries were, the royal connection was cited 17% of the time, in the top four reasons alongside excellent quality, brand meaning, and status symbol. In the context of the Chinese consumer market, the UK monarchy is evidently worth big bucks.</p>
<p>This is corroborated by larger scale studies. Brand Finance recently valued the monarchy as worth <a href="http://brandfinance.com/images/upload/brand_finance_s_valuation_of_the_british_monarchy_2015_full_details.pdf">a whopping £57 billion</a> to the UK. </p>
<h2>Royal warrants</h2>
<p><a href="https://www.royalwarrant.org/">Royal warrants</a> have been granted since the 15th century. A crest granted to products and services that the Queen and her household supposedly use, the warrant bestows a sense of history and tradition. There are around 800 holders of the royal warrant worldwide.</p>
<p>Ultimately, the crest signifies the desirability of British lifestyle. Those holding the warrant range from individual craftsmen to multinationals. It has come to symbolise quality and excellence and can reportedly boost a small business’s sales <a href="http://uk.reuters.com/article/2015/09/02/uk-britain-royals-warrant-idUKKCN0R20Z220150902">by up to 5%</a>.</p>
<p>The traction this has in a market that considers British products to be a paragon of quality is obvious. British brands such as Burberry and Clarks shoes are <a href="http://www.theguardian.com/commentisfree/2012/aug/18/britain-needs-china-tourists">very well known</a> in China.</p>
<p>In my survey, over half of people I asked said the royal warrant was important or very important in increasing desirability of British lifestyle and brands. The royal endorsement is particularly advantageous for companies exporting to China, the rest of Asia, the Middle East and the US. Some 27% of Chinese shoppers said they get their inspiration for fashion and home style from the Queen and the royal family.</p>
<p>This can go to extreme levels – <a href="http://www.theguardian.com/world/2011/apr/27/chinese-couple-royal-wedding">one Chinese couple</a> got married in a ceremony inspired by the 2011 royal wedding, complete with red uniforms and furry hats. </p>
<h2>Luxury ambassador</h2>
<p>Timeless elegance is the very essence of luxury and is distinctively associated with the Queen and the royal family. In luxury brand marketing, heritage is a critical resource and is perceived as a key attribute of brand authenticity and aura. </p>
<p>The Queen embodies history and heritage. In the meantime, as the longest serving monarch, she has acquired an incredible ability to embrace change while remaining untouchable. Whatever the Queen wears, eats, visits or even holds on to instantly increases in value, and all this is mostly British. Whatever is seen on or near the Queen is instantly desired by millions around the world; Lock & Co hats, Cornelia James gloves and Ettinger bags have all gained in prestige and sales by Her Majesty wearing them. If a dress is worn by royalty, it increases the chances of Chinese customers buying – <a href="http://www.telegraph.co.uk/news/uknews/royal-wedding/8485272/Royal-wedding-Chinese-tailors-rush-to-copy-Kate-Middletons-dress.html">or even copying</a> – it. </p>
<p>Luxury goods are defined as those satisfying hedonic rather than functional needs. They are characterised by a founding myth, history, craftsmanship and a link to the leisure class lifestyle, something that the Queen certainly helps British products embody. Our research has found this is an area that Britain enjoys a distinct advantage in – and the Queen is a significant reason for this. So long live the Queen and the monarchy – for the sake of the UK economy, at least.</p>
<p><em>This article was amended on September 10 to correct Brand Finance’s valuation of the monarchy: the figure is £57 billion, not £57 million.</em></p><img src="https://counter.theconversation.com/content/47182/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Qing Wang does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Having a Queen is a distinct business advantage, particularly due to reverence for the monarchy in new and emerging markets like China.
Qing Wang, Professor of Marketing and Innovation, Director, Marketing Innovation and The Chinese and Emerging Economies (MICEE) Network, Warwick Business School, Warwick Business School, University of Warwick
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/39516
2015-04-21T05:19:39Z
2015-04-21T05:19:39Z
From crowns and lace to bubble bath necklaces – the morphing meaning of luxury
<figure><img src="https://images.theconversation.com/files/78616/original/image-20150420-25705-60lnjl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Body 1, Re-materialisation of Systems, El Ultimo Grito, 2014. </span> <span class="attribution"><span class="source">© Photos by POI</span></span></figcaption></figure><p>From a cursory glance at the magazine racks at your local newsagent, it might appear that we have become almost obsessed with luxury. Glossy magazines sport covers dripping with deluxe clothing and goods, expensive cars, fancy apartments. Newspapers like such as the UK’s <a href="http://howtospendit.ft.com/">Financial Times</a> and Telegraph have regular features and even a <a href="http://www.telegraph.co.uk/luxury/">website</a> dedicated to luxury, where it is associated with a breadth of different products and services from art, travel, design, fashion, lifestyle and even technology. </p>
<p>In June the Financial Times will host a <a href="http://www.ftbusinessofluxury.com/ehome/index.php?eventid=108160&tabid=241626&">Business of Luxury Summit</a>, emphasising the significant role luxury plays within the world economy. Over the past decade the effects of globalisation and the rapid growth of emerging nations has brought further opportunities for luxury brands as new markets open up to them. There is now a host of new consumers for luxury goods, and so a corresponding increase in interpretations of its meaning. </p>
<p>So what better time to stage an exhibition interrogating the luxurious? Enter the V&A’s new show <a href="http://www.vam.ac.uk/content/exhibitions/what-is-luxury/">What is Luxury?</a></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/78620/original/image-20150420-25711-1hb23mw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/78620/original/image-20150420-25711-1hb23mw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78620/original/image-20150420-25711-1hb23mw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78620/original/image-20150420-25711-1hb23mw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78620/original/image-20150420-25711-1hb23mw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78620/original/image-20150420-25711-1hb23mw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78620/original/image-20150420-25711-1hb23mw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78620/original/image-20150420-25711-1hb23mw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Ecclesiastical crown, c. 1750.</span>
<span class="attribution"><span class="source">© The Rosalinde and Arthur Gilbert Collection on loan to the Victoria and Albert Museum London</span></span>
</figcaption>
</figure>
<h2>What is luxury?</h2>
<p>Derived from the Latin word <em>luxe</em>, luxury implies indulgence, expensiveness and exclusivity, most usually associated with products beyond life’s necessities. Historically, music and art was reserved for the elite and wealthy classes and were therefore seen as luxury items. Today, however, music is rarely seen as a luxury as it’s accessible to all in some shape or form. Items and experiences considered luxurious are constantly changing. </p>
<p>Luxury used to be denoted by quality. When the French luxury brand <a href="http://example.com/http://www.hermes.com/index_uk.html">Hermès</a> was founded in 1837 its accessories were crafted by skilled artisans using the highest quality materials. These products were made in small batches, indicative of their exclusivity and inaccessibility. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/78621/original/image-20150420-25692-v5fzjx.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78621/original/image-20150420-25692-v5fzjx.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78621/original/image-20150420-25692-v5fzjx.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78621/original/image-20150420-25692-v5fzjx.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78621/original/image-20150420-25692-v5fzjx.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78621/original/image-20150420-25692-v5fzjx.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78621/original/image-20150420-25692-v5fzjx.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Combs, Hair Highway, 2014.</span>
<span class="attribution"><span class="source">© Studio Swine</span></span>
</figcaption>
</figure>
<p>But meanings have changed. The example of fashion particularly shows how luxury has evolved to become <a href="http://www.nytimes.com/2007/08/21/books/21kaku.html?_r=2&">less exclusive and more accessible</a>. Now often signalled by ostentatious visibility of logos, luxury has entered the realms of mass production, something that the fashion writer <a href="http://www.barnesandnoble.com/w/deluxe-dana-thomas/1100314913?ean=9780143113706">Dana Thomas has termed</a> “the democratisation of luxury”.</p>
<p>This creates some confusion over the true meaning of the word, which is diluted in a multitude of different interpretations and cultural contexts. Today, luxury is a commonly applied adjective used to describe everything from food to fashion, technology, hotels, housing … the list goes on.</p>
<p>And if the past and present versions of luxury differ so, how might it be imagined in the future? Given the rise of the digital, it’s likely that in the future luxury will move away from materiality. Perhaps luxury will start to celebrate privacy, quiet and anonymity.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/78619/original/image-20150420-25725-cp61c2.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78619/original/image-20150420-25725-cp61c2.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78619/original/image-20150420-25725-cp61c2.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78619/original/image-20150420-25725-cp61c2.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78619/original/image-20150420-25725-cp61c2.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78619/original/image-20150420-25725-cp61c2.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78619/original/image-20150420-25725-cp61c2.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Necklace, Bubble Bath, Nora Fok 2001.</span>
<span class="attribution"><span class="source">Photo: Heini Schneebeli Courtesy of the Crafts Council</span></span>
</figcaption>
</figure>
<h2>Bubble baths and space watches</h2>
<p>Our current understanding of luxury is based primarily on a consumer perspective. The V&A’s exhibition challenges us to shift away from this point of view. Despite the museum’s extensive collection of luxurious artifacts, the curators have chosen to take a less traditional stance on their choice of exhibits. </p>
<p>There are historic examples from their collection, such as a liturgical vestment made of raised needle lace from 1670-1695, but these sit alongside more contemporary pieces of luxury on loan, such as <a href="http://www.norafok.com/">Nora Fok’s</a> Bubble Bath necklace (2001). Placing these more unusual historic artifacts aside more contemporary interpretations of luxury is intended to challenge the visitor’s traditional notions of luxury. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/78617/original/image-20150420-25692-p7jtq2.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/78617/original/image-20150420-25692-p7jtq2.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/78617/original/image-20150420-25692-p7jtq2.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=849&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78617/original/image-20150420-25692-p7jtq2.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=849&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78617/original/image-20150420-25692-p7jtq2.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=849&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78617/original/image-20150420-25692-p7jtq2.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1067&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78617/original/image-20150420-25692-p7jtq2.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1067&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78617/original/image-20150420-25692-p7jtq2.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1067&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Second Space Traveller Watch, George Daniels, 1983.</span>
<span class="attribution"><span class="source">© Jasper Gough, Sotheby's</span></span>
</figcaption>
</figure>
<p>One of the featured objects is the <a href="http://www.webofstories.com/play/george.daniels/35;jsessionid=DC08838114E22F3D34540D702C3770EA">Space Travellers’ Watch</a>, created by George Daniels, c. 1982. Handcrafted from raw materials and without the use of automatic tools, Daniel’s design was inspired by the Moon Landing in 1969. Daniel describes this watch as all one would need for a <a href="http://www.danielslondon.com/daniels-watches/the-space-traveller/">package tour to Mars</a>. So luxury is presented not just by quality of materials, but significantly also the story behind its creation. The significance of an object’s production in terms of the time and skill invested in its making brings a different, personal meaning to the value of luxury.</p>
<p>Rather than providing a definitive answer to what luxury is, the exhibition presents ideas around the concept, leaving its visitors to ponder their own experiences and renewed feelings towards the term. Whether luxury can truly be defined anymore is uncertain, but by examining the craft and materials of its production the V&A’s presents luxury as an experience. In doing so, it attempts to take the term back to the origins of its meaning.</p><img src="https://counter.theconversation.com/content/39516/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Naomi Braithwaite does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
The V&A’s new show turns the spotlight on our obsession with luxury.
Naomi Braithwaite, Research Fellow, Nottingham Trent University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/32227
2014-10-08T13:55:54Z
2014-10-08T13:55:54Z
Blessed are the wastrels, for their surplus could save the Earth
<figure><img src="https://images.theconversation.com/files/61167/original/knz99r2v-1412771279.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Building resilience, one yacht at a time</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/eyesplash/">Eyesplash - let's feel the heat</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>In a world where too many go to bed hungry, it comes as a shock to realise that more than half the world’s <a href="http://www.lovefoodhatewaste.com/">food production is left to rot</a>, lost in transit, thrown out, or otherwise wasted. This loss is a humanitarian disaster. It’s a moral tragedy. It’s a blight on the conscience of the world.</p>
<p>It might ultimately be the salvation of the human species.</p>
<p>To understand why, consider that we live in a system that rewards efficiency. <a href="http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html">Just-in-time production</a>, reduced inventories, providing the required service at just the right time with minimised wasted effort: those are the routes to profit (and hence survival) for today’s corporations. This type of lean manufacturing aims to squeeze costs as much as possible, pruning anything extraneous from the process. That’s the ideal, anyway; and many companies are furiously chasing after this ideal.</p>
<p>Unfortunately there is often a trade-off between efficiency (producing the same goods at lowest cost) and resiliency (strength against unexpected crises). Protection against crises or disasters generally costs money. You need to maintain reserves and build up unused inventories. You need to develop contingency plans and train workers. You need excessively robust or excessively flexible manufacturing capabilities. You need a branch of your bureaucracy devoted to worst-case scenarios, with all the salaries and time that goes with that. And if you do all that – well, there are other companies out there, very willing to swoop in and take all your customers with their reduced costs. Resilient organisations go to the wall.</p>
<h2>Bleak swans</h2>
<p>Smaller, more regular disasters can be absorbed as a simple cost of doing business. But larger disasters, <a href="http://www.independent.co.uk/travel/news-and-advice/air-travel-disrupted-by-fresh-volcano-threats-in-iceland-and-papua-new-guinea-9700353.html">the large volcanic eruptions</a>, the super-plague (natural or engineered), the one-in-a-hundred-year events… Well, how many companies expect to be in business in a hundred years anyway? </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/60176/original/5wcpcks3-1411731559.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/60176/original/5wcpcks3-1411731559.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/60176/original/5wcpcks3-1411731559.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/60176/original/5wcpcks3-1411731559.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/60176/original/5wcpcks3-1411731559.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/60176/original/5wcpcks3-1411731559.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/60176/original/5wcpcks3-1411731559.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/60176/original/5wcpcks3-1411731559.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Lava flows: Under-represented in corporate planning.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/41812768@N07/15146259395/in/photolist-bWXkjG-ouL8G5-9c3qZz-7V6gMf-7TM29h-62ZbSo-7Z6yMC-iVoYjS-7Z6yK1-a8vdZ2-99N1pk-srLJC-fDaDFQ-p5qxen-81AsVg-6Sg6sw-ayFz7W-9L7kY4-71zYM8-7TJ1xt-2S9TXc-p5RsUN-adi1y1-dQe33i-85suS7-cPqR5G-nkKZb8-4v1sEY-mZ54DP-a1etJj-9L7kXx-7n7es-9QWshP-9gs5hK-EeKbe-4DZxot-gFHYDG-6yrdq2-gWYXcU-7Pkt1v-otasPu-7TvXuH-aD3DP-8nfd3W-7iEykj-4M2iyH-9GraRL-feDVvo-hsxoy-hsxmG">peterhartree</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Thus, the very efficiency that has driven human production to its dizzying peaks, creates a brittleness and a fragility to crises or disasters that are slightly too large. And the whole system is connected: when one part starts being overwhelmed, when one category of ultra-specialised manufacturers go under, others that rely on it will start to suffer too. This could be followed by knock-on effects across the economy, hitting consumers and employees and spreading to other industries. A slightly-too-large disaster may bring down our interconnected economy just as effectively as a huge disaster would.</p>
<p>So it is important to preserve sources of resiliency where they exist. And the current waste in the world’s food system is such a source. It’s a tragedy that rich Westerners and aspiring rich Westerners eat wasteful meat and that <a href="http://www.npr.org/blogs/thesalt/2014/09/25/351495274/supermarkets-waste-tons-of-food-as-they-woo-shoppers">supermarkets</a> and individuals throw away so much food (indeed <a href="http://www.huffingtonpost.co.uk/2013/01/10/food-waste-half-of-all-fo_n_2445022.html">half the food purchased in Europe and the US is thrown away</a> by consumers). But what that means is that there is a lot of slack in the system. If disaster struck, we could go back to eating more vegetables and carefully preserving excess foodstuffs. Even if half the world’s food production was wiped out by a super-plague, we’d still have enough to feed most of the people we feed today.</p>
<p>There are other inefficiencies in the world economy that translate into resiliency for our species. Of course, not all that is inefficient is resilient – some waste is just waste (for food, we could do a lot about <a href="http://www.boredpanda.com/funny-shaped-fruits-vegetables/">not throwing away imperfect vegetables</a>, but little about insect damage). What we are looking for is something that is wasteful, but could quickly be changed to be less wasteful if necessary. Perversely (and tragically), this could do more good for the human species that getting rid of all waste, which would improve the lives of more people, at the cost of making the whole system more brittle.</p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/60172/original/7d9dg2j9-1411730329.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/60172/original/7d9dg2j9-1411730329.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/60172/original/7d9dg2j9-1411730329.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/60172/original/7d9dg2j9-1411730329.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/60172/original/7d9dg2j9-1411730329.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/60172/original/7d9dg2j9-1411730329.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/60172/original/7d9dg2j9-1411730329.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The saviour, or savour, of humanity?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/simonhildrew/243818529/in/photolist-nxCKK-9nWvEU-o8jHsv-4pA5h5-oyazvz-9532fy-952UJy-94YUfH-952Wqq-9533AA-952VnA-94Zspa-6aTTVW-bJZLtR-8ufoQh-bzHwwh-pm76g-953uNU-94Zr3D-eb291j-6Vszjt-eTywix">Simon Hildrew</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Good candidates for resilient inefficiencies are luxury goods. Spending on strict personal luxuries (jewelry, perfume, expensive cars, etc…) represents <a href="http://www.statista.com/topics/1110/global-luxury-goods-industry">more than half a trillion dollars per year</a>; but less blatantly excessive “luxuries” also abound. <a href="http://www.soilassociation.org/marketreport">Organic farms are an example</a>: they use their inputs (land, grain, animals) to produce food at higher cost and lower quantity than conventional farming. The advantages of organic food appeal to richer, western consumers. But if the situation were desperate, organic farms could be retooled for mass production of lower-quality but still edible foods. The same goes for factories making super-plasma, hyper-surround cinema-experience televisions (<a href="http://www.dailymail.co.uk/news/article-2178034/Hammacher-Schlemmers-outrageous-luxury-toys-global-super-rich.html">or similar toys for the wealthy</a>). This rich demand maintains a manufacturing base for extreme luxury products, but one that could be repurposed for mass production of less extravagant but more useful products if needed.</p>
<p>There are many other examples of inefficient resilience. Transport systems are another example: in many countries, there are multiple redundant ways of making the same trip, not all of them filled to maximum capacity. Democracy also qualifies: the great efforts political parties spend denigrating each other can be swiftly replaced with common purpose in case of, to give an extreme example, external attack. Government subsidies represent resources that could be redirected if really needed: the more wasteful they are, the easier this is. A standing army is an ultimate example: serving no efficient purpose at all, it yet makes the country much more resilient. In biology, the immune system and evolution itself are <a href="http://listonlab.blogspot.co.uk/2009/12/inefficient-consequences-of-evolution.html">both robust and hideously inefficient</a>.</p>
<h2>Surplus requirements</h2>
<p>It might seem perverse to promote inefficiency in the name of resiliency. And it is perverse. It would be much more effective to make production as efficient as possible, while some organisations – most likely governments – built up a surplus of goods and capabilities that could be used in case of disaster.</p>
<p>But such carefully planned resiliency might not – if you will pardon the phrasing – be very resilient. The accumulated surplus has no-one to speak for it, no constituency defending it, no faction profiting from it. In times of plenty, it would seem to be – and indeed it would be – an unprofitable waste, and furthermore a clear and visible waste. A waste that could be transformed into value at the stroke of a politician’s pen. The same tension that exists between companies would exist between governments, each pressured to spend their surplus rather than accumulate it. On purely moral grounds, could anyone defend accumulating a surplus for a hypothetical future disaster while people starved today?</p>
<p>In contrast, resiliency through inefficiency is much more robust. It has natural constituencies: farm lobbies, healthy eaters, rich consumers looking for the latest novelty goods. It rests on traditional (or inefficient) ways of doing things, requiring no change or innovation. It does not require active policy interventions, or even acknowledgement of the issue. As long as it is left alone, it will always be there, a reserve of resiliency ready to be tapped. As below, so above: the most inefficient way of producing resiliency is also the most… resilient.</p><img src="https://counter.theconversation.com/content/32227/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stuart Armstrong does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
In a world where too many go to bed hungry, it comes as a shock to realise that more than half the world’s food production is left to rot, lost in transit, thrown out, or otherwise wasted. This loss is…
Stuart Armstrong, James Martin Research Fellow, University of Oxford
Licensed as Creative Commons – attribution, no derivatives.