Chinese luxury consumers are world’s top luxury goods spenders. With a percentage of 25%, they are surpassing the U.S luxury shoppers with 5%. A weaker Euro and better prices lead Chinese people to make 60% of their luxury purchases abroad. According to a study leased by Bain & Company at the end of 2012 China is the world’s largest luxury market.
Chinese luxury consumers have a particular profile. According to World Luxury Association they have an average age of 25 to 28, which means they are 25 years younger than their U.S. counterparts. Young Chinese consumers are usually children of rich business people who offer their children a prosperous material life to counterbalance their absence.
Chinese luxury consumers in Beijing and Shanghai differentiate themselves from consumers elsewhere in China. They usually avoid typical emerging market preference for visible luxury branding and prefer unique and high-quality products.
The Chinese market is a real battleground for brands. Foreign players are dominating China’s luxury goods market. Chanel, Louis Vuitton, and Gucci are the most preferred brand among Chinese shoppers. When it comes to gifting, Maotai is the only Chinese brand that differentiates itself.
Luxury brands are facing different bans from the Chinese government. Despite the obstacles, foreign companies are still very active and visible on China’s luxury market.
In 2011 the Chinese government prohibited ads that were promoting high-end lifestyles in public places. Luxury ads were considered too ostentatious and a painful reminder for the population about the growing gap between rich and poor. Paradoxically, the same year was the boom of the luxury market in China.
This year another ban made waves in the luxury industry. The Beijing government decided to pull luxury advertisements that promote extravagant gift-giving from the official TV and radio stations. Gift-giving is a cultural feature in China. In 2012, personal and corporate gifts accounted for 25% of luxury items sales in the country. In the same time lavish spending on gifting is associated with corruption and fighting corruption is a top priority in China.
Mini movies as the best marketing tools
The government bans affect only a small part of luxury consumers who still use traditional information channels. The young people and the core consumers are digitally native.
Terefore, brands are making significant digital marketing efforts to speak the same language of the rich kids. Online videos, photographic and social content are the basic tools. The microblogging service Sina Weibo and Renren (the Chinese equivalent of Facebook) are the most popular social networking platforms.
The preference of young consumers for the online medium leads to an explosion of mini-movies for both luxury and mainstream products. Mini movies featuring famous people gained great popularity in recent months through players such as Bulgari, Louis Vuitton, Swarovski, and Cartier. Short films are not new on the Chinese market. Three years ago “First Spring” mini-movie realized by Chinese artist Yang Fudong for Prada was a great success.
Here is a romantic story released in 2012 by Swarovsky to promote its Shanghai exhibition entitled “Sparkling Secrets”.
Here is another romantic film recently released by Cartier which clearly aimed the market in China. The film has 3.8 million views on Cartier’s official Youku channel, while on Youtube it has only over 311,000 views.
Do you find it surprising that China is the world’s largest luxury market?
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