How to engage luxury shoppers in China

Comparing luxury brands in China vs. U.S.

Due to China’s population size and growing economy, there is no doubt that Chinese consumers will be the main consumers of luxury goods in the future, trumping spending by American consumers by the billions.

By 2030, China will be #1 market in the global economy in terms of Purchasing Power Parity, replacing the United States which will take the number 2 spot.

The outstanding question is how to prepare for the future and establish a brand for the new luxury shoppers from China. In this article, we will talk about:

  • the luxury brands in China vs. U.S. – you can understand culture and value difference between the two countries
  • characteristics of luxury shoppers in China
  • and finally, if you want to present your products to them, we identify three channels you need to look into to build your brand awareness

Culture difference: what are top luxury brands in China vs. U.S.

Chinese culture is different than that of the U.S. and what it means is that the value system is different between the consumers in those two countries.

According to Affluent Insights 2017, top luxury brands in China, from #1 to #10, Chanel, Dior, Armani, LV, Hermes, Burberry, Prada, Calvin Klein, Gucci and Versace while in the U.S., top luxury brands are: Ralph Lauren, Coach, Calvin Klein, Gucci, Michael Kors, Burberry, Chanel, Brooks Brother, Emporio Armani, and Mont Blanc.

Comparing luxury brands in China vs. U.S.

What is also interesting from the analysis above is that Chinese shoppers likely to purchase PRADA is decreasing from 34% to 32% from 2016 to 2017 while those numbers for Gucci is increasing from 33% to 43% in the coming year.

The characteristic of luxury shoppers in China

There are currently 1 million Chinese people and 5 million Americans with at least 1 million USD in assets – High Net Worth Individuals (HNWI). This is a lucrative segment and one where brands are eager to increase their market share.

Chinese HNWI are more likely to purchase luxury items. For example from the Affluent Insights 2017 report, it shows that 85% of Chinese luxury consumers are likely to purchase luxury items where that number is only 45% for U.S. luxury shoppers.

luxury brand shopping behavior in China Marcetable

Compare to U.S. luxury shoppers, Chinese consumers are more likely to purchase high price tag items online. Basically, Chinese consumers are ready to purchase everything online according to luxurysociety.com. In the past, China’s e-commerce sites such as Tmall recruited a number of luxury automakers including Mercedes-Benz, BMW and Audi to launch digital stores with them. Therefore, luxury brands in China should not be afraid of making the full use of their imagination to creatively think about how they can cater to Chinese consumers digitally.

Furthermore, according to luxurysociety’s studies, Chinese consumers favor shopping on smartphones. “Launching on a major online shopping platform is an absolute must for luxury brands, but they also should improve the functionality of their own apps to make them more localized, user-friendly and accessible to Chinese people.

Additionally, Chinese luxury shoppers are buying more luxury brands while traveling than U.S. luxury shoppers. However, this trend is shifting from 2015:

Shopping behavior changes in China Marcetable

Chinese consumers will be spending more on luxury in the home country, China, because of price changes and exchange rates. Also, there is a decrease of buying luxury brands during travel though the base is still quite significant.

This brings to our next question – how do you engage those consumers that are likely to purchase luxury items?

How to build a brand awareness engaging luxury shoppers in China?

If you are a luxury brand owners, you might ask how to engage Chinese consumers with strong purchase powers. According to the Agility research, the top three channels are brand website, shopping malls, and airports.top channels to engage Chinese consumers

It’s understandable that brand website is one of the top three channels introducing and reinforcing the brand image. What is more surprising is to see airports are making the top-three lists for both two luxury product categories in terms of engaging individuals with high net worth. This is certainly a brand owner should look into in developing their brand strategies when engaging Chinese luxury shoppers.

For example, if a luxury brand owner is entering China, it might not be a bad idea to start engaging Chinese consumers at the airport (in China or local country) to build a brand awareness first as a starting point.

Lisa11

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