Luxurious 'self-rewards' are on a roll

Mike Bastin?

Rolls-Royce Ltd recently announced its highest-ever annual sales, reaching a level of 3,630 cars sold in 2013, its fourth consecutive record-breaking year. The epitome of luxury in the car industry, Rolls-Royce stands proudly at the top of the market for cars that cost more than $250,000.

While many markets experienced impressive sales growth in 2013, including the UK and the Middle East, up by 7 percent and 17 percent respectively, it is now China that has become the No 1 global market for this most exclusive of luxury car brands, overtaking the US market. Sales in China grew 11 percent in 2013 and accounted for 28 percent of overall sales, up from 25 percent in 2012.

Of the 15 more dealerships launched in 2013, seven of them were in China, taking the total number in China to 20. Dealerships were added in seven new cities in 2013 in such places as Chongqing and Xi'an. The company plans to add more this year, with a goal of 25 by the end of 2014.

But why have sales of Rolls-Royce continued to surge in China at a time when economic growth has slowed, albeit modestly? And is this trend set to continue?

Elitism and the need for conspicuous and status-conscious consumption no doubt continue to play an important part in the success of Rolls-Royce with Chinese buyers. But my ongoing research into Chinese purchasing behavior, especially luxury brand consumption, reveals more and more that self-reward represents an even greater influential factor.

In what could be considered an encouraging sign for the future of the Chinese economy, self-reward appears to result more from hard-earned success and consequent and considerable economic gain. It is not as influential where success in business has not been achieved on merit.

Self-reward, in this context at least, appears to represent a selfless rather than a selfish act of consumption.

It is no surprise to see dealerships in China expanding across the mainland to second- and third-tier cities such as Xi'an and Chongqing, where spectacular and sudden business successes are now far more likely. China's first-tier cities, now relatively mature, continue to offer opportunities but on a far more modest scale.

With domestic consumption and regional development set to replace an over-reliance on exports, it is inevitable that Chinese self-made entrepreneurs will continue to emerge and achieve incredible, rapid success in business. This will act as a powerful motivator to all those from humble origins who lack the financial support from an extremely wealthy or well-connected family.

This will also contribute considerably in the fight against corruption and nepotism in China, seen as dreadfully deleterious, economically and socially.

Paradoxically, therefore, this sales surge in Rolls-Royce in China should be seen as a sign of greater economic opportunity for all and a move toward a far more meritorious society.

Far from revealing selfish, decadent behavior, the Rolls-Royce buyer behavior in China is a just reward for all those self-made businesspeople whose hard work, and often entrepreneurial and innovative flair, represents a much-needed change in China.

A product of nepotism and a consequence of corruption, this is not: Chinese Rolls-Royce owners are the new wealth creators in China where family background is less important and tireless endeavor is total.

The author is visiting professor at University of International Business and Economics, Beijing, and senior lecturer at Southampton Solent University's school of business.