In 2015 China accounted for over 20% of the luxury market with 180 billion RMB spent ($27 billion). It is also the fastest growing place for Brands with an annual growth of 15% in average. And, despite a recently slowing economy, salaries are still on the rise, leading to an ever larger middle and upper-middle class. So, how to join the party?
1/Why Do Chinese Love Luxury? How to Define the Middle-kingdom Market?
Chinese with the culture of keeping “face” usually translate in buying expensive stuff such as luxury items, cars and so on. The purpose of that is to project the persona of a successful person. A person that belongs to a certain social class.
In the introduction showed you that the “Chinese market” is booming. But we actually used a shortcut. We should talk about Chinese “markets”. China is huge, and with huge disparities in revenue, culture and sometimes even language.
In truth, there in not only one China. But they are all progressing. The number of luxury-related shop alone has drastically increased. However, we also see some changes and evolution.
The Market in Growing in Sophistication
The Chinese were and still are regarded as the “new rich” that just moved in the neighborhood. Knowing little about luxury codes and overall not very refined in their way to consume. But today the situation is different. Luxury brands have quickly identified the potential that the Middle Kingdom represents and has invested heavily to “educate” the market. As a result, the Chinese now know twice as many luxury brands than they did in 2008. Brands Continue to invest in China (source iworkinChina)
Chinese consumers are now savvier toward the quality. They do not (or less at least) assimilate a high price with quality. Orientation is also evolving as young Chinese consumers claim to be more focused on a luxury experience than a luxury item such as handbags, jewelry or clothing. Unlike products, experience cannot be fake and the growth for luxury services is faster than the one of goods.
To Adapt or to Endure?
Luxury brands are accustomed to be revered. And not without reason. They often have their own culture, with the long history that led them to become a symbol of quality and elegance. Several companies are even approaching 200 years during which they had royal families as clients. It is difficult then not to want to make this rich heritage the spearhead of a marketing campaign.
But China is evolving
…reinventing itself at a fast pace, leading to new trends emerging. A not-so-new concept has resurfaced: to make products specially design for China, with the Chinese cultural identity at the core of it. The debate on the subject is animated. And our advice is:
Why not do both?
A Chinese range of products could combine the best of both worlds. Moreover, the rich culture and Chinese history can offer new perspectives and inspirations for Brands, even in the West. (Further information here)
2/Luxury Goes Digital: So Should You
As a matter of fact, everything does.
The digital world now encompasses all aspects of life. And it’s probably via Internet that the luxuries of brands can quickly get better results in China. Here are the points that are essential to a good strategy:
E-commerce: Join or Die
Internet in China is not an alternative network of distribution but the main one, in front of the hypermarket or any other physical structure. The biggest platforms such as Tmall all enjoy a high rate of consumer trust. The site allows you to have your own shop, it is not just a sales channel but also a real branding opportunity.
Furthermore, it is an area in constant growth. If you think your products too expensive or too high-end for the web, I’ll be blunt: You’re wrong. Maserati for the opening of its shop on Tmall launched a “flash” sales of its new SUV model. The 100 available vehicles were purchased in 18 seconds. Beautiful testimony about the opportunities in the country.
Of course these are just a few reasons to join the adventure. There are many others: Your competitors are probably already there; also it allows you to reach outside of major cities at lower costs, etc.
Social Networks : a Must
Social networks are essential tools when it comes to communicating with your target audience. At the top of the list are WeChat (a chatting and sharing application) and Weibo microblogging platform.
Not only do they give your company the opportunity to define itself as a brand, but also to gain a wider audience (and sales) through content sharing. These can take the form of articles, videos or infographics. They are good as long as they bring something to your followers.
E-reputation , because Chinese Buy “trust”
What is your first step when you are in search for information about a company or a product? Google, most of us would agree. Baidu, the Chinese equivalent of our favorite search engine is the preferred destination in China when you are seeking information.
A Website ? Yes but in Chinese
So you need a website: First and foremost, to prevent impostors posing as your company in order to scam your clients. Second for branding purposes. You can also sell directly through your website. But it is only a complement, the bulk of your online sales will be on Tmall.
Know that no subject is ignored in the Middle Kingdom cyberspace. Chinese Internet users will talk about your brand and products in forums like Baidu Zhidao, the best-known of them all and which belongs to the search engine. Hence the importance of ensuring the protection of your online reputation.