Social Media Drives Luxury
Instagram and other video or photo sharing platforms have been known to be successful at driving FOMO or luxury consumption, whether it’s art, fashion, collectibles, or other luxury goods. While the US FTC has cracked down on its “truth in advertising” mantra by ensuring that influencers actually use the product as described and various advertising agencies have begun to enforce strict photo editing rules, China has still been described as the wild wild west of social media. Until now.
Xiaohongshu is the Instagram of China and it is starting to regulate ostentatious displays of wealth and luxury. Like the United States, the Chinese regulations are aimed to keep communication between luxury brands, influencers, and consumers genuine, authentic, and real. Analysts believe that this push is from the top, the Chinese government, and their goal to create “prosperity for all” and has led to this new regulation as well as high level tech billionaires (like Alibaba’s Jack Ma) stepping aside and tax evasion charged against spotlight celebrities.
The trend for more real engagement from influencers and brands comes on the tails of Ogilvy announcing the end to accepting content from edited sources. On a broader level, it appears that the Chinese have come to a similar conclusion as Facebook (or rather Meta), that social media seems to be causing more anxiety, depression, and hopelessness, especially amongst its youth.
Furthemore, the Chinese government is probably also trying to stem any issues that may arise from the disparaging wealth gap. Similar to the United States, the wealth gap being amplified on social media leads to social and civil unrest as well as all of the individual problems identified above. Previously we looked at how the collectibles and luxury market is exploding due to influencers showcasing their collections and creating FOMO amongst their followers. Is the top of the collectibles market here due to the new regulations? Will this stem the demand?
China is trying to lead the Green Revolution
In addition to keeping its people happy, China is also trying to appeal to the planet. The country is regulating posts that showcase “excessive consumerism” like challenges for followers to spend $1 million yuan a day. In an attempt to curb ever flowing waste and plastics in our atmosphere, the Chinese realize that there needs to be a change of values. There is no equivalent regulation in the United States at this time.
The regulation by the largest economies governments comes at a time when the world is drowning in consumerism and consumption, deteriorating mental health, and hopelessness in income inequality. Studies have shown that social media has exacerbated this problem even further by creating addictive and aspirational images that are at people’s fingertips nearly 24 hours 7 days a week.
Is the Digital World not Mentally Fit
The world is becoming more digital as there is a push towards Web3 and the metaverse. It seems like we can’t put the toothpaste back in the tube at this point. If we can’t solve these issues while our digital selves are only a fraction of who we are, how are we going to solve things when we are fully immersed? Is this the beginning of a glut of depression cases, mental health pandemic, or civil unrest?
What do you think of the new regulations? Is it surprising that China has implemented these regulations? Do you agree with them or do you think that you should be able to post whatever you want, especially as a consumer? Do you think this will affect the exploding collectibles market? How will this affect luxury consumption and the bottom line of artists and high fashion? What will happen to the future of the human mind? Drop us a line with your thoughts and opinions!