Yes, this audience can be demanding, but the potential rewards for successful Western brands are huge, especially as China’s younger consumers cement their position as truly global citizens, with money to spend! So what are some of the key things that Western marketers should know when trying to understand what Chinese Millennial and Gen Z customers want from brands?

Luxury brands

Research by Bain & Co has found that China’s younger markets are expected to consume 45% of the global luxury product market by 2025. Dealmoon, the luxury online Chinese-American retailer, has found that Chinese millennial and Gen Z customers love high-ticket brands such as Hermès, Gucci and Balenciaga, as well as edgier high street brands such as Converse and Zara. Trainers are a hot category but handbags remain the most coveted status symbol, with the classic Chanel quilted leather always being eminently covetable.

This cohort of buyers demonstrates a tendency to impulse shop, wield significant buying power, and be extremely empowered and confident in their consumer choices. When it comes to luxury markets, they love big names, big celebrities and big campaigns – but increasingly they also want to discover interesting and unique brands that are highly relevant to their lifestyles. Gen Z and Millennial buyers also want to show off their luxury purchases, to display their style credentials and affluence. They do this on social media, sharing posed content that incorporates their brand choices, and which gives marketers a fantastic chance to engage, share and make their customers into micro-influencers.

Digital-first

Western brands will find that younger Chinese buyers move seamlessly across a far more complex and technically advanced digital ecosystem than their Western counterparts. This means getting to grips with a far greater array of Chinese social media platforms, AI and VR technologies, live streaming, live gaming, shopping events, Chinese payment platforms, mobile-first optimisation… and more! A Chinese digital marketing agency can make this process far easier, and organise everything from Chinese website hosting and translating through to Chinese user journey optimisation and targeted content creation.

Micro-influencers

This audience is highly mobile and digital and they are increasingly turning to micro-influencers (Key Opinion Consumers, KOCs) who they see as being more authentic. High-profile and celebrity influencers are still valued in the social media world but many trend analysts expect to see Chinese purchasing decisions migrating further and further towards online micro-communities.

Micro-influencers offer exciting benefits to Western brands. Firstly, they are extremely good at developing deep levels of engagement with their followers, who value them greatly – in a way not seen comparably in the West. Micro-influencers also have a far greater degree of product and service knowledge and really understand the brands that they represent. They are also far more cost-effective for brands than large celebrity KOLs, and evidence suggests that they can deliver genuine gains in terms of shifting products. When Dealmoon launched a luxury handbag that didn’t sell, they kickstarted the campaign again using micro-influencers and sold the entire range within a day.

Price consciousness

China’s younger shoppers have money to spend, but they are very price-savvy and understand the value of what they buy. T/his means that they want the best deals at all costs, and they also value ‘tokens of appreciation such as gifts with purchases. They also want to feel valued and rewarded for their custom and they greatly value things such as pre-launch sales and exclusive previews to recognise their loyalty. Brands can avoid the temptation to discount by offering these added-value symbols. Tactics such as thank you notes, digital stickers and wallpapers, free gift wrapping, free trial sizes, shareables and invites to product launches can be very worthwhile.

Values

The younger generation of Chinese customers is also uniquely demanding regarding the brands they choose and the products and services they buy. They want to feel that they really resonate with a brand’s values, energy, passion and true meaning. This means that storytelling is more important than ever, and in a country where digital experiences are ubiquitous, these stories must have the finest production qualities, the best creative concepts and respectful, careful localisation to avoid accidentally causing offence or misinterpretation.

Brands must be clear on the values that they embody and the ways in which they communicate them. Values should be authentic, respectful of Chinese culture (any content criticising the Chinese government, for example, is likely to see a Western brand’s online presence taken offline entirely in China), and tailored to these switched-on, sophisticated and intelligent young buyers. And never miss a Chinese shopping festival if you’re serious about sales!

It’s also interesting to note that Chinese Millennial and Gen Z buyers are becoming particularly passionate about sustainability, environmental issues, veganism and natural or ‘clean’ beauty. These are all attributes that Western brands can consider when developing and marketing their Chinese products and services, to differentiate and engage their target audience.

Find out more

Most Western brands who are seeking to succeed in the Chinese market will first commission tailored market research to truly understand their target audience within the Chinese Millennial and Gen-Z markets – which are huge! This research is a valuable starting point upon which careful digital marketing strategies can be developed and deployed, using omnichannel marketing and exciting, culturally-aware campaigns delivered via optimised Chinese branded digital ecosystems.

To find out more, and to benefit from the partnership of an expert Chinese digital marketing agency with native Chinese language skills and a proven track record, please contact Market Me China today.

The post What do Chinese millennial and Gen Z customers want from brands? appeared first on Market Me China®.

China’s luxury goods market is helping to reinvigorate China’s economy, and it is expected to rebound sharply after the pandemic’s global downturn. But how has China’s luxury goods market changed in the past year?

During the Covid-19 pandemic, China’s luxury goods manufacturers switched their production away from high-end designer products to the essentials of the health crisis – producing masks and PPE and donating money to charities working on the Covid frontline.

Now, those brands are working hard to establish longer-term impacts. Analysis from McKinsey [1] suggests that the following changes may result:

1. Structural changes

Before the world even knew about Covid, independent European wholesalers of luxury goods were beginning to struggle, along with some of the luxury department stores of North America. This was partly driven by a structural move to more vertical integration models which had begun some years previously – accelerated by the recent surge in e-commerce. Some of these wholesalers, boutiques and stores are expected to go out of business, and those which survive are expected to embrace aggressive discounting and commercial policies which could negatively impact the market position of brands without concession models – at least in the near term.

2. Local shopping

Luxury goods have always been associated with global consumers, with up to 30% of these purchases being made outside of a customer’s home country. Chinese customers took over 150 million foreign trips in 2018 and McKinsey believes that over 50% of China’s luxury goods spending in that year was made overseas; for the lower prices, and as part of the travel experience itself.

However, international travel restrictions are likely to persist for some time and this means that brands will need to attract Chinese luxury goods lovers in a fresh way. Forward-thinking brands will seek to attract this high growth market with local, tailored experiences across digital and omnichannel platforms, and strategies that focus on customers in China’s evolving tier-two and tier-three cities. The challenges of customer service and retail logistics in these cities will be a challenge, but one that luxury brands are expected to be highly motivated to overcome; particularly for Western brands with the logistics capabilities to service Chinese markets via an e-commerce model.

3. The end of the live show?

Trade shows and fashion weeks have always been an integral part of luxury brands’ marketing campaigns and their relationship building with direct customers and trading partners alike. These shows are expected to return in time, but many Western luxury goods brands are looking at digital alternatives in the meantime, and creative means of providing that same sense of atmosphere, drama, storytelling and magic through online content. The challenge will be an enticing one for creative partners of luxury goods brands, who can leverage China’s advanced digital landscape to offer cutting-edge content experiences – without live audiences.

4. Goods over experiences… for now

Experiential luxury – the desire for experience over physical goods – has been one of the fastest-growing trends in the luxury industries in recent years, driven by millennials who prefer ‘Instagrammable moments’ over physical products – and then followed by Baby Boomers who had already brought a lot of physical luxury goods and were also moving towards more experiential purchases; think of high-end restaurants, resorts, cruises and hotels for example.

However, research suggests that there will be a growth in luxury physical goods sales again – at least in the short-term – with customers seeking out reassuring, high-end, quality possessions that they can enjoy while awaiting a return to normal life and free travel. Once international travel and other restrictions are ended, it is expected that the trend for high-end experience consumption will surge once again. This offers opportunities for luxury brands of all kinds to implement impactful digital marketing campaigns that appeal to their target Chinese audiences now – whether for immediate conversions or for longer-term brand positioning in anticipation of future sales.

Steps for luxury brands to take now:

a. Review your current inventory and consider 2021 collections – ideally without resorting to any deep discounting to manage excess stock.
b. Accelerate your investment in digital marketing to engage target customers and to grow your e-commerce channels.
c. Reassess the strength of your supply chain – recognising that, for luxury goods, in particular, many manufacturers are still not operating at capacity.
d. Begin thinking about how you can put digital at the heart of your entire operating model, for a robust ‘pandemic safe’ sales channel that can overcome any future local restrictions.
e. Revisit your customer and market research, to understand how these may have changed in the past year.
f. Focus on building a culture that embraces flexibility, innovation and resilience, to succeed in testing times!

In conclusion

The luxury goods industry is used to reinventing itself. Western brands were already waking up to the emergence of powerful native Chinese luxury brands, changing Chinese consumer trends and the impact of global politics on trade – before Covid was even a factor! There is no doubt that the sector will continue to succeed – although some brands will emerge in a stronger position than others. Success will rest on the ability of brands to adapt to the short-term demands made as a result of Covid, whilst planning ahead to meet longer-term changes in underlying customer demand.

Western luxury brands should almost certainly be using this time to invest in their digital marketing activities and their strategic campaign planning. Whether those brands are in sectors that can now operate freely (such as e-commerce) or planning ahead for a return to full commercial form in the near future (such as luxury travel), there is everything to play for in a market where China’s customers have money once again, the intention to spend and high optimism about their economic prospects.

The help that you need

Market Me China is here to help you succeed with your digital marketing efforts in China, whether your business operates within the luxury sector, or a different market entirely! Our team of highly experienced marketing professionals blend native language skills with deep Chinese digital marketing experience to bring measurable returns to our clients and their bottom line.

We help to develop and deliver impactful Chinese digital marketing campaigns that are tailored to every client’s unique needs – and naturally, we can work on a distanced basis in line with current working practices. Please contact us in the first instance to discuss your needs and we will be delighted to help.

Source

[1] China consumer report 2021 – Understanding Chinese Consumers: Growth Engine of the World, McKinsey

The post How China’s luxury goods market has changed during Covid appeared first on Market Me China®.

The Chinese luxury market after Covid

The good news is that China’s market is strong and buoyant and its luxury retail markets are already picking up once again, with Chinese customers keen to purchase quality, authentic Western brands to show their taste and affluence. Studies show that Chinese customers are feeling optimistic about their economic prospects, with most expecting to enjoy higher levels of disposable income and wealth in the coming months, compared to the start of the year.

What are Chinese luxury customers buying?

As international travel is currently curtailed, Chinese customers are keen to indulge themselves with luxury shopping sprees – particularly in clothing, makeup and skincare lines, along with jewellery and high-end technology. And, with Covid still very much present, these affluent customers are keen to shop online and to enjoy products from their favourite Western brands, favouring fewer – but higher-quality – purchases that show their taste and awareness of key social trends, such as sustainability. Let’s look at how this translates into a series of key emerging trends that Western marketers should know:

1. Options for greater flexibility

Georgio Armani recently announced that he planned to move away from the twice-yearly fashion shows of old and embrace digital showcasing options according to his own schedule. This may well set a trend for luxury fashion and aligned industries. Customers may be less inclined to travel to fashion shows for both health, environmental and image reasons. This could mean an end to seasonal collections (a strategy already successfully employed by Moncler Genius.) At the same time, digital marketing channels mean that brands can use social media and their own digital eco-system to showcase products to customers whenever they want.

2. A desire for longevity and meaning

Millennials in China have long loved to purchase luxury goods, but early trends suggest that they are shifting their focus towards more durable, environmentally-friendly products, driven by a growing awareness of sustainability and a desire to be seen as ‘green’. At the same time, these younger generations will be reshaping their world-views after their first taste of privation. Their assumptions that economic growth and success will continue in an upward trajectory will have been challenged and their views of the world are likely to be adjusting. As a result, luxury brands should focus on purpose, values, meaningful experiences and storytelling with a focus on authenticity and heritage.

One immediate expected shift in the luxury goods markets? Prominent logos are expected to become a thing of the past, as conspicuous consumption takes a backburner for more discreet luxury appreciation. The good news for Western luxury brands? It’s far harder for counterfeiters to make convincing replicas without resorting to overt logos, which should help to protect the integrity of your brand in China.

3. Potential new business models

Wasteful fashion has become a hot topic and luxury brands are keen to distance themselves from images of landfill and poorly-paid workers in sweatshop environments. This means that the circular economy is a hot new trend and firms such as Panoply and Rent the Runway are becoming desirable. In the UK, luxury retail brand, Selfridges, has shared its intention to create a circular retail economy at the highest level with resell, repair, rental and refill options for customers – partnering with a peer-to-peer rental brand, Hurr, to create its luxury circular retail model. Expect Chinese luxury brands to also begin releasing their own worldviews of circularity – with lucrative partnerships and interesting new revenue models both all to play for.

4. Greater agility

Covid-19 demonstrated how unprepared the business world was to systematic uncertainty and risk. This means that luxury brands will be working hard to embrace creative thinking, agility and flexibility at their very hearts. Expect to see a movement towards more diverse, agile business models which can make rapid shifts as market conditions require. Western brands which can adopt similar leadership strategies are far more likely to survive and thrive in this new post-pandemic world.

5. A willingness to ‘buy Chinese’

The ‘Made in China’ campaign was powerful during Covid, and Chinese luxury brands have been heavily favoured during the pandemic – particularly as the country’s trade war continues with America. This could offer interesting opportunities to Western luxury brands who are keen to create fresh retail models and to work in China with complementary partnerships.

6. A passion for ‘Wellness’

The wellness market has been strong in the West for some time, and now it’s a huge trend in China too, especially amongst younger buyers. Chinese consumption is driven by myriad factors, such as identity, emotion and social connection – but the old desire to show wealth and economic success is now slowly being replaced by a desire to be fit, well and happy. This will be visible in greater sales of athleisure clothing, loungewear and home leisure luxury goods.

The takeaway for Western brands

Luxury Western brands cannot move past these uncertain times with old strategies and tired tactics. The world has been fundamentally adjusted by Covid-19, so those firms that can be flexible, agile and – above all else – ready to embrace meaningful, evidence-based change – can enjoy real success in China. To find out how Market Me China can help your luxury brand to thrive in China’s post-Covid market, contact our team for a no-obligation chat about your needs. Our team of digital marketing experts are ready to help and able to work using virtual tools to maintain social-distancing whilst delivering evidence-based results at every turn.

The post What will Chinese luxury consumers want in the post-Covid world? appeared first on Market Me China®.

Preparing your Chinese marketing strategy

Luxury brands seeking to build a successful marketing strategy in China must really get to grips with the intricacies of their target Chinese market and the unique features that differentiate it from equivalent Western audiences. For example:

1. Chinese customers value trust – so luxury brands must seek to persuade new customers of their brand credentials by showcasing awards and certificates etc, or peer-to-peer recommendations.
2. China is a collectivist society where the power of the group, networks and the maintenance of harmony for all are key features – superseding individual wants and needs. To meet this, luxury brands must demonstrate their global presence and find ways to engage with groups on social media.
3. Chinese people prefer to avoid situations which are ambiguous. They prefer security over risk, competition and adventure. Luxury brands can respond by playing on the quality and trust of their product offer, providing free trials, free returns, generous guarantees and after sales service, along with the ability to leave unbiased reviews.
4. Guanxi, or the creation of relationships, is essential for Chinese business success. Luxury brands can leverage this by using social media and live chat features to create a sense of membership and to share rich, compelling and valuable content which resonates with the audience. This creates a sense of belonging and personalises the global shopping experience.

A Chinese marketing agency can help Western luxury brands to master these complexities in order to create a successful marketing strategy in China. Remember, without local expertise, you can inadvertently damage your brand, fail to engage your target audience and see your budget fritter away without that vital ROI.

Choosing your platforms

Chinese consumers prefer to research and buy online and most are keen to use their mobiles to do this. From brand engagement to peer-to-peer reviewing and research and the actual point of purchase, it is highly recommended Western luxury brands develop a multi-channel, integrated digital strategy to launch their brand and products successfully in China, using messaging and content that is designed specifically to appeal to the target Chinese audience. This multi-channel strategy is likely to include:

Website and app optimisation

Western luxury brands who are serious about building their brand in China will create a localised Chinese website. They will provide landing pages for Chinese buyers, mobile optimised purchasing and Chinese friendly payment platforms. Other elements such as categorisation of products is also important. For example, Western luxury beauty brands should know that Chinese women are keen to attain bright, light and clear skin. Large players such as Creme de La Mer use this knowledge and group their products under a specific ‘whitening’ category for this audience.

Chinse online PR

To build your reputation and brand awareness in China, the right online PR strategy is key. Branded releases, peer to peer comments and editorials should be published on relevant vertical media websites, news portals, forums, as well as Baidu Q&A. This content can also be repurposed across social platforms and your website. This should be carried out from the start of your Chinese marketing strategy.

Chinese consumers are keen to research their product purchasing decisions, using referrals and word of mouth, as well as social networking to gather their information. They are keen to use well-known brands with prestige credentials, and they value Western brands and see them as being luxurious. Western luxury brands should be active on forums (& Baidu Q&A) where their potential customers are known to be active – engaging and sharing information which helps them to make a positive purchase decision.

Chinese social media

WeChat and Weibo are obvious top two Chinese social media platforms, but other more niche platforms may be right for your brand, for example, Little Red Book which is a content generation platform for product reviews. With over 100 million users, aimed at young Chinese women – 90% of its users are 18-35 year old females – allowing them to share information about fashion, beauty, and health products from overseas that are hard to access in China. Your Chinese marketing agency can help you to identify the right social networks for your brand and product offer. Once you have created your platform, you must fill it with rich, engaging and beautifully curated Chinese-language content which inspires sharing, gives a sense of aspiration and encourages followers to become your brand ambassadors. Giveaways, raffles and other competitions will encourage referrals.

WeChat case studies:

Let’s look at WeChat as a case study of the power that Chinese social media can offer to luxury brands. This hugely successful platform has a billion users across the globe and features that include mini-programs and Moments Ads. Ways that Western luxury brands use the platform’s mini-program feature include:

– Longchamp lets potential buyers book a VIP retail appointment in a physical store and see a personalised preview of exclusive services and products. Customers ready to buy a luxury bag can do so online and then visit a retail store to collect it offline.
– Gucci offers personalised wallpapers and branded stickers for users to share amongst their own networks; again building that personalised and intimate brand experience with a sense of prestige.
– Hermes offers before and after customer services support, as well as the ability to prebook a viewing appointment in store.
– Dior used this feature to deliver an hour-long livestream with a ‘see now, buy now’ mini-program that engaged 3 million visitors; a platform first.

Where to start?

To be successful in this competitive environment, your Chinese marketing campaign on social media should include tactics that deliver against the key deliverables of exclusivity, engagement, community, personalisation, gamification, social gifting and limited time offers. Unsure where to focus your efforts? Your Chinese marketing agency will get you started, fast!

KOLs

Key Opinion Leaders (KOLs) are Chinese online influencers and wield a huge degree of power across buyer markets, particularly B2C markets. There are a huge number of KOLs, each of whom charges different fees to promote, sponsor or review products. Again, your Chinese marketing agency can help you to find the right KOL for your brand and make the necessary arrangements for a profitable business relationship. This approach can jump-start your social media following on Weibo, WeChat and Little Red Book.

Baidu PPC (SEM)

Social network and KOL activity rely heavily on the emotional side of buying, using influencer marketing, beautiful and aspirational imagery and clever campaigns that resonate on a personal level with customers. Baidu PPC also helps to increase your website’s ranking for online buyers who are actively searching out your type of product. You have to invest in carefully targeted Baidu PPC in order to use your budget wisely and for maximum ROI, and invest in SEO activity for the longer term to consolidate your presence. These activities must be ongoing and carefully managed, with regular adjustment for optimum results. Get your Search Engine Marketing right and you’ll see heightened conversions from greater targeted traffic to your website.

Case study – Crème de la Mer:

This legendary facial cream had long been renowned in the West, but once it joined The Estée Lauder Group in 1995 its reputation grew amongst a global audience. The brand launched successfully in China via a standalone Chinese website which was filled with products and equipped with live online chat. La Mer also delivers paid advertising campaigns on Baidu and uses PR to share releases, editorials and peer to peer marketing to rank highly. At the same time, it has built a powerful social presence on Weibo, WeChat, YouKu and more, providing content that offers genuine value to customers with tutorials and expert tips.

Find out more

For help in perfecting your Chinese marketing strategy, contact Market Me China for expert assistance. Our team of marketing professionals specialise in all forms of digital commerce and offer the practical skills and insights that you need to succeed in the Chinese market. Whether you are a new luxury brand seeking to build a foothold in China or a more established brand looking to grow your reach and sales, we are here to help. Contact us today to find out more.

The post How to develop the right marketing strategy in China for luxury brands appeared first on Market Me China®.

Here are some luxury brand marketing tips to help you gain a foothold in this highly lucrative market.

Build trust

When it comes to luxury goods, fraud is a big problem in China. Globally, fraud is worth $600billion per year, and Chinese shoppers are very wary of it (source: Global Legal Post). It is vital that your luxury brand marketing works to build an element of trust. While just over 50% of online shoppers report feeling more confident about buying online, 78% still want to visit a store in order to see a physical version of the product (source: Enterprise Innovation). Your marketing will therefore have to work hard to ensure you build a trustworthy brand that people feel comfortable buying from.

Create exclusivity with your luxury marketing

Western goods show off a person’s success in China. Just as in the West, certain brands are valued for their exclusivity. If everyone owned them, nobody would want them, and Chinese consumers have the same attitude. We’ve seen in previous posts how Chanel have managed to curate an image of selectness by only opening one boutique in Shanghai, despite the city’s vast population. Other luxury brands have seen their perceived value fall simply because they opened too many stores.

Even if you are planning to target China online shopping, creating luxury brand marketing that suggests exclusivity can serve to attract wealthy consumers who want to stand out from the crowd.

Identify brand ambassadors

There was a time when celebrity endorsement was a marketing tactic that could only be used by the biggest companies. Modern social networks now create a wealth of minor celebrities (many of whom won’t be known at all outside of the online sphere), who are called KOLs (Key Opinion Leaders). These people have a strong platform of loyal followers, and therefore make perfect influencers. At Market Me China, we have a KOL network on the top social media platforms WeChat, Weibo to help your product reach a wider audience.

Present the right face of your business

We say this all the time, but being aware of cultural differences is the most important thing to remember. Global companies often fail in China because they didn’t adapt their offering. What Chinese people value can be different to western consumers. Luxury marketing in China isn’t about making your product seem different to what it is, it is about choosing which features and benefits to highlight to the new market.

Get your luxury brand marketing right, and China will reward you greatly.

(Image source: Image created by Stuart Miles | www.freedigitalphotos.net)

The post Luxury brand marketing for Western SMEs entering the China market appeared first on Market Me China®.

What do Chinese women buy?

In China, giving an expensive gift is a sign of your own personal success, so Chinese women give only the best. Louis Vuitton used to reign supreme in the luxury fashion market, although it has now been knocked down two places. Rival firm Chanel had taken the number one spot in 2013, according to the volume of internet searches performed for luxury goods China. As of the beginning of 2015, however, the top spot goes to Apple.

 Apple in China

In 2012 Apple held just 7.5% of the Chinese smartphone market (source: CNN). Now, with the iPhone 6 Plus catering to the Asian demand for larger phones and the incorporation of Chinese language ads into its luxury brand marketing, Apple is now the preferred brand for gifting among 18.9% of female luxury consumers (source: Haute Living).

Chanel in China

Chanel was the number one luxury brand in the Chinese luxury fashion market 2013-14. While it has now been surpassed by Apple, it is still the most popular fashion brand for women. With the popularity of Louis Vuitton still falling, and Dior holding the fourth spot with just over a third of Chanel’s popularity, the brand comfortably holds the lead in the Chinese luxury goods market, for now.

 Louis Vuitton in China

There was a time where Louis Vuitton was the must-have fashion for Chinese women in the China luxury goods market. It was so popular that one French outlet has to introduce a rule that only one handbag could be bought per passport, otherwise Chinese tourists would clear out their entire inventory (source: English.People.CN). Now only 10% of Chinese women prefer LV when gifting, placing it firmly in the number 3 spot.

Fashion addicts addicted to luxury goods China

While sale of watches and expensive menswear fell last year, demand for cosmetics, perfume, and women’s wear grew by 10 per cent. Middle income women, from wealthy urban cities such as Beijing, Guangzhou, and Shanghai, are driving the demand in the China luxury goods market. These women are knowledgeable about fashion brands and want to impress their friends and peers (source: Bloomberg).

 Selling luxury goods China

There is a gradual shift happening in the China luxury market. Women have more purchasing power and the gender split in shoppers is starting to move towards global averages. Products targeted at women are gaining popularity, and the general rule still applies that if you want to succeed in the Chinese market, you must customise your offering to meet the demands of domestic shoppers.

(Image source: Image created by sattva | www.freedigitalphotos.net)

The post The favourite brands of women in the China luxury goods market appeared first on Market Me China®.

So which brands do the Chinese covet the most? We take a look at the most searched-for brands online in 2013.

1. Audi (China luxury car market)

With the China luxury market expected to outpace the USA in car sales by 2016, it is fitting that the most searched luxury brand of 2013 was the German car manufacturer Audi. Audi has been enjoying record sales in China over the past few years, with a “double digit” percentage growth forecast in 2014, meaning sales of at least 540,000 vehicles. In 2013 Audi outsold rival luxury car firm Mercedes by more than two-to-one and sold 26% more units than BMW (source: Bloomberg).

2. BMW (China luxury car market)

Being beaten to the number one spot by a rival car firm won’t bother BMW too much, as the China luxury car market is proving to be highly lucrative for the company. A 20% increase in sales in 2013 made China the manufacturer’s biggest market. 390,713 BMWs and Minis were sold: nearly 15,000 more than their second largest market: the United States. BMW intends to increase local production and number of dealers through joint Chinese ventures, allowing it to keep pace with the forecast annual rise in the China luxury car market of 12%, lasting until at least 2020 (source: Reuters).

 3. Chanel (Luxury fashion market)

In 2013 Chanel beat rival fashion brand Louis Vuitton to become China’s favourite. With a range of offerings on the market, from fragrances to handbags, Chanel’s way of operating is often the template other brands try to follow. Chanel have aimed for exclusivity, and as such have kept their number of boutiques small (just three in Shanghai) in order to focus on quality and customer care (source: CNN).

4. Estée Lauder (Luxury fashion market)

Estée Lauder’s growing popularity can likely be attributed to one particular strategy: they developed an entirely new brand for their Chinese consumers. As well as making almost half of its 28 cosmetics brands available in the Chinese market, Estée Lauder introduced Osiao, a new line of products that caters to the needs and tastes of Asian customers. The brand uses traditional Chinese ingredients – such as ginseng – for authenticity, while labelling the products in English to emphasize the much sought-after foreign aspects of the brand (source: New York Times).

5. Louis Vuitton (Luxury fashion market)

Dropping two places since 2012, Louis Vuitton may have suffered from over exposure in the Chinese market. An abundance of the product, combined with Chanel’s strategy of few sites to promote exclusivity has made Louis Vuitton’s sales fall. The fact that other brands offer a larger variety of product ranges, such as cosmetics, could also have a role to play in luring customers away from the once favourite luxury fashion brand in China (source: Forbes).

These brands may be vast global companies, but often the key to their successes can be applied to lots of different products. Chanel created a feeling of exclusivity, BMW moved with increasing demand in the China luxury car market, and Estée Lauder combined the most sought-after features of both domestic products and foreign brands. These strategies could easily work with your brand too.

(Image source: Image created by Teerapun | www.freedigitalphotos.net)

The post The top 5 brands in the China luxury market appeared first on Market Me China®.

But two thirds of luxury goods bought by Chinese consumers are purchased overseas. Why are Chinese shoppers choosing to spend their money abroad instead of at home?

Greater disposable income makes travel more accessible

With larger amounts of disposable income, the Chinese people have access to travel and holidays that they wouldn’t have had a few years ago. In fact, the number of international trips made by Chinese travellers has grown from 10million in 2000 to 83million by 2012 (source: CNN). Just as people in the West like to treat themselves whilst abroad, so do Chinese consumers. With greater disposable income comes a greater desire to spend, and the affluent Chinese middle classes can now afford to indulge themselves in the luxury market.

Heavy import duties and taxes on Luxury goods in China

The strongest motivating factor for Chinese consumers to shop abroad for luxury goods is their country’s excessive tax regime on imported goods. Combined with taxes, these regulations can increase the price of luxury goods in China by up to 50%. The price of a Louis Vuitton handbag is 30% higher in a China than in Paris (source: The Economist). So from a Western point of view it may seem that Chinese spending abroad is very high, from a consumer’s point of view they are actually saving themselves a lot of money – a win-win situation for Chinese consumers and the UK luxury market.

Quality assurance

As in the West, the ‘made in China’ label is often associated with low quality amongst Chinese consumers. Goods produced in other countries, with the label to prove it, are therefore highly valued amongst Chinese shoppers. It also serves as proof of their trip, showing others that the shopper has been abroad, helping them gain social status and demonstrate their success. Chinese consumers also expect a high level of service when buying from the luxury market, with 92% of customers being unhappy with the service in Mainland Chinese stores (source: Bloomberg).

Impressive gifts

Another part of ‘gaining face’ (a key social concept in China) is being able to give lavish gifts. Foreign luxury goods in China are held in high regard, and many Chinese people want to be able to present their family or friends with impressive gifts from their holiday. Luxury goods in China help them gain social status, demonstrate their wealth and generosity, and allows them to brag about their trip abroad – all important for the newly rich middle class Chinese shopper.

(Image source: Image created by renjith krishnan| www.freedigitalphotos.net)

The post Why Chinese prefer shopping overseas to luxury goods in China appeared first on Market Me China®.

Why is China so obsessed with luxury goods?

Young money

Traditionally luxury items are seen as products for older consumers, who have most disposable income and highly-paid jobs to justify their spending. In China, however, it is the younger shopper who is increasingly keen to have the latest luxury goods. Shoppers aged 18-34 account for just under half (45%) of the luxury consumers in China. The fast growing Chinese economy is creating more consumers with considerable amounts of disposable income – two thirds of people buying luxury good in 2010 were doing so for the first time. Apparel advertising has now become one of the fastest growing areas of online advertising to keep pace with the demand (source: Business Insider).

 Increased exposure

Chinese people are more aware of luxury brands than they were a few years ago. The internet, in particular social media, has helped to spread awareness, as has the increasing number of luxury retailers opening stores in China. Being able to afford to travel abroad means that Chinese consumers can discover new luxury items and bring knowledge of these back home. Between 2008 and 2010, brand awareness grew quickly, with consumers becoming twice as aware of luxury brands (source: McKinsey).

Great deals abroad

China’s large import duties make buying luxury goods at home very expensive. Chinese consumers are becoming more price savvy, with a falling number of shoppers automatically assuming that the most expensive items are the best quality. Luxury consumers in China now compare products and prices online to find the best deals, and there is an increasing awareness that products are much cheaper overseas than they are at home. This explains why Chinese shoppers are happy to spend £1,700 each per trip on luxury goods when they come to Britain – a figure three times the average for the market (source: Economist).

Making the most of the Chinese obsession with luxury goods

Being one of the fastest growing luxury markets in the world means China is a viable and worthwhile focus for your business. The Chinese middle class is growing fast, and there are a huge number of millionaires in the country (around 2.8million, currently), many of whom are young (source: Economist). From entering the foreign market, or attracting the attention of Chinese tourists visiting the UK, there is plenty you can be doing to benefit from this lucrative market segment. The Chinese demand for luxury goods is going to increase. Are you going to be there to meet it?

(Image source: Image created by stockimages | www.freedigitalphotos.net)

The post Why does China love luxury goods? appeared first on Market Me China®.

Jewellery sales during Chinese New Year

For many the perfect gift, sales of jewellery in China between the New Year period in 2014 rose by 38.1% (source: International Business Times). As well as typical jewellery pieces, and New Year themed items, there was also a general rise in the sale of precious metals. Caibai, a leading jewellery retailer in Beijing, reported a 57.6% rise in sales, which included gold and silver as well as jewellery items. The Chinese like to buy jewellery, as well as New Year themed gold bars, as presents for themselves or others, in the hope that they will increase in value, therefore making them an investment, rather than a passing trinket (source: Bullion Street). Convincing Chinese shoppers of the potential for your jewellery and metal products to increase in value, is a good way to inspire confidence among New Year customers.

Chinese New Year travel

For many Chinese, New Year is a time to be spent with friends and family. During the Spring Festival period, into which New Year falls, over 1billion Chinese people travel to spend time with relatives and friends. But it is not just visits home that make Chinese roads, airports and seaports so busy during the Lunar New Year. Plenty of Chinese people take advantage of the time off to go travelling. Shanghai alone saw 64,000 people travel abroad in 2012, an increase of 11.6% on the previous year (Source: China.org). 2014 saw a total of 4.5million estimated overseas travellers, a record level at 12.5% higher than 2013 (Source: GB Times).

Spring Festival luxury goods sales in the China market

We already know that Chinese travellers are big spenders when abroad. During the New Year period, even more so. In 2012 Chinese travellers spent $7.2billion on luxury goods abroad. Their spending alone accounted for more than 62% of the luxury sales in Europe. As the Chinese people acquire a taste for luxury goods and enjoy increased levels of disposable income, they are becoming a powerful spending force, already accounting for the largest market in luxury goods in the world.

Are you considering marketing to China for the Spring Festival period? Let us know below!

(Image source: “New Year Bag” | www.freedigitalphotos.net)

The post The important Chinese New Year spending patterns appeared first on Market Me China®.