THE recent trip abroad by Chi- na’s leading couple， President Xi Jinping and his wife Peng Liyuan， attracted global media attention. There are many aspects to write about， but perhaps most interesting from an economic point of view is the positive impact of China’s new first lady on China as both a global and domestic brand. In Europe， and particularly in the U.S.， the image of wives of senior political figures have often been defined in terms of the names of their primary designers or brands that they like to wear. In recent years the U.S. first lady Michelle Obama has been the best example of this phenomenon， but as China – the world’s most populous country – continues to become more affluent and selective， the impact of her fashion choices may soon come in second to those of Ms. Peng.
　　Since assuming office as head of China’s political leadership， President Xi has projected an image of modesty and frugality. With this in mind， one might question whether it is appropriate for the Chinese first lady， already something of a celebrity in her own right， to be promoted as a fashion icon in the media. Absolutely， is the short answer， for several good reasons.
　　First and foremost is that there was nothing flashy or particularly luxurious about the style that she promoted during this trip. Although some may know who the designers of her outfits are， to the casual observer （and the author is not very fashionable） the brand that she promoted was thoroughly one “designed and made in China.” This is in stark contrast to the near obsession with international luxury brands that has swept through urban China in recent years. Secondly， looking through photos of Ms. Peng during this recent trip， her aesthetic style tapped into many distinctly Chinese patterns and traditional designs. Even so， many were still unique， reflecting the interpretation of the designer， whoever he or she might have been. Finally， her style was original， and reflected the confidence of the wearer， rather than some social ideal that self assurance comes from Gucci， head to toe.


　　So what do these points have to do with China’s consumer economy？ In many consumer sectors， like industrial ones， there is no shortage of the ability to produce. There is， however， a problem in the form of a demand shortfall that policy makers and economic commentators have noted for years. The sustainability of China’s growth miracle depends on convincing households to spend more in order to reduce the reliance on investment and foreign trade as leading sources of GDP growth. 　　Many domestic policy makers have suggested that in order to smooth this structural transition in the economy， national and local government entities need to help create big domestic brands to rival established foreign ones that the masses will buy into. Part of what one might call the “Peng effect” is that her preferences alone might help catapult small， unknown designers into big time retail.
　　It is interesting to note that in a recent survey of American consumers， nine out of ten could not name a single famous Chinese brand despite being well aware that a large proportion of the consumer goods that they purchase come from Chinese factories. Crowded domestic consumer markets are forcing Chinese companies to look abroad for investment opportunities， many of which may involve the acquisition of foreign companies. In doing so a key challenge would seem to be how to absorb the “intangible assets，”such as brand reputation and image， into the broader concept of brand China.
　　The idea of “thinking big” is not necessarily wrong， but it does overlook another important aspect of the “Peng effect，” and that has to do with “thinking small.” There is an advantage in having a large number of flexible producers who can respond to styles that change swiftly rather than relying on big orders from big brand names that standardize many of their offerings throughout their retail networks. Designers have a wide range of options when it comes to choosing whom they engage with to turn their visions into product. Using recent history as a reference， the future of branded retail will probably revolve around company names that we have not heard of yet. Established global brands face a challenge from the bottom as it becomes cheaper and cheaper to produce products on a relatively small scale and promote them on a very large one via new media.
　　There is still the demand problem， and this is where the “Peng effect” is relevant： convincing consumers to think small， too. A lot of research has shown that consumers in China， particularly women， have a preference for foreign branded goods， and that these preferences become more fixed the more affluent the individual is. It is reasonable to expect that， after the media attention that Peng’s fashion attracted on her recent trip， more and more high-profile Chinese will be on the lookout for high-style in design， rather than as a function of the brands represented. This could potentially have a large impact on the place of foreign luxury goods mak- ers in the country’s fashion hierarchy.
　　The work of a brand ambassador， like all diplomats， extends across cultural， economic and political dimensions. However， when it comes to the important task of boosting household consumption in China， Peng’s role may be mostly domestic： boosting the profile， confidence and hence “intangible assets” of domestic brands.