In 2021, China is the only country recovering from the pandemic and actually meeting exponential growth. Especially for fashion and luxury brands, China is the el dorado of sales and growth. Chinese consumers are always looking for international brands to stay up-to-date with the last global trends. On Chinese social media, luxury consumption is always associated with a successful career path, ambition, and promotion. From now on, 400 million Chinese are expected to level up their income and purchasing power towards luxury.
Top reasons why Chinese consumers prefer internationally well-known brands
Chinese consumers want to “keep the face”
Economic growth in China has grown rapidly, and many Chinese quickly grew rich. China’s new rich are looking for luxury goods everywhere. Their lifestyle has changed and they became wealthier and are ready to consume even more luxury goods. Indeed, the love of China for luxury goods moves down the economic ladder and hits a new Chinese middle class. Why? Because it is a great opportunity to show off they had a promotion or reached a career milestone.
This new rich Chinese group will create new opportunities and challenges for marketers who were used to serve only the very rich. In China, there are two social classes: the wealthy consumers and the upper-middle class. The very wealthy consumers (with an income above RMB 300,000 which is about $46,000) are the majority of luxury goods consumers. The upper-middle-class (with incomes between 100,000 and 200,000 RMB) offers new opportunities for luxury brands.
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Chinese consumers always favor international brands for being more qualitative and more exotic. This is a key to differentiate from other Chinese people. So, they are not expecting international brands to only purchase a product… but also to live a special experience. Many Chinese are now interested in luxury tours, exceptional experiences such as spa, wellness activities. Consumption increases more rapidly for those excellent services for luxury goods as they want something unique.
The importance of trust among Chinese consumers
Luxury Chinese are more informed than before products thanks to the internet, traveling abroad. So the Chinese have become more demanding in their requests and needs, as mentioned in this Mckinsey Report. They now expect trust and quality from brands and are more and more demanding for reviews; if your brand is not known in China, no one will buy the products! You need to find a way to make people talk about your products on the market to differentiate from the competition.
With the explosion of luxury boutique numbers, fashion magazines, websites, and the use of social networks, the Chinese are now twice as familiar with luxury brands. They are more exposed to international brands and more familiar luxury goods on the market. Today, the Chinese are much more informed about the price and quality of products of each brand.
They are less likely to associate the more expensive products with the best quality products. Chinese consumers can now do more research to have their own opinion on the brand. So, they spend a lot of online benchmarking before buying something; they expect reviews, compare prices, look for dupes.
Chinese consumers love shopping when they travel… in China!
The Chinese are traveling abroad and can check prices overseas to compare them with prices on their domestic market. So they realized that prices in China were sometimes more than 20% more expensive than abroad. In a word, it was more advantageous for them to do their shopping while they travel.
The daigou is a direct answer to this need of Chinese fashion lovers to purchase international brands. A daigou in Chinese means “personal shopper”. They are people who travel and purchase products overseas to sell them in China. Thanks to the avoidance of taxes, the products are way cheaper. This is why the daigou are considered to be “the new international duty-free alternative” by luxury brands.
After the Covid-19 pandemic, the challenge for luxury and fashion brands is to engage with Chinese travelers… in China. Due to travel restrictions, they are not flying anymore and purchase directly in China. By 2025, 50% of the luxury spending by the Chinese will be made in China. Regarding the evolution of the global pandemic, this forecast should be reached quicker!
New opportunities for luxury brands in lower-tier cities
The rapid growth of China’s rich and rapid urbanization China will create new targets for luxury brands. Indeed, many rich do not necessarily live in Shanghai or Beijing, but in smaller cities like Qingdao and Wuxi, which in the near future will become large enough to accommodate luxury stores.
Luxury goods consumption in these cities will approach the level of present cities like Hangzhou and Nanjing, which are highly developed cities in the luxury market. Most luxury brands are already operating in China or are thinking to increase their investments.
What are the strategies of luxury brands to increase their market share in China?
#1 BRANDING – Attract Chinese consumers’ attention
A fashion or luxury brand looking for performing in China must invest in branding. A good brand image will attract the attention of Chinese consumers. With a highly connected society, luxury brands must invest in digital strategies to reach the largest possible audience. How?
First, luxury brands must create a sophisticated website. It is necessary to have a Chinese website written in modern Chinese available on the Chinese internet. In China, people do not have access to Google services. They use a totally different ecosystem to read the news and find entertaining content: Baidu, Zhihu, WeChat, Weibo, Xiaohongshu, etc… In a word, you can have the most beautiful and visible international website on Google, Chinese consumers will never find it. You need to create a Chinese website in China with a good ranking on the Chinese Google: Baidu.
Depending on your investment, you can also work on your Search Engine Optimization (SEO). What are the keywords that most describe your brand or products? How could you reach Baidu’s first page? You need to understand the Chinese culture and society to know which keywords you should use to better target Chinese consumers. For instance, we often work on the long tail. You cannot perform on the keyword “fashion brand” in Chinese, but you can perform on the keyword “premium athleisure American brand”.
#2 SOCIAL MEDIA – Go digital to engage with Chinese consumers
In China, everyone is on social media. On average, Chinese people spend 6 hours per day on their phones. This is why luxury brands should have an active presence on Chinese networks like Weibo and WeChat. First, to communicate with the Chinese customers and know them better. Then, to share content on the brand for Chinese customers to become familiar with the brand.
It is not only important but VITAL for a luxury brand to work its reputation and ensure its authenticity to Chinese customers. This is important so you can leverage influencers such as KOLs, local celebrities, or KOCs to promote the brand. Social media in China are central and a lot of them exist know to help brands promote their content; by being present on several of them at the same time, brands can expand their visibility and e-reputation in China.
WeChat, the Chinese Facebook / WhatsApp
WeChat is the most popular and used app in China. There are 1.2 billion monthly active users, using it for both personal and professional reasons. On WeChat, Chinese netizens send messages, participate in group chats, read the news, pay in stores, purchase train tickets, or follow brands. This superstar app is literally THE app on which you can do everything.
Fashion and luxury brands use WeChat to create a privileged interaction with their clients. First, you need to create a WeChat official account for your brand. On this social media, you will have the chance to personalize your account and give a personalized image of your brand. We definitely recommend you to work on the design and the content creation with premium pages, H5 pages, eye-catching videos, brochures, and newsletters.
What about VIP clients? WeChat is the perfect tool to create a VIP program. Your users could have the possibility to register and receive special privileges. On WeChat, you can even go further by creating small discussion groups to boost your customer service. Your Chinese clients can have a higher sense of belonging and decide to engage more.
Weibo, the Chinese Twitter
The name Weibo literally means “microblog”. This Chinese social media is a great mix of Twitter and Facebook to enable netizens to discover new content and follow their favorite brands or KOLs. Weibo is the main platform on which influencers share content with their audience and even do live streaming. With 523 million active users, you can reach a huge audience and find easier partnerships with stars, KOLs, and KOCs.
Fashion and luxury brands often decide to go along with 2 social media: WeChat and Weibo. This is a great strategy to both engage with customers and reach a wide audience. First, you need to create a Weibo official account and register for the official “V” in color. Then, you can post photos, videos, thoughts, and even share UGC (User Generated Content) to create engagement among your customers. All the luxury brands have a Weibo account because the Chinese shoppers’ reflex is always to go check the Weibo official account of the brand.
Xiaohongshu, the Chinese Instagram
Xiaohongshu is also called Little Red Book or RED. The users’ growth is tremendous, especially among the industries of beauty, health, fashion, and luxury. On Xiaohongshu, 80% of the users are women. Fashion and luxury brands that target women definitely need to be on this social media. You can post pictures, videos, share UGC, and even open your e-commerce store. This is a great strategy to enter the Chinese market and generate sales quickly.
After creating your Xiaohongshu official account, you can decide to open a store. You can have a better conversion rate on Xiaohongshu than on WeChat because Chinese consumers can watch products’ recommendations and then directly purchase them. In China, 75% of consumers make research online to find information before any purchase. The Chinese Instagram Xiaohongshu decided to combine these needs by proposing an integrated e-commerce shop.
#3 LOCAL PARTNER – Collaborate with an agency to localize your international campaign
The content creation of a luxury or fashion brand must always adapt to Chinese standards and beauty. For instance, several international brands forget to localize their campaign: Asia models, Chinese text, Chinese standards. If you do not adapt your communication you cannot engage with Chinese consumers or, even worst, you can create a bad buzz.
It does not mean that you have to change completely your brand DNA, not at all! It just means you have to understand the Chinese culture and daily lifestyle to talk to them. Imagine if a Chinese brand was trying to target you with only Chinese models’ visuals written in Chinese… You would never purchase it! Why? Because you could not identify with the brand. You need to play on your brand universe and values while incorporating local specificities to perform in China.
At the Gentlemen Marketing Agency, we help international brands localizing their campaign while respecting their brand DNA. You do not know where to start? You can contact us. Our team of +70 digital experts in marketing can support your next project in China.
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