Bringing Luxury To China: Tips For Marketing Success

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With a population of over 1.3 billion people, China is the fastest-growing consumer of luxury goods, and is expected to represent 20% of the global luxury market by 2015. But, as Sage Brennan from the Chinese Luxury Network cautions, "China is a demographic, not a geography," and as such you need to recognize the distinct characteristics that exist among this marketplace.

For instance, in China the luxury target tends to be much less affluent than their western counterparts, yet they devote a disproportionate chunk of their income to purchasing luxury goods. In the U.S., the average female prestige consumer registers household income of $150,000 and spends $3,000 annually on handbags. In contrast, the average female prestige consumer in China makes $18,300 (¥125) and spends $2,000 annually on handbags. Often these purchases occur after two to three months of research and consideration, most of it done online.

From a travel perspective, too, the strength of this market shouldn't be underestimated. In the next five years the country is expected to build 56 new airports and by 2015 they'll be taking more than 100 million outbound trips with a spend of over $100 billon. On average, a Chinese tourist spends nearly $7,000 per trip and in 2010 they spent more on shopping during their travels than any other nation (with $21 billion spent in duty-free shops and on airlines alone!)

Having a solid China strategy is now a must-have for every brand. But it's not an easy market to crack. To help you plan for success, here are some key tips that that we took away from the conference:

• For luxury brands, marketing is less about reaching an age 50-something millionaire and more about a 30-something, upper-middle class consumer. According to a recent McKinsey report, 73% of Chinese luxury consumers are under the age of 45, and upwards of 45% are under the age of 35. And while the average age of a millionaire in the U.S. is 57, it's only 37 in China.

• The Chinese luxury consumers are digital natives. According to eMarketer, the country is forecasted to have 840 million Internet users by 2013, compared to 221 million for the U.S. and 96 million for Japan. But there are a vast number of ever-changing digital platforms in use. They come and go quickly and most Chinese are on multiple platforms, so there is no singular, dominant, all-encompassing approach that would be comparable to the reach of Facebook in the U.S. This requires brands to have a nimble digital strategy that works across platforms and can be adapted quickly.

• With that said, it's essential that you become familiar with the bigger platforms in China: Baidu in search (you'll be invisible without a presence here); Alibaba and Taobao for online shopping; Sina for social networking; Youku for video streaming; and Sohu for gaming.

• Mobile and emerging platforms are critical: Of the 485 million current Internet users in China, 318 million access the web through their mobile phone. Many Internet users have gone from no Internet directly to mobile Internet, so streamlined mobile sites are critical for this market.

• Focus on promoting your brand instead of emphasizing transactions. Credit cards are slowly gaining traction, so you need to start by educating and informing, rather than promoting a financial transaction that many can't complete.

• While the initial impulse is to primarily target Beijing and Shanghai, the real growth is actually happening outside these traditional markets. In fact, nearly 75% of wealth creation is happening in what are tier two and three cities like Chengdu, Tianjin and Hangzhou. That's what motivated Louis Vuitton to put nearly three-quarters of its stores outside of tier one markets.

• Fifty-six percent of Chinese luxury purchases are made abroad, however, just over half of Chinese language sites provide a U.S. and European store/property locator -- a missed opportunity to provide information to Chinese tourists.

More than anything the takeaway from the conference was just how unique the China market is and how it requires a very targeted, informed and focused effort that recognizes the nuances of the culture, lifestyle and geography. Simply translating your website and repurposing western-themed promotional efforts isn't going to cut it. So, you really need to make the appropriate investment in both time and resources to develop a market-specific strategy.

Clearly, China represents a massive opportunity for any brand that can get it right. Or, as one conference presenter reminded everyone, even a small success in China will easily dwarf homeruns in other markets.

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0 comments on "Bringing Luxury To China: Tips For Marketing Success ".

1. Danielle Bailey from L2 Think Tank
   

   commented on: October 3, 2011 at 9:44 a.m.

   Video Infographic: Everything You Need to Know About The China Luxury Market in 3 Minutes: http://www.vimeo.com/29807370
   

2. Joe Buhler from buhlerworks
   

   commented on: October 10, 2011 at 11:53 a.m.
   The key takeaways were true 25 years ago for the Japanese market when I worked there as a destination marketer as they are for China today. Every article on the topic I read reminds me of how some basics never change when it comes to foreign markets, especially in Asia.

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