The Year of The Rooster – China Luxury Market Outlook By The Luxury Conversation
There was a good deal of debate in 2016 about the slow-down of the Chinese economy and tough times for luxury brands. After years of strong growth, we are now talking about China’s “new normal” – i.e. a more moderate rate of growth and sales. But it’s not all doom and gloom. In fact, UBS Global Research predicts a recovery of Chinese luxury consumption in 2017 and 4% growth. So just what are the biggest opportunities for 2017 in China? The Luxury Conversation put that question to a panel of experts….
Zan Wu, Founder of ZANADU
ZANADU is China’s No.1 luxury online travel agency, curating the world’s most amazing travel experiences and luxury boutique hotels and villas for the discerning Chinese traveler. ZANADU is also the leading creator and distributor of premium travel and lifestyle information.
“Customers’ demands are increasing and they are willing to pay a premium for better and more unique experiences. In addition, the media environment will become more vertical. Therefore, the biggest opportunity (and also challenge) for luxury brands is to deepen their understanding of customer interests, lifestyle and aspirations to stay relevant. This applies in every aspect from product development, marketing, communications, channel strategy, partnerships and content. All these will become more personalised and segmented.”
Rupert Hoogewerf, Chairman and Chief Researcher of Hurun Report
Founded in 1999, Hurun Report has grown into a world leading researcher of, and media for, the Chinese high net worth individual.
“Less is more – this coming year, I expect there to be an upsurge in the confidence of the Chinese luxury consumer, which could translate into bigger sales. Not only are the middle and upper classes getting richer, there are also more of them than ever before. There is now a new normal in the state of luxury in China following the anti-corruption campaigns, which hit luxury brands hard. Those brands have responded to this over the last three years by launching more entry and affordable products with less ostentatious branding.”
Allen Liu, Chief Editor of World Wrist Watch Magazine and Luxury Watcher
Established in 1999, World Wrist Watch Magazine is the most successful professional watch title in Asia. Luxury Watcher covers all aspects of affluent lifestyle across Greater China.
“We will see a continued increase in domestic luxury consumption. This will be driven by two factors. First, luxury goods are becoming less expensive in China compared with overseas because of the RMB rate and price-equalization trends from many brands. Second, the Chinese government has been very strict in enforcing customs checks at major airports, hence deterring consumers from bringing in as many luxury products as before. Lastly, I think luxury brands will continue to focus more on CRM initiatives. Many brands have established VIP customer databases and will be looking to leverage existing customers by offering them unique experiences.”
Lilly Liu Minkove, Founder of ArtLogica Strategy Group and Global Luxury Advisor
ArtLogica is a business, brand and marketing strategy firm helping clients in consumer-focused verticals.
“Mobile will become an even stronger influence on Chinese luxury consumers. They are discovering, conversing and engaging with brands and online content at an unprecedented level. Mobile will increasingly become not only the source of information, but also the mode of transaction, even for luxury products. Brands need to first understand the customer journey and channels of information – how the consumer is using social media to gather information about new brands and new trends – before ultimately making a purchase.”
Fang Yang, Founder and Designer of by Fang
by Fang is a Shanghai-based, ready-to-wear luxury fashion brand inspired by the story of its founder, Fang Yang.
“2017 is a pinnacle year in the evolution of the luxury industry in China – a gradual shift from imported foreign-made luxury goods to the appreciation of homegrown, Made In China luxury products. The Chinese luxury consumer is finally shaping his and her own identity.”
Chloé Reuter, Founder and CEO of Reuter Communications
Reuter Communications is an independent communications agency based in Shanghai and Hong Kong, representing some of the world’s most celebrated premium and luxury brands.
“The year ahead is set to be one of adaptation and change. With the evolution of e-commerce and mobile, shifts in path-to-purchase and consumer behaviour in China are at full speed. Competition will be intense, so success for luxury brands will be determined by who can adapt their approach and respond best. Story-telling will be big in terms of driving brand awareness, affinity and engagement, as consumers increasingly value authenticity and genuine brand-stories that they can connect with. This will also be the year when emerging Chinese fashion brands compete with the established names.”
Though the Rooster is possibly the most reliable animal in the zodiac, for luxury brands looking at China, the only thing they can be certain of is change. To stay ahead of the game, brands that are nimble and can adapt quickly will be successful in this market. A young luxury consumer with low brand loyalty and attention span is hard to convert. So here are our top tips on how to stay relevant:
Digital – understand the digital landscape and how it impacts business, both from a communications standpoint as well as a path-to-purchase journey. Know that mobile is key when it comes to everyday transactions in key cities. Who actually carries RMB these days?
Experiences – a lot has been said about experiences, and we will say it again. What are you providing beyond the purchase to add value and connect on a deeper level with your consumer?
China Brands – this is the time for Chinese fashion brands. Homegrown creativity is not only rising in popularity in China, but is being acknowledged around the rest of the world.
Content, Content, Content – 8 seconds is the optimal attention span of a young Chinese luxury consumer. How powerful is your message to connect in that time?
Travel – 120 million people will travel overseas this year – how are you engaging with them? Did you know that 80% of luxury purchases made overseas are already decided before they leave China?
What Is The Luxury Conversation?
The Luxury Conversation is a platform for global luxury professionals to connect, share and discuss Asia’s luxury industry and its rapidly evolving affluent consumer. The Luxury Conversation curates and debates topical issues that are impacting the industry and weighing on the minds of our community. From consumer attitudes and trends, to the factors influencing and shaping the market, The Luxury Conversation debates the questions of the moment – from China’s luxury traveller and the rise of m-commerce, to Chinese economic growth and the new technologies disrupting the marketplace.