Current Environment

2.1.1 Selling Reports Regarding Luxury Goods in Taiwan

15

Even though Taiwan is just a small island (35,980 km²) with population of

twenty-three millions people (2010, Ministry of Interior), it has always been playing a prerequisite role when it comes to the luxury goods market. With the rapid growth of Information Technology industries and enhancement of international trade, the economic growth in Taiwan had been tremendously significant in the year of 1990s.

The population of middle class in Taiwan had been increasing within several years, and the consequence of their raising income and financial flows have reflected the sales reports in luxury goods market. According to the report of Moet Hennessy Louis Vuitton (LVMH Group) in 2002, Taiwan was ranked as the top fourth market, standing for 2.2 billion NT dollars, for Louis Vuitton around the world (Albatross, 2010). As for the luxury Jewelry and watches, the revenue in Taiwan has also constantly stepped up.

Taiwan was regarded as one of the top ten largest markets in terms of Cartier’s jewelry and watches lines in the year of 2004 and 2005 (Fashion Guide, 2005). Cartier’ Trinity Ring and Love Bracelet were seen as extremely hot items and act as a token of

affection and wealth. According to the official report in Switzerland, Taiwan market in 2004, ranked as thirteenth, accounted for 1.8% of the entire Swiss-made watch

manufactures’ revenue and it represented approximate 8.5 billion NT dollars. In fact, one of Swiss luxury watch brands- Vacheron Constantin, established in 1755,

discovered Taiwanese consumers’ purchasing potentials and provided exquisite and exclusive services for the top of pyramid consumers. In 2006, Taiwan was the second largest market for Vacheron Constantin. Besides, the same phenomenon can be reflected to Georg Jenson, the market in Taiwan had accounted for approximately 10 percent of entire market around the globe and was evaluated as the second largest market followed by Japan for Georg Jenson. Another French jewelry brand, Bouchern, ranked Taiwan as the third market in 2006. To the company’s surprise, there was only

16

one store in Taiwan, located in the capital of the country- Taipei, but the store’s annual sales reached more than 4 hundred million NT dollars.

From the numbers of evidences and data mentioned above, Taiwan’s domestic needs and purchasing index has been significantly booming especially for luxury goods such as sophisticated watches and limited jewelry. What’s more, these presented selling reports reveals contemporary luxury goods market in Taiwan during 2005-2006 when market focused on the domestic needs. Nowadays, with the transformation and democratization of political as well as diplomatic policies, frequent interactions and interflows between Mainland China and Taiwan have echoed the consensus of

“facing-up the reality, mutual non-denial, working for the benefit for people and cross-strait peace” (Romberg, 2009) recently. Cross-strait relationship has been enormously improved which can in turn stimulate Taiwan luxury goods market because of considerably visitors from China coming to Taiwan and consuming products. Therefore, the ministry of economic affairs, R.O.C (2010) suggested that more than 40 percent of luxury goods sales in Taiwan would be contributed owing to people from Mainland China.

2.1.2 Academic Researches for Luxury Goods Buyers in Taiwan

However, the luxury goods market had already been quite matured and cultivated for years and younger generations in Taiwan, at the age of 18-30, enjoyed aesthetic experiences in exposing themselves to the luxury goods ads and more than 73 percent of population had possessed luxury (defined as items that were worth of more than 15,000 NT dollars) hand bags, watches or jewelry either by themselves or from others (Zhan, 2006). Taiwanese, particularly people aged 25-40 are acquainted with luxury goods advertisements and more willing to spend their money on luxurious products

17

(Chen, 2004) than we had expected. The stunning sales reports and high revenue in Taiwan luxury market impressed Luxury manufactures and therefore attracted more companies to Taiwan and compete over each other. Due to the fierce competition in the luxury goods market, each luxury goods manufacture increase their marketing budgets in Taiwan and their advertisement expense has reached about 3.2 billion NT dollars (jewelry and watches were 7.8 hundreds of million NT dollars) and print media accounted for 62 percent of total luxury goods advertisement expenditures (Nielson, 2005; Taipei Association of Advertising Agency, 2005). Under this

circumstance, readers are more easily being exposed to luxury goods advertisement, which may directly or indirectly enhance their cognition and brand recall in terms of luxury goods. Moreover, Chen (2004) claimed that the value, self-centered

perspective, commonly held within the individuals in the Generation Y was apparently distinct from older generation which mainly conducted purchasing behavior on the basis of needs of family or others first and this existing discrepancy was likely to result in attitude to behavior change in terms of purchasing luxury goods.

Besides, peer pressure and group conformity, for undergraduate or graduate students in Taiwan, can be other key factors to elaborate why young adults considered

purchasing luxury goods to be a common behavior or even a routine (Chung, 2008).

Chung’s study indicated that young adults in Taiwan were primarily influenced by peer (friends/ class/workmates or siblings) and media content when it comes to perceiving luxury goods purchasing intention. Chou (2009) further explored a phenomenon in Taiwan through an aspect of sociology, positing the fact with the establishment or formulation of reference groups and consumer tribe, the luxury consumption may be a regular pattern, constant ritual in one’s community.