Chinese buyers have stepped up their purchases of New York City real estate in the last few years. What’s notable about these buyers is they often build their own skyscrapers rather than just purchase historic buildings. For buyers from China, history doesn’t play as large a role as the property’s potential does.
The same is true for Chinese luxury buyers. China currently accounts for 32% of all global luxury purchases, and, as a result, the top luxe brands should to take into account the following four points about the Chinese luxury market:
1. Chinese consumers don’t care about brand legacy. Many marketers are learning that Chinese consumers don’t have much reverence for established brands. Instead, the Chinese consumer is more concerned with value and quality rather than brand origin, according to a recent McKinsey study. Overwhelmingly, it is Millennial Chinese who are buying luxe goods. According to a recent report from Bain & Company, those young consumers have a global mindset and an awareness of the “price-value equation.” That means that Chinese consumers aren’t dazzled by preeminent luxury brands. For instance, Tiffany & Co. only found traction in China after it introduced cheaper items aimed at young buyers.
2. Chinese luxury brands are coming on strong. China’s economy is booming, and its consumers are understandably proud of the quality and cachet that their homegrown brands have achieved. Chinese fashion brands like Peacebird, Bosideng and Metersbonwe dominated sales for the country’s Nov. 11 Singles Day. Qeelin, a homegrown jewelry brand, has also resonated with Chinese consumers, as have Chinese fashion brands MO&Co., Heilan Home and UR. The Chinese government has accelerated this shift to domestic brands, in part by making harder for consumers to move money overseas; thus, these brands are more attractive to the local consumer.
3. Millennials in China are digital first. The Chinese luxury market had been stagnant for about six years but is showing new life in 2018 as Millennial consumers come of age. Unlike past generations, Chinese Millennials are constantly receiving new information and recommendations about products and brands. Recommendations in particular seem to carry weight in this market. Gucci claimed success last year when it partnered with acerbic Chinese fashion tastemaker Gogoboi for a dedicated program on the messaging platform WeChat. Within five days, all items sold out.
4. Mobile video is the prime platform. Another difference in the Chinese market is that mobile video is the main event, not a sideshow. This year, Chinese consumers will spend more time with mobile video than TV, according to eMarketer. Mobile video also comprises 60% of total media ad spending in China, according to another eMarketer study.
Opportunity and crisis for luxury brands
John F. Kennedy once noted that the characters that make up the word “crisis” in Mandarin are composed of the words “danger” and “opportunity.” While that’s only somewhat correct, it’s an apt summary of the situation for established luxury brands in China right now. Since there’s an opportunity to woo a new generation of consumers with mobile video, there’s a real danger that such consumers will be lured away as well.