The Overconsumption of Luxury Items in China

The Overconsumption of Luxury Items in China
Chinese luxury goods market has grown dramatically over the past decades. According to a report released by Bain & Company (2012), currently, Chinese consumers
occupy about 50% of the luxury purchases in Asia, and nearly 33% of those in Europe. Globally, one in four purchases of individual luxury goods comes from Chinese
customers. Therefore, overconsumption of luxury items in China is a problem which
should be given attention to. This problem will lead to a series of negative impacts on
economy, society and environment, such as bustling counterfeit markets, distorted
values, and damaged environment which could present significant challenges for China even all over the world. The purchase of luxury goods by Chinese consumers may
be motivated by different factors from the aspects of economy, society and culture.
This report will identify the impacts, analyze the causes, and consider possible solutions of this problem.

Three aspects could be affected by the overconsumption of luxury items in China:
economy, society and environment.

To begin with, the overconsumption of luxury items would result in thriving counterfeit markets and threatened domestic businesses. Due to the demand for luxury goods,
a bustling counterfeit market has been established, with counterfeiters offering replicas of luxuries at much cheaper prices than the authentic counterparts. For a country
as a whole, this counterfeit market has two main negative impacts on economy. For
one thing, it will hinder foreign direct investment (FDI). A robust and well-enforced
intellectual property rights legal system is a key requirement for multinational companies to decide to invest in the destination country (International Chamber of Commerce, 2013). They may consider whether their investments made in production will
be returned and will not be undermined by counterfeit goods. Because these counterfeit products will also...