• by Patricia Pao , April 4, 2012

The U.S. (and France) is a shopper’s paradise for the Chinese. The Chinese prefer to buy their merchandise “at the source” because they believe by doing so they 1) can save a lot of money and 2) have greater selection.

But how do you capture them? Many luxury goods firms have taken the step of hiring Mandarin-speaking sales people and creating marketing programs designed to attract the wealthy Chinese consumer. While some companies have been more successful than others, all have expressed the desire to fully leverage their Chinese tourist program.

The following reflect the advice I have given to them. I chose to focus on eight things because eight is the symbol of good luck and good fortune.

1. Organize shopping tours but only with a qualified source. Chinese people are very private. They are used to being persecuted for their political and religious beliefs. As a result, they only trust “friends and family.” If you decide to participate in an organized Chinese tourist shopping tour, make sure you ask the tour operator how they recruited their customers. If they tell you that they used Facebook or Twitter, run away as fast as you can. It’s a scam as the Chinese government has blocked Facebook and Twitter. If they tell you that they used forums or other forms of social media, be skeptical. Qualified buyers (e.g., those with big assets) will only go on a tour with their friends and family.

2. Focus on government officials and the heads of state-owned enterprises (SOE). You need a visa to enter into the U.S. It is very difficult to obtain a visa. The most likely to obtain a visa are highly placed government officials and/or heads of SOEs. Interestingly, there is a lot of overlap between these two. This is because the Chinese government has structured the promotion process to reward those people who have spent time in the private sector. One of my interns, Alex, is from the Shangdong province. His father is a highly placed government official. He obtained his position by alternating between government and private sector jobs. For example, after being the mayor of his city, he then took over and successfully turned around an abandoned ice cream factory. He sold the factory and then received a promotion as a government official. He then was asked to help build China’s steel industry (back to an SOE) and once he successfully built this business was promoted to head of one of the most prestigious government agencies. As a result of his efforts, Alex’s dad is able to secure a three-week visa each year. 

3. Privacy is not a plus. The Chinese like to do their shopping in the open in front of an audience. In the U.S., a private room is considered to be a status symbol. As a result, many luxury goods manufacturers pride themselves on being able to whisk their special clients to a private room. This doesn’t work with the affluent Chinese buyer. It is a status symbol to be seen making big purchases. Also, they are afraid that they might be robbed or cheated in a private room. In China, it is common place to have strangers actively listening in on conversations. Crazy but true… 

4. The Art of the deal. The Chinese love to bargain. It is a fact. I have seen billionaires argue for 20 minutes to receive a $2 discount off of a $20 purchase. It’s not the amount but they expect something. This presents a huge issue to luxury goods companies. One way to get around this is to offer a special gift. This gift has to be of limited edition and not available for sale. The Chinese have to feel that it is truly special. One of the best special gifts I have seen is from Louis Vuitton. One Christmas, they made a snow globe where the decorative item was a miniature open trunk and the “snow” consisted of LV icons. Furthermore, the snow globe was packaged in an exquisite Louis Vuitton set up box similar to the quality used to house their handbags.

5. Graduations and back to bchool are better than Chinese New Year. Most luxury goods companies focus on Chinese New Year promotions. What they fail to realize is that Chinese New Year is probably the one time that is spent with friends and family, not shopping. Instead, luxury goods marketers should focus on U.S. graduations. The U.S. is still renowned for its educational system and most Chinese parents aspire to send their children to American schools. As a result, there is a flurry of activity in June and September where parents are either sending their children to school or attending their children’s graduations.

6. Reach out and touch Chinese students. American education is expensive. Even more so because Chinese students pay full price as they are not eligible for financial aid. Consequently, it is fair to assume that most Chinese students are from well-off and/or well-placed families. We did a study for a leading Paris jeweler and found their most effective outreach efforts were to Chinese students from the top five U.S. MBA schools. These students not only owned pieces from their collection and were planning to make additional purchases but their parents were also planning to purchase when they visited their children.

7. Multiples are okay. Chinese like to buy multiples. They are not looking to resell. Most of these purchases are either for themselves or their families. I was in Beijing recently and saw a man purchase six Cartier watches at its Wangfujing boutique. Intrigued, I went up to him and asked him (in Mandarin) who he was buying them for. Delighted to have an audience, he told me that the three women’s watches were gifts for his daughter, wife and mistress and the three men’s watches were for himself.

8. The gift closet is your friend. It is traditional to give gifts at ceremonial occasions. This usually revolves around business events. The gift-giving is tiered with the most important guest receiving the best gift. As a result, most Chinese business people have a gift closet from which they can select. The gift closet represents a great opportunity for you to sell a variety of merchandise to them. We should all aspire to create gift closet market share metric…