the Chinese traded silk internally, within the empire. Caravans from the empire's interior would carry silk to the western edges of the region. Often small Central Asian tribes would attack these caravans, hoping to capture the traders' valuable commodities. As a result, the Han Dynasty extended its military defenses further into Central Asia from 135 to 90 b.c. in order to protect these caravans. Chan Ch'ien, the first known Chinese traveler to make contact with the Central Asian tribes, later came up with the idea to expand the silk trade to include these lesser tribes and therefore forge alliances with these Central Asian nomads. Because of this idea, the Silk Road was born.
Northwestern Indians who lived near the Ganges River played prominent roles as middlemen in the China-Mediterranean silk trade because as early as the third century a.d., they understood that silk was a lucrative product of the Chinese Empire. The trading relationship between the Chinese and the Indians grew stronger with increased Han expansion into Central Asia. The Chinese would trade their silk14 with the Indians for precious stones and metals such as jade, gold, and silver, and the Indians would trade the silk with the Roman Empire. Silk proved to be an expensive import for the Roman Empire since its trade across Indian and Central Asia was heavily controlled by the Parthian Empire.
While the Chinese silk trade played a minor role in the Chinese economy, it did increase the number of foreign merchants present in China under the Han Dynasty, exposing both the Chinese and the foreign visitors to different cultures and religions.
And this is one of the first evidences of globalization in luxury. It was an intricate and long-drawn-out pattern, but the goods exchanged and the cultural exchanges had enough value to endure the lengthy and uncomfortable process. What makes it luxury is that the items being traded were not actually part of daily living. What was being traded were things that people did not actually need to survive but desired anyway. This is the true essence of luxury: Demand for something for which there is no need.
But it did decline eventually and become specific to certain areas, such as the silk–fur trade with the Russians, north of the original Silk Route – as means of transport were not the most convenient. It revived under the Song Dynasty in the eleventh and twelfth centuries when China became largely dependent on its silk trade. In addition, trade to Central and Western Asia as well as Europe recovered for a period of time from 1276–1368 under the Yuan Dynasty when the Mongols controlled China. As overland trade became increasingly dangerous, and overseas trade became more popular, trade along the Silk Road declined. By the end of the fourteenth century, trade and travel along the road had decreased.
This is somewhat reminiscent of what is happening today, though only in terms of the importance of China and what China has to offer. China is an important factor in today's luxury economy. As a part of the growth of globalization and the emergence of new markets, it's one of the most important countries. Again, this is not new. Historically there were explorers such as Marco Polo forging Sino–Italian/European ties. This is also one of the first examples of globalization and looking eastward. In the mid-thirteenth century, Marco Polo spent 17 years in China fulfilling a wide variety of tasks in Kublai Khan's administration. He was in effect a member of an occupying force, speaking Mongolian but not Chinese, so his understanding of the people was limited. But he traveled a great deal, often trading on his own as well as serving the emperor. Figure 2.1 gives a snapshot of the evolution of the luxury industry.
Figure 2.1 The Evolution of the Luxury Industry
The twentieth century was when the best-known luxury brands of today came to prominence. Though these brands may have been established earlier, the 1900s saw them gain the distinct identity that they still possess. While the first half of the century generally saw fashion relegated to the background in favor of robust economic development, the second half saw the luxury economy grow to become a major contributor to the modern-day economy. Through the course of this chapter, we intend to look at the major milestones in the evolution of luxury in the twentieth century.
Several luxury and prestige brands such as Louis Vuitton, Burberry, and Chanel were launched in the nineteenth and early twentieth centuries, when a strict social class system defined society and royalty and aristocracy reigned supreme. During this period, designers like Christian Dior, Yves Saint Laurent, and Guccio Gucci designed clothes and leather goods exclusively for the noble men and women of society. Their work was an art form that took several weeks and sometimes months to produce, and this was all a part of the “luxury and prestige” experience. During this period, it was the norm to literally dress in one brand from head-to-toe.
In the present twenty-first century environment, the story is different. The luxury market is no longer reserved for the elite. It has transcended boundaries. At the beginning of the century, luxury consumers were a small segment of the population who all looked the same. First, a class of wealthy people have emerged the world over. In the last three to four decades however, a vast amount of wealth has been accumulated by individuals due to several economic, social, and technological breakthroughs. Second, there has emerged a sea of luxury brands, and this has affected the high entry barrier that the industry guarded for centuries. It has also given luxury consumers more choice than ever before. Third, the rapid growth of digital information and communications technology has given consumers more variety in luxury product offerings, easier access to view the choices, and lower switching costs, especially on the Internet. This has empowered the consumers to become more individualistic, experimental, and bold enough to mix luxury and high-street fashion in one outfit; something that their mothers and grandmothers would have considered a taboo in the past.
The result of this change is the phenomenon of trading-up and trading-down. The new wealthy class that is enjoying its ability to acquire luxury products practices “trading-up.” “Trading-down” is the practice of mixing the use of luxury items with fashion brands. This practice is also popularly called “the democratization of luxury.” Therefore it is no longer a surprise to find a wealthy celebrity wearing jeans from H&M, earrings from Chanel, shoes from Coach, a shirt from Zara, and a bag from Louis Vuitton.
In 2013, companies and even luxury companies are seeing China as the land of opportunities. The other way of looking at luxury from a historical point of view is to review the actual evolution of the brands and companies and evaluate if there is any difference in their success depending on their structure and business model. Traditionally, the luxury sector was highly fragmented, characterized by a large number of family-owned and medium-sized enterprises. In the past two decades, it has been increasingly dominated by multibrand luxury conglomerates. Some small niche brands do survive as independent companies, such as Goyard, but they are in some danger of being acquired. Acquisitions occur for a few different reasons. As in the case of LVMH, a company may be trying to gain market share and control as much of the industry as possible, or as in the case of Hermès, a company may be seeking vertical integration to be in control of their own production and supply chains. The industry is now dominated by conglomerates. The day of the family-owned business is over unless it is financed by a private wealthy family such as Tiffany, Chanel, Armani, Ralph Lauren, or a number of others.
Luxury has evolved over time from family businesses to conglomerates, from old luxury to new luxury, from uber luxury to affordable luxury. Figure 2.2 denotes the evolution of family businesses to multibrand corporations in the luxury industry. The connections and validations have to be made by royalty – whether it is as old as the Roman Period, when the Emperor was given silks as gifts, or the modern era, when brands give celebrities gifts that they wear or use in public to legitimize the products. The main evolution has occurred in the way that luxury has been promoted during the years. We have discovered that desire or the dream factor of luxury has always been the same and will probably always remain the same. As long as consumers aspire to own the things they cannot afford and the same things are always more rare, more beautiful, or more coveted, then the concept of luxury will remain the same.
Garthwaite,
