By BCG and Tencent
The report notes China’s luxury market reached $123 billion (110 billion euros) in 2018, growing by six percent from the prior year. It also predicts that the country will contribute 41 percent of global luxury consumption by 2025 — a big jump up from 33 percent in 2018. This monumental growth will be super-powered by the next generations of customers in China: Millennials and Gen Zers.
By Annie Hou, & Mickey Chak (for Ogilvy China)
The report takes a deep dive into the differences that define the post-90s consumer group, from the shift in luxury brands as a status symbol, to luxury brands as an extension of self, the concept of ‘scarcity to virtual rarity,’ to the new rules of creating an omnichannel customer experience. The side-by-side comparisons in the report are supplemented with specific actions brands can take to matter in China today, and in years to come.
By Lan Luan, Aimee Kim, and Daniel Zipser (for McKinsey & Company)
This is the story of how a new generation of Chinese consumers are powering the global luxury market, and the double-edged sword they present to the world’s leading luxury brands.
By Ruder Finn and Consumer Search Group
This eighth edition of the report offers key performance indicators for the luxury product markets in Mainland China and Hong Kong. The report also provides insight into the latest industry trends by analyzing consumer behavior and preferences.
The report discusses the trends and issues that are driving the luxury industry. It suggests why luxury goods companies should be aware of the changes brought about by the new affluent class of customers. It also identifies the 100 largest luxury goods companies based on publicly available data for FY2017 (which we define as financial years ending within the 12 months to June 2018), and evaluates their performance across geographies and product sectors.
Weibo’s marketing research institute published a luxury industry white paper generated from data from over 1000 consumers on the platform. The report was created as a guide for brands to navigate top fashions with young Chinese consumers and better understand the hottest-selling items, categories, and brands from 2018. It also explained behavioral differences between Chinese post-80s, -90s, and -00s luxury consumers.
Launched in 2009, Jing Daily is a digital publication on luxury consumer trends in China. It covers the latest news, analysis, features, and reports exploring developments in that landscape. Our readers are seeking to understand China’s complex and rapidly evolving luxury industry.
WalktheChat is a marketing & IT agency focusing on helping overseas brands to sell via WeChat and Weibo. Services includes building a WeChat/Weibo cross-border shop, WeChat Mini Program, social media marketing, content localization and customized development, and design. WalktheChat also provide free educational content to help brands to market to China.
The main purpose of this research is to investigate how a luxury brand may be affected by the variables associated with the entry to a new market as in the Chinese one and how those new variables are integrated into the branding in the new geographical context. In doing so, this study reviews the main existing literature in the field-despite the limited literature in luxury digitalisation in China and following three derived propositions through a qualitative approach, it analyses the examples of the brand strategy of three European luxury brands after entering China. The luxury brands considered in our investigation are three international ones, each with a specific consolidated brand heritage and with a sectorial positioning. This research explores and analyses the specific luxury brand building and rebranding process adopted by these three luxury brands to enter the new market and specifically through the digitalisation of the brand. The empirical research evidences the critical impact of digitalisation for successful luxury branding in the entry market strategy and has justified its adoption in the exclusive luxury sector by the socio-cultural context-related factors of the new market. It provides specific orientations and recommendations as well as best practices for luxury corporations on the specificities of branding and digitalisation of luxury in China. The research shows that a successful model path for luxury branding when entering the Chinese market and the key impact of the 'luxury digitalisation' strategy is usually associated with high accessibility, when compared with the traditional ` luxury retailing' strategy which is usually associated to the exclusivity of the luxury sector.
The relationship between luxury and digitalisation, has been and still is problematic. Literature evidenced the challenging situation for luxury goods and online purchase with respect to exclusivity and identity. China has shown impressive orientation towards the digitalise world and a steady increase in Internet use in every business sector. Chinese market has its own socio-cultural norms and its luxury and fashion purchasing habits seemingly in constant evolution. The situation in China has indicated that luxury fashion brands and digitalisation have not fully revealed its development in relation to its "Chineseness" - or the specificity of the Chinese luxury and fashion market. As a result of the very limited research on digitalisation, luxury and China, this study will try to provide an understanding on the emerging issues - derived from the Chinese consumer market - which influence digitalisation strategy for luxury brands in China.
Purpose - The purpose of this paper is to examine internationalising luxury fashion retailers' entry and post-entry expansion strategies in mainland China.
Design/methodology/approach - The study adopts a pragmatic mixed-methods research approach, including a quantitative mail survey and qualitative face-to-face in-depth executive interviews.
Findings - Different from initial single entry methods, multiple methods are increasingly popular for luxury fashion retailers' post-entry expansion in mainland China. Although directly controlled expansion strategies have become significant, local partnerships are still important and omnichannel distribution strategies are rapidly growing.
Research limitations/implications - The findings were generated in mainland China only.
Originality/value - This work provides an understanding of luxury fashion retailers' activities in the Chinese market from both macro and micro perspectives. It examines luxury fashion retailers' initial entry strategies, as well as their post-entry expansion strategies in mainland China. Few studies in the area of international luxury fashion retailing have employed a mixed-methods approach with this number of participants.
As a growing emerging market (EM), China offers remarkable opportunities for luxury firms from advanced countries. Studies emphasize the global approach to luxury markets, but the uncertainty and cultural distance characterizing the Chinese market increase the risks for firms using standardized global strategies. This article investigates the internationalization strategies of luxury firms in China by exploring the role of design and marketing capabilities. A qualitative methodology is adopted to develop a case study of an Italian company. Design and marketing capabilities emerge as important factors for balancing the advantages of a global strategy while adapting to the unique characteristics of the Chinese market. This process requires dynamic capabilities to maintain coherence with a company's global brand identity, which is an asset of luxury companies.
Taking the case of China, this paper examines the relationship between different luxury value dimensions, and explores how these affect consumers' purchase intentions. China is now the second largest luxury market in the world. Most previous studies of luxury consumption have tested only the direct influences of luxury value perceptions on purchasing behaviour. For this paper, sample data were gathered through surveys administered to 409 Chinese nationals living in China. The model is empirically tested using structural equation modelling. The current research incorporates both personal- and social-oriented perceived values, and draws a holistic picture of consumers' decision-making processes in luxury consumption. The results suggest that perceived social value and perceived emotional value both directly influence luxury purchase intention. Perceived unique value exerts an indirect impact on luxury purchase intention. Perceived quality value has both a direct and indirect effect on luxury purchase intention. We also account for cultural differences rather than simply replicating previous studies in China. We consider local culture in order to understand what consumers actually value from luxury products, and we discuss the implications of indigenisation for future international marketing research.
This paper considers the standardization-localization debate within the context of foreign luxury fashion retailers' internationalization into the emerging Chinese marketplace. Luxury retailers must balance a global-local dilemma, given the challenging trading conditions of a complex marketplace with low brand awareness and loyalty, alongside the need to maintain exclusivity and standardization of brand image across all markets. Qualitative data from 22 luxury fashion retailers currently active in the Chinese market provide rich insights that reveal the decision-making process for marketing strategies that support entry into China. Foreign luxury retailers balance the 'global-local dilemma' in China firstly by locating operational management control within the strategic hub of Hong Kong, and secondly by implementing far more adaptive and enterprising marketing communications than seen in other mature markets. At the same time, foreign luxury retailers retain tight strategic control of key branding dimensions at head offices in their home markets, as part of a successful long-term luxury brand management strategy. As Chinese luxury consumers increasingly feel part of a global elite, over-localization may cause confusion over brand identity and country of origin (COO). The insights may be strategically useful for luxury retailers entering or expanding in China and also provide indications of future trends of luxury retailing in China and other emerging markets.
The luxury brands sales in emerging markets will see rapid growth. When entering the emerging markets, luxury fashion brands always find it challenging to balance adaption with local consumer culture and standardization to maintain their global brand image. The present study attempts to examine this intriguing issue of adaptation and standardization and many other challenges for luxury brands in the emerging market by focusing on China’s luxury market. A case study on China is conducted, which consisted of reviewing academic literature and consulting trade reports, examining over 50 luxury brands’ Chinese websites, reading newspaper articles, conducting field trips to luxury retail outlets, and studying luxury brands’ advertisements in major Chinese fashion magazines. We identified five intriguing market characteristics that must be taken into account in order to succeed in this market. Specifically, we found that to perform well in China’s luxury market, luxury brands should have a good understanding of the conflicting Chinese social cultural sentiments toward luxury consumption. Luxury brands should seek a balance between standardization and adaptation and appeal to both consumers’ converging needs and their desire for products that embrace local elements. Further, given the unique consumer characteristics, luxury brands should better serve the young and economically diverse consumer base in China.
Although there has been a global growth of luxury business start-ups for about 100 years, which accelerated especially since the 1990s along with the upswing of the global luxury market, it is barely acknowledged that the luxury segment today is highly entrepreneurial. This is even more the case in China, where a variety of Western and Chinese market players are setting up China-specific luxury brands. Although surprising for most experts and consumers, the luxury business community in China is emerging in leaps and bounds. The main objective of this article is to analyse the major challenges and strategies for the development of luxury brands in China. For this purpose, the article discusses the concept of Chinese luxury brands and the major players and luxury start-up models. On the basis of that, success factors of Chinese luxury brands, with reference to their stage in the brand lifecycle, are analysed with eight instructive case studies including Charles Philip Shanghai, Gieves & Hawkes, NE Tiger, Seagull, Shanghai Vive, Shang xia, She Ji-Sorgere, and Sheme. Each of them represents a major luxury market entrance strategy and highlights typical success factors for luxury brand building in China, which are summarized by some major lessons learned.
The aim of this article is to provide insight into the market for luxury brands in China. A literature review is used to inform an inductive methodology based on an empirical survey of 200 Chinese consumers. The data were collected in a series of street intercept interviews that were completed at various locations in Beijing. The study answers questions regarding what, where, when, how and why Chinese consumers buy luxury goods. The article provides insight into consumer behaviour for marketing practitioners who are either already involved in the large and growing luxury market in China or are considering entering it, as well as providing direction for academics interested in conducting research in the Chinese luxury sector. The article constitutes a contemporary and timely review of the luxury market in China from the Chinese consumer perspective and, as such, makes an original contribution to knowledge in terms of providing insight for practitioners as well as providing guidance for academic researchers.
Luxury plays a pivotal role in the traditional structure of Chinese society. In the Confucian tradition it is used to bind the different elements of the national community. For example, in a professional context, gift-giving is a way to honour one’s superiors, peers, or subordinates on special occasions. In a family context, it is a way to show gratitude to parents, relatives, or elders. As Tsai explains, to this day, luxury remains intertwined in a web of gifts and counter-gifts that ensures the perennity of social relations and structures (Tsai 2008).
This cross-cultural study examines the effects of individual characteristics (i.e., consumers' need for uniqueness and self-monitoring) and brand-associated variables (i.e., social-function attitudes toward luxury brands and affective attitude) on U.S. and Chinese consumers' purchase intention for luxury brands. A total of 394 college students in U.S. and China participated in the survey. Using structural equation modeling (SEM), this study finds that U.S. and Chinese consumers' self-monitoring positively influences social-function attitudes toward luxury brands. Social-function attitudes toward luxury brands positively influence consumers' purchase intention through affective attitude. Attitude plays an important mediating role between social-function attitudes toward luxury brands and purchase intentions. The article closes with theoretical and practical implications.
Purpose - The paper aims to further extend our understanding by assessing the extent to which two prominent cultural values in East Asia i.e. face saving and group orientation drive consumers' perceptions of luxury goods across four East Asian markets.
Design/methodology/approach - A multi-methods research approach was adopted consisting of: an expert panel of close to 70 participants, group discussions with five extended East Asian families, personal interviews with eight East Asian scholars, a pilot test with over 50 East Asian graduate students and a multi-market survey of 443 consumer respondents in Beijing, Tokyo, Singapore and Hanoi:
Findings - The authors extend previous conceptual studies by empirically investigating the impact of these two cultural values on the perception of luxury among East Asian societies. Specifically the study reveals that across all four markets face saving has the strongest influence on the conspicuous and hedonistic dimensions of luxury, group orientation meanwhile is the strongest predictor of the quality, extended self and exclusivity dimensions of luxury. Collectively these two cultural values significantly influence East Asian perceptions of luxury. Overall, the findings reiterate the importance of understanding different cultural values and their influence across different East Asian societies.
Practical implications - The findings have important implications for managers of western luxury branded goods that are seeking to penetrate East Asian markets or seek to serve East Asian consumers. Specifically, to assist with developing suitable brand positioning, products, services, communications and pricing strategies.
Originality/value - This study contributes to our understanding of the subject by exploring the impact of face saving and group orientation on the perception of luxury goods across four East Asian countries. Several directions for future research are suggested.
This study investigates the underlying motivations for luxury consumption among Chinese middle-class consumers by testing the relationships between psychological traits and attitudes toward the best-known luxury brands. The study examines three psychological traits that make Chinese consumers unique compared to their global peers: value consciousness (VC), susceptibility to normative influence (SNI), and the need for uniqueness (NFU). Results suggest that consumers evaluate the best-known brands more favorably as they become more value conscious, indicating that luxury products are not necessarily extravagant purchases in China. In addition, SNI positively relates to brand attitudes, which suggests that social influence is an important driver for luxury consumption. The relationship between NFU and brand attitudes depends on consumer knowledge. As consumers learn more about different luxury brands, they evaluate the best-known brands more negatively as uniqueness-seeking becomes a more important goal. These findings offer insight into consumer perceptions of luxury brands and provide managerial implications for marketers to build sustainable luxury businesses in China.
A better understanding of the Chinese consumption of luxury fashion brands may assist the fashion industry when targeting China as the soon-to-be largest consumer market. This study aims to examine Chinese consumers' willingness to pay for luxury fashion brands related to their fashion lifestyle and perceived value. Practicality fashion lifestyle, perceived social/emotional value, perceived utilitarian value, and perceived economic value were found to have a significant influence on the willingness of Chinese consumers to pay for luxury fashion brands in a multiple regression model (n = 480). This research also examines the different effects of fashion lifestyles and perceived value on willingness to pay among four groups characterized by different previous genuine and counterfeit purchasing experiences. This study deepens understanding of consumer perceptions and behaviors relating to luxury fashion brands in China.
East Asia is fast becoming the world's largest brand-name luxury goods market. This study develops the concept of face and face consumption to explain why Asian consumers possess strong appetites for luxury products despite their relatively low income. This paper distinguishes the concept of face from a closely related construct, prestige, and examines the influence of face on consumer behaviours in the United States and China. Due to the heavy influence of face, Asian consumers believe they must purchase luxury products to enhance, maintain or save face. Accordingly, face consumption has three unique characteristics: conformity, distinctiveness and other-orientation. The results of a cross-cultural survey support the existence of these three subdimensions and show that Chinese consumers are more likely to be influenced by their reference groups than are American consumers. Furthermore, they tend to relate product brands and price to face more heavily than do their US counterparts. In addition, Chinese consumers are more likely to consider the prestige of the products in other-oriented consumption than are their American counterparts.
A ground-breaking exploration of the Chinese elite's consumption of luxury products and their attitudes toward luxury goods. Elite China identifies the Chinese luxury product consumers and the characteristics of their luxury consumption, explains the implications for luxury firms and marketers and most importantly, spells out strategies for international luxury brands and Chinese luxury brands to succeed in Chinese market.
A guide to reaching and profiting from China's expanding luxury consumer class China's growing consumer base and expanding economy means more disposable income for more Chinese citizens. The Chinese market for luxury goods is expected to expand from $2 billion this year to nearly $12 billion by 2015. Today's biggest global luxury goods retailers expect China to make up a large and ever growing portion of their customers, and those businesses are responding with new stores and investments in China. Luxury China gives readers-particularly professionals in advertising, marketing, and the luxury brands industry-a deep look into the future of the Chinese luxury goods market and shows them how to tap into China's tremendous market potential.
Why the luxury market's fate rests in Chinese wallets The media has negatively focused on the Chinese political administration clamping down on gifting. Observers have come to doubt the strength of Chinese consumption as the key driver for luxury. The Bling Dynasty illustrates how doubts about Chinese consumption are ill-founded and Chinese luxury demand is on the cusp of becoming dominant. This book contains the research and expert views companies need to understand and address the new challenges posed by this dominance. Each chapter brings a different perspective, covering complex aspects of luxury consumption, with illustrations and real-world examples that support the research. Readers will gain insights through interviews with brand executives, retailers, experts, and consumers. As an economic heavyweight, China is fast realizing its role in the luxury market. Chinese consumers should be accounting for more than a third of the global luxury market today, and half, if not more, in ten year's time. The Bling Dynasty runs counter to the conventional wisdom that expanding sectors become more global. Luxury is actually becoming over-dependent on Chinese sales. Readers will: Understand how Western brands developed in Asia and the challenges they are met with, notably ubiquity Learn why Chinese are purchasing luxury items abroad and what it means for the future of the sector Gain insights on why there are no Chinese luxury brands challenging Western models Realize that Chinese consumers are becoming similar to their American peers and that luxury competition goes way beyond pre-conceptions China's big spenders are increasingly mobile and this is affecting key markets. The Bling Dynasty provides new research and a comprehensive look at the booming business of luxury and the Chinese wallet.
This book provides an analysis of the luxury industry in two of the world’s biggest and evolving markets, and identifies and discusses the key issues and dynamics in transforming their luxury landscapes. By discussing the elements that are most likely to dominate boardroom agendas, the pragmatic implications for both strategic and marketing planning are made clear. Special emphasis is placed upon well-contemplated responses to luxury brand marketing challenges that executives are likely to face as they push their brands to adapt and thrive in these shifting markets.