How Apple became China’s most coveted luxury brand

This piece was originally published in Adweek on February 13, 2015

Last week, Hurun Research Institute released its consumer survey of the luxury market in China. Topping the list wasn’t a brand like Chanel, Louis Vuitton or Hermes. This year, instead, Apple was named the preferred brand for gifting among Chinese richest men and women.

The designation is not just a testament to Apple’s awe-inspiring growth, it also marks a shift from luxury as status symbol to luxury as cultural code . Where status symbols show off economic success, codes are reflections of one’s cultural capital.

“Apple has all the markings of a luxury brand: a tightly controlled narrative, considered design and metered supply, especially around launches and in certain emerging markets,” says Colin Nagy, Executive Director of Media at New York City agency The Barbarian Group.

The story of Steve Jobs’ entrepreneurialism and extraordinary achievement resonates well with affluent Chinese. It’s the story of their own striving reflected back at them. Newest iPhones are the cultural code of universal entrepreneurial success that give Chinese’s efforts self-consciousness and recognition. Carrying the newest iPhone, rather than the ubiquitous (and cheaper) Android competitors, is not just a sign of being able to afford it; it’s a display of one’s own entrepreneurial story in the tangible form.

Apple’s entrepreneurial cred makes smartphone as luxury different from a luxury smartphone. Deeper bonds with consumers are not created through made-to-measure, diamond-encrusted smartphone covers. They are made through a strong story — something TAG Heuer, Gresso, Tonino Lamborghini, Savelli, Bellperre or Brikk lack.

Like their Japanese or Western counterparts, Chinese rich are looking for smart technology that helps improve their overall lives, according to Wearables.com and The Center for Generational Kinetics’ study. Yet if modern luxury was down to just functionality, other smartphone brands would have found themselves crowning the Hurun Research’s top ten list as well. Apple stands out.

“Apple has created the same level of desire and passion for their products that equals or even exceeds what any luxury brand has for their products,” notes Julie Noiman, Managing Director of Spring Studios in New York, which counts Tom Ford, Canali and Cointreau among their clients. “When you look at the other players in [consumer electronics] category — the products trade on features and functionality. People just use them.”

This is the sort of relationship that inspires people to loyally stand in line and pay full retail price for a new product from Apple, more than they would for a luxury good. “While Apple might not have the pure prestige of established, family owned luxury brands like Hermes, they are reinventing the idea of luxury as it relates to technology. I can’t think of anyone that is close,” notes Nagy.

In 2014, China became largest luxury retail and e-commerce market. It is a country with the highest number of mobile users and has been the world’s largest smartphone market since 2011. With overwhelming number of Chinese purchasing their first smartphone, it can be expected that Apple’s aggressive market penetration strategy and its luxury clout will lead it to become the preferred brand of choice.

The evolving relationship between luxury and technology is something that hasn’t been lost on fashion industry. “Fashion and luxury brands elevate Apple, by constantly making digital technology the focus of their campaigns,” says Andreas Neophytou, Senior Creative Director at Spring Studios. “In this way, Apple has been ingratiated into the fashion world.” But the company also captures the wider shift in how we think about luxury.

Louboutin’s red sole, Chanel’s quilting, and Apple smartphones provide a narrative that we can identify with and aspire to, in an intrinsic, club-like, unobtrusive way. They are meant to express our own, personal quality of life. Codes are reflections of the things we do, adventures we enjoy and places we see.

Chinese rich have already shifted their preferences from luxury goods to exquisite experiences peppered with the thrill of danger, like swimming with sharks and expeditions to the Antarctic, according to the recent “Shock of the New Chic” report from Boston Consulting Group.

“Luxury is ultimately about creating memorable experiences — not pretty products,” says Nicole Victor, Partner and SVP, Planning and Strategy at New York-based digital agency Rumble Fox, who has Tiffany&Co. as its client. She adds: “Luxury is access. Luxury is knowledge. Luxury is not just a thing you buy.”