The luxury goods market: Understanding the psychology of Chinese consumers

Abstract

The objective of this research is to construct a multifactorial model facilitating the assessment of the interrelation between aspects of Chinese consumers' attitudes towards luxury items and their psychological intent to acquire such goods. The paper presents a factorial model of the evaluation system, which encompasses factors such as luxury brand awareness, materialism, social comparison with peers, fashion novelty, and consumer engagement with fashion. The research findings indicate that: (1) there exists a positive correlation between the attitudes of Chinese consumers towards luxury items and their intention to acquire them; (2) Chinese consumers, overall, tend to disregard fashion innovations as a significant factor in luxury item purchasing decisions; (3) however, materialism as a motivation for conspicuous consumption and status has become a pivotal stimulating factor; (4) substantial influence is also exerted by the impact of luxury item acquisition on the owner's social status; (5) individuals possessing knowledge of fashion trends demonstrate a higher propensity to acquire luxury items. Theoretically, this study contributes to the broadening of the understanding of luxury goods consumption within the context of the Chinese market. This contribution holds value for researchers of this market, as well as those examining other regional markets, facilitating a comparative analysis of consumer behavior factors. From a practical perspective, the model is oriented towards expanding the toolkit available to managers and marketers. It enables an understanding of the psychological motives attracting Chinese consumers to the luxury goods market. This understanding, in turn, facilitates the formulation of an effective strategy for introducing new items into this market.

1

Introduction

The global luxury goods market, encompassing expensive, high-quality, and status-oriented products, has experienced significant growth in recent decades (Zhang & Cude, 2018). If in 2013 its value reached $226.61 billion, by 2023 the luxury goods market had reached an estimated $346.19 billion, demonstrating sustained demand for such products (Global Luxury Good Market, 2024). France remains the steadfast leader among consumers of luxury goods, accounting for approximately 32.3 percent of the global market share in 2022 (Statista, 2023). Among the regional drivers of the luxury goods market, India is cited; forecasts suggest that in 2024, the national luxury goods market will generate revenues of up to $7.86 billion USD (Statista, 2024). However, the catalyst for the expansion of this segment of the global market is China (Kim et al., 2020), which is currently experiencing an increase in consumer activity (Bain & Company, 2019, 2021). In 2023, luxury goods consumption in China constituted approximately 22–24 % of the global volume (Bain & Company, 2023). Thus, China has maintained its position as the second-largest market for luxury goods for several years (Cui et al., 2019; Dhaliwal et al., 2020). This underscores the need to study consumer motivation in this market to comprehend their psychology.

Numerous researchers have focused their attention on the phenomenon of luxury goods consumption. They have developed an understanding of consumption approaches and motivations towards purchasing luxury brands (Ko et al., 2019), examined consumer behavior motives by assessing the functional and hedonistic value of luxury items (Kessous & Valette-Florence, 2019), and presented a novel perspective on a systematic, integrative basis for explaining contemporary consumer behavior regarding luxury items (Wang, 2022). Of particular interest are studies concentrated on investigating how the price prestige of luxury goods affects consumer purchasing motivation (Ho et al., 2023). According to earlier works based on regional data, the opportunity to showcase luxury goods is a significant factor of social value for their acquisition by consumers in emerging markets (Kumar & Paul, 2018). However, in individualistic cultures such as North America, social pressure does not influence the motivation to purchase luxury items as strongly as the association of luxury with high quality (Zhang et al., 2019b).

There is also an observed growth in research on luxury goods consumption considering the regional specificity of China, for instance, elucidating the significant surge in the consumption of such goods (Chen et al., 2021). Cross-cultural perceptions of the value of luxury items have been examined, offering a new perspective on luxury goods marketing in the Chinese market segment (Ho, 2022). However, it is noted that gaps persist in studies concerning China-specific factors determining Chinese consumers' intentions regarding luxury items (Ma et al., 2021). This may be explained by the fact that Chinese consumers can be considered not only a vast but also a unique group, given their distinct cultural codes. Concurrently, the deepening of China's global connections has led Chinese luxury consumers to demonstrate a tendency to reassess commonly accepted cultural values, which influences their psychology (Latif et al., 2019).

Further exploration of the psychology of Chinese consumers of luxury items holds significant importance for the luxury goods industry. New insights into this issue will enable manufacturers and intermediaries in the luxury goods trade to enhance the success of their businesses in the Chinese luxury goods market. Therefore, this study aims to formulate a multifactorial model that would facilitate the evaluation of the relationship between aspects of Chinese consumers' attitudes towards luxury items and their psychological intent to purchase such goods. To achieve this aim, research objectives were formulated as follows: to synthesize the theoretical basis of approaches to studying consumer behavior; to investigate the factors and peculiarities of consumer behavior in China; to identify model variables; to identify the strongest relationships between observed variables and model factors; to implement multidimensional analysis to assess causal relationships within the model.

2

Literature review

2.1

Theoretical framework of the study

The research framework builds on the following theories:

Acquisition-transaction utility theory formulates that in studying consumption decisions, it is necessary to distinguish between acquisition utility (identified with the pleasure of purchase) and transaction utility (identified with the value extracted by the consumer directly from the transaction) (Thaler, 1985). It has been shown that the utility of a transaction depends on the comparison of the actual price at which the buyer purchased the product with other prices. From the perspective of consumer behavior in the luxury goods market, the theory provides a basis for the formation of behavior predictors models related to the price of luxury goods.

The Theory of Consumer Choice (ССТ) examines the complex process of decision-making by rational consumers and the formation of their spending habits (Levin & Milgrom, 2020). It is based on the assumption that choices are determined by product prices and consumer preferences. In our case, the theory provides a basis for assessing the extent to which rational behavior (underpinned by the available budget) will shape consumer intention behavior in the high-end branded goods market.

Social Comparison Theory, which was used to understand consumer behavior (Festinger, 1954). The theory posits that individuals strive to engage in self-comparison with others to evaluate their own identity. From this perspective, the relationship between the intention to purchase luxury items and the willingness to acquire luxury items (Sun et al., 2014) is important for this study. In the current context, it can be assumed that people tend to evaluate their achievements relative to others through the acquisition and display of brands. This process of comparison plays a significant role in driving the purchase of luxury goods as a means of social expression.

Theories in the Psychology of Luxury Consumption posit that the psychology of consuming luxury goods is influenced by a series of contradictions and external forces shaping consumer behavior in this market (Dubois et al., 2021). The primary contribution of the theory lies in identifying the types of signals that shape the perception of goods as luxury items, their acquisition, display, and the consumption consequences for the buyer. For this study, it is important to highlight the need for status. According to the theory, the need for status is a predictor of consumer behavior when purchasing luxury goods. In turn, “status” is interpreted as 'respect and admiration from others' (Dubois et al., 2021). This socio-psychological motive aims to elucidate the relationship between consumers' goals and their behavior in pursuit of luxury. Testing the theory's postulates can also help future researchers address the question it poses regarding the trade-offs between the costs of luxury goods and the social benefits for the consumer. By presenting new insights into the psychology of luxury consumption, this study aims to pave the way for further research.

Theories relating to a comparative review of different consumer cultures, based on cross-cultural analysis, demonstrate that for consumers in both Western and Asian countries, (including both developed and developing economies), external predictors dominate over internal motives (Kapferer & Valette-Florence, 2021). For this study, the theory provides a basis for examining not only satisfaction but also its effects, as it offers a comprehensive understanding of this phenomenon. Importantly, the theory predicts differences in the level of satisfaction from luxury purchases that may be observed among buyers from different countries, representing both developed and developing economies.

The main theoretical basis for this work rests on the following postulates: (1) The Theory of Reasoned Action and (2) The Theory of Planned Behavior (TPB). The Theory of Reasoned Action is a cognitive theory (mathematical model) that enables the prediction of human behavioral intentions based on components such as beliefs, attitudes, and subjective norms (Ajzen & Fishbein, 1975). According to this theory, attitudes determine whether the outcome is perceived as favorable or not, beliefs shape the perception of the relationship between action and outcome, and intention determines behavior as a response to beliefs and attitudes. The Theory of Planned Behavior (TPB) emphasizes motivation influencing behavioral intentions and behaviors (Ajzen, 1991). According to the Theory of Planned Behavior (TPB), purchase intentions have three predictors (Ajzen, 2020): attitude toward the behavior (ATB), subjective norm (SN) regarding the behavior, and perceived behavioral control (PBC). According to Ajzen's modified theory, behavioral beliefs (in this case, attitudes toward luxury spending) serve as the link between expectations and experiences. In other words, behavioral beliefs are a subjective assessment of how likely a behavior is to lead to a specific experience (Ajzen, 2019). For example, this study hypothesizes that brand awareness of a luxury brand may increase the likelihood of purchasing it. The subjective norm (in our case, consumer involvement in fashion) can influence the intention to purchase luxury goods through perceived social pressure. Normative beliefs in this study are important in terms of their presumed pressure, which encourages certain behaviors (exerted by family, relatives, friends, or colleagues). In this context, social comparison and materialism become the primary driving forces behind the purchase of luxury goods. Perceived behavioral control (an individual's perception of their ability to perform the desired behavior) is considered a set of accessible control beliefs. In the context of this study, these beliefs include social status, comparison, and interaction with fashion. Intention is the willingness to perform a specific behavior (i.e., purchase luxury goods), as well as a precursor to actual behavior (the direct purchase of such goods). Predictors of intention are weighted according to their importance for the behavior and the population of interest. Perceived Behavioral Control (PBC) moderates the influence of Attitude Toward Behavior (ATB) and Subjective Norm (SN) on intention, as well as the influence of intention on behavior. Behavior is the explicit, observable response to a specific intention. Behavioral achievements depend on both intention and the level of behavioral control. That is, it is important to consider the extent to which an individual intending to purchase a luxury item possesses the skills and other prerequisites necessary to perform the desired behavior. Based on the literature review, the following research framework was constructed (Fig. 1):

Fig. 1.

The research framework.

Note: designed by the authors.

2.2

The cultural impact of the luxury market: the particularities of China

To comprehend the intricacies of this regional market, it is pertinent to note that China commenced its journey towards consumerism only in the 1980s. Before the culmination of the Cultural Revolution, the country had been operating under the party's prohibition on bourgeois lifestyles. Only after the introduction of economic liberalization policies, China opened its economy to the outside world, transitioning towards a market-oriented economy focused on commodity consumption. This shift has formed a class of consumers who are ready and capable of purchasing expensive goods as symbols of success (Perry et al., 2020). The luxury goods market in China can be considered relatively nascent, as renowned Western brands such as Dior or Versace entered the market only in the 1990s (Liu et al., 2023).

The majority of contemporary luxury goods consumers in China fall within the age range of 20 to 40 years. They are increasingly departing from traditional lifestyles, shifting consumption habits from mass products to individual choices, and transitioning from purchases to satisfy basic needs to purchases for pleasure (Rahman et al., 2020). This contrasts with Western markets, where luxury goods are typically consumed by individuals over 40 years old, who often prefer to buy local luxury brands rather than foreign ones (Karoui & Khemakhem, 2019). It is believed that older generations of Chinese are accustomed to leading more modest lives, while millennials (born between 1980 and 1995) and Generation Z representatives (born from the mid-1990s to the early 2000s) tend to purchase expensive items (Kang et al., 2021; Lauring & Steenburg, 2019). The worldview of Chinese millennials is shaped by individualistic values akin to Western ones, making them more predisposed to materialism (Mundel et al., 2021). Chinese born after the 1980s accounted for over 71 % of luxury goods buyers in the country in 2021. It is projected that by 2025, they will spend approximately $183 billion on luxury items (McKinsey & Company, 2019; Mundel et al., 2021).

Globalization has gradually led to the convergence of many aspects of luxury goods consumption in China and other countries worldwide (Husain et al., 2022). However, differences persist, including in terms of how consumers engage with brands. For some, luxury must be exclusively expensive (Kapferer & Valette-Florence, 2021), in which case external motives prevail over internal ones (Kapferer & Valette-Florence, 2021). Researchers note that Chinese luxury goods consumers pay more attention to external social needs than internal individual ones (Ho, 2022). In China, the symbolic value of luxury items often outweighs their hedonistic value. Therefore, despite the availability of quality smartphones and laptops from domestic brands, a significant number of consumers remain loyal to foreign brands such as Apple (Chen et al., 2021). An important emphasis is placed on the concept of "face" in Chinese culture, which implies self-esteem, reputation, and social status, motivating the giving of expensive gifts. This can serve as such a strong motivation for luxury purchases that even modest-income individuals in China may allocate funds for them (KPMG, 2023). Some researchers argue that Chinese individuals are more susceptible to the influence of other members of their social circle compared to, for example, Scandinavians. They observe what their friends and colleagues wear, and heed the recommendations of group leaders. By emulating influencers, Chinese consumers feel more confident when purchasing expensive luxury brands and seek to integrate themselves into certain social circles (Mainolfi, 2020).

To comprehend the significance of the proposed topic, it is pertinent to provide a brief assessment of luxury goods consumption statistics in the Chinese segment of the global market. Following the COVID-19 pandemic, luxury goods consumption in China is swiftly recovering and expanding (Zhang, 2021). However, in retrospect, the dynamics of its growth in China have notably fluctuated. Although by the end of 2009, this market expanded to USD 9.4 billion, there was a 50 % decline during the period from 2013 to 2014 (World Luxury Association, 2023) as a consequence of the government's anti-corruption campaign (Zhang et al., 2019a). In 2018, the total volume of global retail sales of luxury goods reached 276 billion euros (Bain & Company, 2018), of which China accounted for 111 billion euros (Blazyte, 2020). According to PricewaterhouseCoopers (PwC), the Chinese luxury goods market will constitute 25 % of the global volume by 2025 (Bain & Company, 2021), and it will contend for the largest share (Mundel et al., 2021). Analysts expound on the principal drivers of China's luxury segment, as depicted in Table 1.

Table 1.

Factors contributing to the growth of the luxury goods market in China.

Growth driver	Characteristics
Repatriation	The measures undertaken by the Chinese government to reduce import duties and intensify scrutiny of "grey" import schemes have prompted Chinese consumers to increasingly purchase luxury items within China, rather than travel to destinations like Hong Kong, Seoul, Tokyo, and European trading cities. In 2018, Chinese consumers made 27 % of their luxury purchases within China (up from 23 % in 2015), and by 2025, this figure could potentially reach 50 %.
Millennials	Consumers aged 23–38 are ready to spend on luxury brands and have the financial means to do so. It is estimated that 70 % of Chinese millennials own a home (twice as many as in the US, for example). Millennials in China often receive funding to buy luxury goods from their parents, they are knowledgeable about brands and fashion, depend more on what they think is cool, and value novelty more than discounts.
Digitalization	An increasing number of brands are actively seeking avenues to expand their online presence. Online sales of luxury items experienced a 27 % growth in 2018, constituting 10 % of the total brand sales volume. However, online sales are impeded by the existing criminalization of electronic payment systems (Sturc et al., 2020) and consumer concerns regarding the security of their data (Stepenko et al., 2021).
The fast-growing middle class	It is projected that by 2027, middle-class consumers who are purchasers of luxury goods will comprise approximately 65 % of all Chinese households.

Note: compiled using (Bain & Company, 2019; McKinsey & Company, 2019).

Furthermore, it is noted that Chinese consumers of luxury brands pay particular attention to the origin (France, Italy, Germany, Japan, and the USA) of goods (Mundel et al., 2021). Predominant luxury items preferred by Chinese consumers include clothing, accessories, bags, footwear, watches, and jewelry. However, the surge in popularity of luxury brands in China is not solely due to increased incomes; instead, psychological determinants play a key role in shaping this inclination (Mundel et al., 2021).

2.3

Research factors and hypotheses

An integrated perspective on luxury entails its conceptualization based on wealth, encompassing competencies such as experience, aesthetic sensibility, and sensitivity to the symbolism of luxury. These evolved through the exploration of the unique attributes of luxury goods, including design, quality characteristics, tactile sensations, and socio-cultural narratives (Wang, 2022). Individual and social motives exert a restraining influence on the acquisition of luxury items (Kim et al., 2020). The psychology of luxury consumption is shaped by the mismatch between what luxury means to an individual and the external forces dictating their consumption of luxury. These contradictions can affect consumer behavior, ranging from aspirational levels of luxury aspiration to the consequences of consumption (Dubois et al., 2021).

A powerful driving force behind expenditures on luxury brands is their value and individuality (Hung et al., 2020). Brands and high prices serve as markers of luxury in the minds of egocentric consumers (Wehrle & Fasbender, 2019). Recognizability is also considered crucial in influencing the decision to purchase luxury items, as it is explained by consumers' psychological inclination to choose products from well-known advertised brands. Consumers who are well-informed about brands attribute greater significance to them, using them as a means of expression and aligning their identity with the prestige of purchase (Xi et al., 2022). Even consumers of counterfeit luxury items are more inclined to select high-quality counterfeits that are indistinguishable from the original to the casual observer (Musnaini et al., 2017). A pronounced brand identity, exclusivity, and widespread recognition among consumers constitute primary elements of luxury (Cabigiosu, 2020), playing a key role in predicting the behavior of luxury goods consumers who purchase them as symbols of status, success, and influence (Sharda & Bhat, 2018). Then, hypothesis 1 suggests:

H1

Brand recognition and attitude towards luxury items are positively correlated.

Another significant factor is materialism, which refers to the value attributed by the consumer to their purchase. Materialism relates to a lifestyle characterized by a pursuit of wealth; consumers with higher materialistic tendencies are more inclined to purchase luxury items (Trzcińska & Sekścińska, 2021). In this context, consumer motivation is driven by the notion that consuming luxury items enhances positive mood and life satisfaction (Ruan et al., 2022). Materialistic consumers with an independent self-construal prefer inconspicuous luxury brands due to their heightened need for uniqueness, while those with an interdependent self-construal often opt for conspicuous luxury items (Lee et al., 2021; Makkar & Yap, 2018). As a consumption motive for luxury goods, materialism is associated with conspicuous consumption and social status. Materialism may be inherent in individuals oriented towards both individual values (success and status) and collective values (purchasing luxury items to fit into a particular social group) (Pencarelli et al., 2019). The aspiration for luxury status among Chinese consumers holds for Chinese millennials as well, driven by both individual factors (materialism) and social factors (need for uniqueness and social comparison) (Kim et al., 2020). Then, hypothesis 2 suggests:

H2

Materialism positively influences consumers' attitudes toward luxury items.

Another significant factor is social comparison (Moorse et al., 2021). The influence of orientation toward social comparison on intentions to purchase luxury items can have a substantial effect, for instance in Asian countries like India. However, the effect may be less pronounced in other cultures such as the United Kingdom. The consumption of luxury items is rooted in the propensity for social comparisons (Pillai & Nair, 2021). Individuals underscore prestige and status through luxury items, even though the quality or functionality of these products may not necessarily markedly differ from less expensive alternatives (Xi et al., 2022). Yet, recognized and expensive brands serve as a sort of guarantee for the preservation of the buyer's status (Dubois & Ordabayeva, 2015). At the same time, there is an opinion that some Chinese consumers purchase luxury items to emulate the consumption patterns of a higher social class and associate themselves with them (Mundel et al., 2021). Then, hypothesis 3 suggests:

H3

Social comparison does not influence attitudes towards luxury goods.

Subsequently, it is imperative to address the factor of "fashion novelty," which is defined as the predisposition to acquire and utilize novel items ahead of a majority of other consumers (Puiu, 2019). In general, individuals who hold influence in the realm of fashion tend to show a strong inclination towards spending more money, indicating that they are less affected by the costs involved. Consequently, they are more likely to invest in high-end products (Islam & Singh, 2020). Recent research has also broadened its focus to include discussions about product innovation and the attractiveness of the brand. Notably, the integration of technological advancements bears consequential ramifications for the nexus between eco-fashion branding and consumer intent (Ryding et al., 2022). Furthermore, factors such as status quo and consumer fashion engagement also exert a favorable impact on consumer loyalty towards innovative luxury fashion artefacts, concomitant with their propensity for innovation (Puiu et al., 2021). Then, hypothesis 4 suggests:

H4

Product innovations are positively associated with attitudes towards luxury goods.

The most significant factors include fashion involvement, which is defined as a consumer's active engagement in the utilization of fashionable items (Naeem & Ozuem, 2021). This is a crucial predictor of brand affinity and luxury item purchases, capable of stimulating the acquisition of even those items deemed excessively expensive or questionable in terms of utility. Consequently, it can be inferred that a consumer's inclination towards luxury sector goods shapes their intention to purchase them (Cristini et al., 2022). Then, hypothesis 5 suggests:

H5

Consumer involvement in fashion positively influences attitudes towards luxury goods.

The consumption of luxury can be approached from a dual perspective, driven by motives rooted in both the inherent attributes of the product and experiential considerations. For instance, anti-consumption tendencies prompt consumers to purchase or lease vintage and pre-owned luxury items, a phenomenon underpinned by utilitarian motives (Guzzetti et al., 2021). The interaction between the perception of the value associated with luxury and the inclination to procure luxury items seems to be mediated by a favorable orientation towards the economic advantages attributed to counterfeit commodities. The principal drivers of luxury value perception encompass financial and social dimensions, whereas functional values assume a relatively less significant role (Rahimnia & Arian, 2021; Zhang & Zhao, 2019). Simultaneously, attitudes towards counterfeit brands attenuate the positive influence of luxury value perception on purchasing intent. Then, hypothesis 6 suggests:

H6

Attitudes towards luxury items positively influence purchase intentions.

Thus, this study aims to investigate the impact of Chinese consumers' attitudes towards luxury items on their purchase intentions. This will be achieved through the implementation of a factorial model, which includes a comprehensive assessment framework consisting of five factors (see Fig. 2): brand awareness, materialism, social comparison, fashion novelty trends, and consumer engagement with fashion.

Fig. 2.

Factors affecting luxury purchase behavior.

Source: developed by the authors according to Ajzen, I.

Each factor in the proposed factor model (Fig. 2) was analyzed separately to identify triggers that luxury marketers should consider when designing their marketing, positioning and advertising strategies. The proposed framework would enable luxury marketers to improve communication, increase customer loyalty and retention rates, and manage their preferences.

3

Methodology

To achieve the research goal and systematically address the posed questions and objectives, quantitative methods were employed. The use of these methods was due to the necessity to identify causal relationships and statistical regularities, as well as to test hypotheses formulated based on empirical research. In the initial stage of the study, the strongest correlations between observed variables and factors included in the model were identified. To achieve this, an exploratory factor analysis (EFA) was conducted to examine the factor structure of the questionnaire and determine the model variables: brand awareness, materialism, social comparison, fashion novelty trends, and consumer engagement with fashion, and attitudes toward purchasing luxury items. The set of factors included in the modelling was designed to explain consumer behavior in the luxury goods market. To this end, the insights from previous research were integrated and combined to elucidate consumer behavior in terms of their perception of the value of luxury goods (Ajzen, 2020), perceived social pressure (Ajzen, 2020; Dubois et al., 2021; Festinger, 1954), behavioral intention, and motives (Ajzen, 2019; Kapferer & Valette-Florence, 2021). The subsequent stage involved constructing a correlation matrix, conducting principal component analysis and factor loading analysis (coefficients of correlation between variables), as well as measuring the influence of factor variables. These measures allowed the authors to identify statistical relationships among the predictors included in the model to ascertain how changes in individual factors coincide with changes in consumers' psychological intentions. The final stage entailed testing the formulated hypotheses. Structural equation modelling was employed for hypothesis testing, allowing for second-generation multidimensional analysis to assess causal relationships within the constructed multifactorial model.

3.1

Data collection

Initially, invitations to participate in the study were sent to 1125 Chinese consumers. The sample was drawn from a cohort of graduates of educational institutions affiliated with the study's participants, as well as institutions of their colleagues and some regional market research and consumer institutions, who agreed to act as intermediaries in distributing the initial invitation to participate in the survey. Participants were selected from major cities in China. This allowed for the formation of a representative sample, as all six economic regions were covered. The participants included respondents from Eastern, Northern, Northeastern, Northwestern, Central-Southern, and Southwestern China, encompassing individuals of various age groups, educational levels, and professions. Specifically, potential candidates were queried in the message about their experience in purchasing luxury goods. Following the initial screening, a follow-up invitation with refined questions for a more specific selection was sent to 570 potential participants through Chinese social media platforms. Prior consent with an affirmative response about luxury purchasing experience was obtained from 476 people invited to participate in the survey. At the start of the study, 13 participants withdrew their consent due to personal reasons, and 22 participants were discarded because they could not certify the fact of a luxury purchase. During the data processing, 20 questionnaires were rejected (there were gaps in the answers and other cases of incorrect completion). The final sample of the study was 421 participants. The sample included participants who were at least 25 years old at the time of the survey, had a bachelor's degree or higher, and had an annual income of $25,000 or more. A prerequisite was experience purchasing luxury goods in the past year. Buyers of luxury goods typically keep receipts (or electronic copies of them), which are the basis for obtaining warranty service for the goods. Not only verbal assurance, but also documentary evidence was obtained to confirm a luxury purchase (which included jewelry, watches, accessories, and apparel from global brands). Detailed demographic characteristics are presented in Appendix A.

Thus, there are 58.6 % of men and 41.4 % of women; most of the sample (73.8 %) is represented by people aged 25–34 years, 74.1 % of participants are married, most (58.8 %) work full-time, and 39.1 % have an annual income ranging from $25,000–49,999. Additionally, the participants were asked about their experience in purchasing luxury products: approximately 35.7 % of those surveyed said that they had purchased 2–3 lxury products in the past year, spending $500 or more on this purchase.

3.2

Data analysis

The data collection procedure was carried out using an online survey. The reliability of the survey measurement scale was determined using Cronbach's α coefficient (0.88), which proves the stability of the scale and its compliance with the research objectives. The survey method was chosen as a primary research method, as the survey provides an opportunity to collect data from the desired population and is adapted by the researchers to the formulated needs and objectives.

3.3

Ethical issues

Responding to the survey was based on voluntary engagement. Each participant was assigned a code number. Their personal details were not disclosed. To keep the responses anonymous, the respondents were asked to write down demographic information only. The questionnaire forms were then submitted for expert evaluation and analysis. The receipts served as proof that participants did purchase luxury. In turn, confidential information, such as the credit card account number, type of purchase, and other details that users wished to keep secret, was not collected. All the participants were tested on the social desirability scale prior to the interview in order to determine whether or not there was a response bias (Leite & Nazari, 2020). The results are presented in Appendix B.

The overall MCSDS score is low (19 % of the maximum score possible). This result suggests that the respondents were generally ready to answer truthfully and that the response bias was relatively low (Appendix B). Afterwards, the respondents were asked to fill out a questionnaire consisting of several parts.

Section 1 of the questionnaire gathered general information, allowing for the formation of key demographic characteristics of the sample. Sections 2 and 3 served as the basis for collecting information to determine the variables of the model, enabling the subsequent identification of the strongest relationships explaining the consumer behavior of Chinese consumers when purchasing luxury items. The second part of the questionnaire revealed the participants' attitudes towards the factors included in the research model, measuring: brand recognition - 10 items (Sproles & Kendall, 1986; Tai & Tam, 1998; Thaler, 1985), materialism - 12 items (Ajzen, 2019; Levin & Milgrom, 2020; Richins & Dawson, 1992), social comparison - 5 items (Ajzen, 2020; Chan & Prendergast, 2007; Dubois et al., 2021; Festinger, 1954), fashion novelty trends and engagement with fashion - 5 and 12 items of the questionnaire respectively (Ajzen, 2020; Chae et al., 2006). Section 3 consisted of 6 questions aimed at elucidating respondents' attitudes towards the purchase of luxury items and their intentions to purchase such goods (Ajzen, 1991; Kapferer & Valette-Florence, 2021; Park et al., 2007; Zhang & Kim, 2013). For evaluation, a Likert scale (7 points) was used, in which: 1 point corresponds to the answer “absolutely disagree” or otherwise expresses complete agreement with a negative answer or evaluation; 7 points – “absolutely agree” or otherwise expresses complete agreement with a positive assessment (the wording depends on the question posed).

3.4

Research tools

Confirmatory factor analysis (CFA) (Suhr, 2006) was used to test whether the design metrics were consistent with the researchers' understanding of the nature of the design, i.e., whether the data were consistent with the assumed measurement model. Structural equation modelling (SEM) was utilized for second-generation multivariate analysis and assessment of causal interactions (Iacobucci, 2010).

Model fit was assessed using four indices. Thus, the Non-Normalized Fit Index (NNFI) was used to address negative bias (0.97 - values with a threshold of 0.95 or higher indicate good model fit). The comparative fit index (CFI) was used to analyze inconsistency between the data and the hypothetical model, adjusted for sample size problems inherent in the chi-squared model fit test (0.98 - a value of 0.90 or greater indicates acceptable model fit). The study also used an incremental fit index (IFI) (0.98 - a value from 0.9 indicates the validity of the design) and the root-mean-square error of approximation (RMSEA), the value of which must be minimal to confirm the validity of the model (0.069) (Harrington, 2009).

Elements characterized by low values of factor loadings and large standardized residuals were removed from the final model. The factor loadings in the final model have a value that exceeds the threshold (0.40). The final model showed a satisfactory fit to the data: χ² = 452.56, df = 160, p = 0.000.

To confirm convergent validity and discriminant validity, it was decided to calculate cumulative reliability (CR) and average variance extracted (AVE) exceeding 0.60 and 0.50, respectively. The AVE value exceeded the square of the multiple correlations, suggesting satisfactory values for the constructed model (Fornell & Larcker, 1981). The internal consistency reliability statistic is expressed using Cronbach's α.

4

Results

4.1

Data collection and model testing

Initially, the reaction of a Chinese consumer when deciding to buy luxury goods was analyzed with a simple survey. It revealed the Chinese people's first impression of luxury goods (Table 2).

Table 2.

Chinese consumers' first impression of luxury brands.

Impressions of luxury goods	% of respondents
High quality goods with a high price	52.5 %
Expensive brands in Western countries	25.3 %
Brands offering unique handmade products	22.2 %

Note: designed by the authors.

The results indicate that the majority of Chinese consumers categorize goods as luxury items from a functional standpoint, opting for the designation of "high-quality product" (52.5 %). Interpreting this perspective suggests that respondents cannot always distinguish high-performance products from those emphasizing intangible value (brand) at first glance. However, it is noteworthy that a significant proportion (23.5 %) of Chinese consumers associate luxury items with Western brands. It is important to note that in this case, Chinese traditionalism yields to the influence of globalization, as younger consumers tend to view national brands as less attractive for purchase and display compared to well-known products from Western manufacturers. The subsequent stage was the confirmatory factor analysis of the proposed model (Table 3).

Table 3.

Results of confirmatory factor analysis.

Factors and Measures	Factor loading	t-value
Brand awareness (α = 0.88; AVE = 0.72; CR = 0.92)
I often choose expensive brands.	0.86	- *
A higher price means the higher quality of the product	0.85	22.91
I am ready to pay more for a well-known brand.	0.91	24.99
Foreign brands are preferable to local brands for me.	0.72	17.35
Materialism (α = 0.90; AVE = 0.62; CR = 0.92)
Your attitude toward people who have expensive real estate, cars, accessories, and clothes (do not cause any admiration/cause strong admiration)	0.83	–
Your attitude toward possessing things that impress others (makes you feel very uncomfortable/brings you great pleasure)	0.85	19.41
Your attitude toward the purchase of material goods as a measure of life achievements (not important at all/extremely important)	0.91	21.39
Owning expensive things that you do not have now would make your life better (it would not make it better/it would definitely make it better)	0.68	15.02
Do your acquisitions say anything about your success in life (they do not say anything/they say a lot)?	0.76	17.37
Your attitude toward a significant win (expensive prize) (this is not important/it is very important to me)	0.75	15.98
Social comparison (α = 0.92; AVE = 0.88; CR = 0.94)
I focus on the luxury brands that my idols from the world of music, movies, and social media choose.	0.94	–
I study the style of celebrities.	0.94	37.81
Product innovation (α = 0.94; AVE = 0.84; CR = 0.95)
In my social circle, I am the last to know about fashion trends	0.74	–
In my social circle, I am the last one to buy things and accessories from new collections of luxury brands.	0.76	29.98
Compared to my social circle, I have very few fashion accessories and things from luxury brands.	0.64	23.71
Involvement in fashion (α = 0.93; AVE = 0.80; CR = 0.94)
For me, fashion products from luxury brands are essential.	0.92	–
I am considered an opinion leader in my circle with regard to fashion products from luxury brands.	0.93	28.02
I always have at least a few of the most fashionable things and accessories from luxury brands.	0.93	31.28
I like to buy goods from luxury brands.	0.86	25.98
My clothes typically correspond to fashion rather than say what my style is.	0.88	27.06

Note:*Set to 1, so the t-values are not given. All P-values are statistically significance at the levels of 0.005 or 0.01.

The results presented in the table show that for all selected groups of factors, the cumulative reliability and extracted mean-variance values exceed 0.60 and 0.50, respectively, indicating satisfactory convergent and discriminant validity of the model. The next step was the calculation of the correlation matrix with the mean values and standard deviations (Table 4).

Table 4.

Results of calculating mean values, standard deviations and correlation dependence.

	M	SD	Brand awareness	Materialism	Social comparison	Fashion novelty	Engagement with fashion
Brand awareness	3.69	1.40	1
Materialism	4.02	1.29	.60	1
Social comparison	3.31	1.79	.69	.58	1
Fashion novelty	3.52	1.53	−0.06	.00	.06	1
Engagement with fashion	3.57	1.66	.69	.67	.79	.21	1

Based on the correlation analysis, there is an inverse relationship between product innovation and brand awareness. This can occur when a consumer chooses between two different brands. For instance, the arrival of Rolex Cellini watches on the market will spark demand despite the growing awareness of the Cartier brand.

4.2

Hypothesis testing

The next step focuses on SEM to implement a second-generation multivariate analysis to evaluate causal interactions (Fig. 3). The general consistency of the built model is noted to be satisfactory at χ² = 1166.69, df = 285, p = 0.000, NNFI = 0.99; CFI = 0.99, IFI = 0.99; RMSEA = 0.090.

Fig. 3.

The model with the inclusion of standardized path coefficients.

Note: *р < 0.05, ^⁎⁎р < 0.01, ^⁎⁎⁎р < 0.001.

The final model confirms the hypothesis (H1), assuming the influence of brand awareness (β = 0.17, p < 0.05); it is noted that the "materialism" factor (H2) also exerted a positive influence on how the surveyed Chinese consumers perceive the purchase of luxury segment goods (β = 0.26, p < 0.001); the influence of social comparison on the purchase of luxury goods (H3) can also be traced (β = 0.20, p < 0.001); engagement with fashion (H5) has a positive effect on the attitudes of Chinese consumers toward the purchase of luxury goods (β = 0.44, p < 0.001). It is demonstrated that fashion novelty (H4) is not a significant factor in influencing attitudes toward the purchase of luxury goods. Hypothesis H6 is also confirmed. There is a significant positive relationship between the attitude of a buyer toward the purchase of luxury goods and their intention to purchase luxury goods (β = 0.80, p < 0.001).

In the luxury industry, marketers tend to focus on sustainable development, seeking to achieve customer satisfaction while also preserving the environment and complying with environmental, social, and management standards. To this end, luxury brands adopt various marketing strategies, particularly those centered around creating tailored offerings and defining product identity. These approaches are designed not so much to generate demand, but rather to evoke the sense of owning a one-of-a-kind item.

By constructing a factor model, this study assessed the relationship between consumer attitude toward luxury goods and purchase intention in the Chinese context. Brand awareness, materialism, social comparison, fashion novelty, and consumer engagement with fashion were found to be the key drivers of consumer motivation. The uniqueness of this study lies in the fact that the respondents who participated in the research process were luxury consumers. Only this category of respondents could articulate the motivations behind luxury spending.

5

Discussion

This study aimed to construct a multifactorial model to facilitate the assessment of the relationship between measures of Chinese consumers' attitudes towards luxury items and their psychological intent to purchase such products. This study aligns with the thesis asserting the existence of differences in factors influencing the purchasing intentions of the Chinese consumers of luxury items (Zhang & Cude, 2018). The findings further confirm the importance of perceived consumer values influenced by lifestyle (Akkaya, 2021). As posited by the Theories in the Psychology of Luxury Consumption (Dubois et al., 2021), socio-psychological signals shape the perception of goods as objects of luxury, influencing the motivation behind their acquisition, display, and the subsequent consequences of consumption for the buyer. It has been demonstrated that brand recognition is a key motivating factor for Chinese consumers to purchase luxury items. This reaffirms earlier findings that luxury buyers tend to favor widely advertised products of well-known brands (Balabanis & Stathopoulou, 2021).

Overall, the findings confirm the conclusions supporting consumers' willingness to pay more for luxury brands based on their branding and exclusivity (Bazi et al., 2020). Purchasing intention and loyalty towards luxury brands are higher compared to mass-market goods (Royo-Vela & Sánchez, 2022). It is also noteworthy that the postulates of the Theory of Consumer Choice (Levin & Milgrom, 2020) have not proven applicable in practice to the luxury goods market. In this market, rational behavior is not determinant in shaping consumers' intentions toward expensive branded products.

However, an intriguing and distinct observation has emerged, which is that within the Chinese context, the aspiration to possess a fashionable novelty ahead of peers exerts negligible impact on consumers' inclination to procure luxury products. Furthermore, the authors of this study managed to confirm the postulate that materialism plays a pivotal role in purchasing expensive brands. These brands are not only associated with prestige and reputation but also contribute to emulating the most successful members of society (Kim et al., 2022). It is reasonable to concur with the assertion of the Theory of Reasoned Action (Ajzen, 2019). According to this theory, social comparison and materialism are driving forces in the luxury goods market, which mutually reinforce each other and consumer behavior.

The research findings demonstrate that the Chinese consumer is motivated to purchase luxury items due to the perception held by fellow community members. This corroborates earlier research wherein it is asserted that the concepts of "saving face," gift-giving, and social status hold a central position within Chinese culture (Wang & Foosiri, 2018). In the specific context of the luxury goods market in China, the practical applicability of the Social Comparison Theory (Festinger, 1954), is thus affirmed. This theory asserts the significance of self-comparison with others for evaluating one's own identity.

Prior research also underscores that latent social motivations of luxury consumers arise from satisfying at least one societal goal. In instances where this objective cannot be attained, such as when branding emphasizes the lack of originality in a branded item, consumers are more inclined to anticipate the achievement of an alternate objective (Zhang et al., 2019b). Utilizing and expanding upon the Theory of Planned Behavior, in combination with preceding research (Zhang et al., 2019a), this study elucidates that the inclination for societal validation, together with brand recognition, directly impacts the intentions to procure luxury items. Confirmed, as posited in the Theory of Planned Behavior (Ajzen, 2020), the subjective norm (in this study, the involvement of consumers with well-known brands in fashion) through perceived social pressure influences consumer intention to purchase luxury goods.

The results of assessing the influence of social comparison and fashion involvement suggest that Chinese consumers perceive such purchases as an opportunity to enhance their social status. This somewhat diverges from earlier research that demonstrated functional and individual value influencing luxury consumption but only in conjunction with income (Zeng, 2018). It also differs from studies (Theories in the Psychology of Luxury) (Dubois et al., 2021), asserting that the consumption of luxury items invariably constitutes a compromise between costs and benefits for consumers of luxury items. Similarly, the Acquisition-transaction utility theory (Thaler, 1985), suggests that the actual price of acquiring the product is important for the buyer. However, this may be explained by cultural peculiarities – recent research examining India and the United Kingdom demonstrates a significant effect of social comparison orientation on intentions to purchase luxury items in a collectivist culture, but minimal impact in an individualistic one (Pillai & Nair, 2021). China, meanwhile, aligns with collectivist cultures, akin to India.

It is interesting to discuss the regional nuances in consumer behavior regarding luxury items. Some early theories (relating to a comparative review of different consumer cultures) (Kapferer & Valette-Florence, 2021) nevertheless asserted that external predictors dominate over internal motives in both developed and developing economies. This paper lacks a comparative analysis; however, not all researchers agree on the equal influence of external motivation in different regions of the world. For instance, the association of luxury items with product quality and foreign origin showcases a similarity (McKinsey & Company, 2018). Research on the Russian luxury goods market, similar to that of China, indicates that consumers spend more than they can afford to maintain their social status (Gerasimenko & Golovanova, 2021). Overall, such behavior, though paradoxical, is characteristic of BRICS countries, where consumers demonstrate a surge in luxury purchases disproportionately exceeding their disposable income. Part of this phenomenon is explained by the increase in luxury purchases by individuals with shadow incomes (Chernov & Zakharova, 2021). However, unlike the findings of a survey on young Chinese luxury consumers, the initial impression of Russian buyers is associated with the internal value of the brand itself, its uniqueness, and its functional properties (McKinsey & Company, 2018). A lesser emphasis on the values of social dominance and a greater appreciation for the uniqueness and functionality of branded items are also demonstrated in the American consumer sample (Yu & Sapp, 2019).

6

Conclusions

The study delves into the comprehension of motivations and perceptions of luxury item values that influence purchasing behavior in China. Drawing from the findings, this research presents theoretical and practical implications for global luxury item brands targeting the Chinese luxury market for business development. The evident conclusion is that brand name, recognizability, image, and pronounced status play significant roles in the purchasing behavior of Chinese consumers in the luxury goods segment. The study found that the predominant portion of consumers focuses on acquiring luxury items from a utilitarian perspective, attributing a biased perception of superior quality to such goods. In this case, Chinese consumers demonstrate that they consider such products to be of higher quality, durability, or functionality, hence justifying their high price. It can be inferred that Chinese consumers do not always differentiate at first glance between products with qualitative characteristics and those emphasizing the intangible value of the brand, as highlighted by marketers in advertising campaigns.

The final model allows for the conclusion to confirm the hypothesis regarding the influence of brand recognizability (its status) on purchasing motivation. More recognizable brands are more appealing to Chinese consumers and are associated with value, which extends to product features. A positive impact on the attitude of Chinese consumers towards purchasing luxury items is recorded for factors such as materialism. It can be argued that Chinese consumers believe that buying and subsequently displaying a large number of luxury items in society allows them to enhance their social status in the eyes of others and align with the trends of the most affluent social groups. The purchase of luxury items is also explained by the potential to attain a higher status in social comparison. Buyers are ready to pay a higher price, provided that their peers are aware of the amount spent on the luxury item. The intention to purchase luxury items depends on involvement in fashion, as following its trends promotes consumer engagement with expensive items and positively influences attitudes towards purchasing luxury items.

However, fashion novelties do not significantly influence the motivation to purchase luxury items in China. Chinese consumers of luxury items remain representatives of a collectivist culture, meaning that consumers do not wish to stand out excessively from their social group. The insignificant impact of fashion on the attitude of Chinese consumers towards purchasing trendy luxury items confirms that personal hedonistic values have significantly less influence on the purchase of luxury items than the factor of social status. There is a significant positive correlation between consumers' attitudes towards purchasing luxury items and their intention to buy luxury items.

6.1

Theoretical contribution

From a theoretical perspective, this study is intended to engage scholars specializing in consumer theory and consumer behavior motivation. The paper seeks to enrich the theoretical foundation by complementing existing research on the psychology of luxury consumption, including the cultural orientation of a specific market. A new perspective on modelling the factors influencing consumers' attitudes towards purchasing luxury items and their intention to make such purchases is proposed. This research pays special attention to expanding regional studies in the context of the Chinese market, which is characterized by significant size, growth potential, and cultural features such as traditional values and collectivist culture.

6.2

Practical contribution

To address the task of understanding the behavioral motivations of luxury item consumers, an instrument in the form of a five-factor purchasing model has been developed, stimulating the acquisition of luxury items. This model offers practitioners the opportunity to facilitate decision-making processes conducive to luxury item acquisition. The proposed model enables brand managers and marketers to comprehend the primary reasons why Chinese consumers purchase luxury items. Insights into consumer motivation aid in devising effective pricing, advertising, and innovation positioning strategies within the luxury sphere. forecasting consumer behavior, and meeting growing demands through an exquisite range of products. Based on the analysis of the Chinese luxury goods market, the study provides recommendations to actively stimulate consumer desire to purchase luxury items. Thus, emphasis on brand associations with social status value is essential. Advertising messages and communicative strategies of luxury brands should highlight the potential to enhance the buyer's social standing. Additional consumer engagement can be achieved by creating exclusive limited editions, as excessive ubiquity begins to diminish a brand's exclusivity. Enhanced promotional efforts for new high-end brands in the Chinese market should focus on increasing their recognizability.

6.3

Research limitations and prospects for future research

The limitations of the study are primarily associated with the voluntary nature of participation. The sample consisted of respondents who were inherently motivated to participate, potentially representing individuals with an affinity for luxury item purchases and engagement in shopping and fashion trends. Moreover, the respondents were digitally savvy and active individuals, utilizing social media platforms as a means of survey engagement. It remains plausible that less progressive Chinese consumers may harbor somewhat distinct motivations and driving factors behind luxury item acquisition. This aspect is recommended for further investigation, including comparisons of the differentiation or convergence of psychological stimuli among Chinese consumers and other regional markets of luxury items. Future research may also focus on assessing the factors (or the degree of influence of factors identified in this study) affecting the motivation to purchase luxury items in specific industry sectors. It can be assumed that consumers purchasing automobiles or handbags may be motivated by different drivers. With the rise of online shopping, it would be pertinent to compare the results of factor influence assessment between luxury items purchased online and those bought in boutiques, as luxury consumers traditionally have a tendency to be influenced by the atmosphere of luxury stores.

Availability of data and material

Data will be available on request.

Ethics approval

The research was conducted ethically in accordance with the World Medical Association Declaration of Helsinki. The research was approved by the local ethics committees of State University of Management (Protocol No 2 of 12.12.2022).

Consent to participate

Informed consent was signed by the participants.

Funding

The research received no funding.

CRediT authorship contribution statement

Sergei Chernov: Writing – review & editing, Writing – original draft, Visualization, Validation, Supervision, Software, Resources, Project administration, Methodology, Investigation, Funding acquisition, Formal analysis, Data curation, Conceptualization. Dmitry Gura: Writing – review & editing, Writing – original draft, Visualization, Validation, Supervision, Software, Resources, Project administration, Methodology, Investigation, Funding acquisition, Formal analysis, Data curation, Conceptualization.

Acknowledgments

Not applicable.