The reason Chinese affluent men and women buy Rolex watches and Louis Vuitton bags are not simply because of the Swiss craftsmanship or French design. There is an important reason.
Their motivation to buy these luxury brands has its roots in the more complex Confucian values and demand for social recognition, and the growing influence of Western values.
Chinese yuppies are driving the demand, buying everything from expensive watches to imported cars. Those that are able to gain and maintain a preferential share of these Chinese affluent consumers will be able to sustain their global image and compete in equal terms with the future emerging Chinese luxury brands.
China has a much longer history of luxury consumption by its upper class than the Western world, as can be readily seen in the many Chinese and Western museums displaying Chinese bronzes, ceramics, paintings and other historical artifacts.
The traditional Chinese society was organized according to the doctrine of Confucianism and an elite class of scholar-bureaucrats that helped the emperor to manage the country.
These scholar- bureaucrats, selected from the young talented people by a national examination system, were able to obtain tremendous fortune and power through their educational and cultural accomplishments.
The scholar bureaucrats were at the top of Confucian social ranking, followed by the farmers, the artisan, and, last of all, the despised merchants. Remains of this hierarchy is still present in many cultures where a person with an Univesity degree is considered having a superior status to a person doing manual labor.
As the Coronavirus pandemic continues to afflict the luxury industry worldwide, China becomes more important than ever due to its swift recovery and the repatriation of wealthy consumers barred from international travel.
Luxury brands have adopted more sophisticated digital tools and are searching for new ways to connect with Chinese consumers. Luxury brands in China continue to invest in celebrities and KOLs (Key Opinion Leaders/influencers), but also experiment with livestreaming, emerging social media platforms, and new channels of e-commerce like Tmall.
Louis Vuitton maintains its genius brand status for the second year in a row by investing heavily in celebrity and KOLs to drive buzz and continuing to innovate with a particular focus on Gen-Z consumers. The brand created its own sneaker-centric WeChat Mini Program to host product drops, was one of the first luxury brands to livestream on RED
Gucci rose to second place in this year’s ranking with its strong social media presence, including a portfolio of top tier influencers across multiple platforms.
Bvlgari developed a seamless ecosystem of WeChat Mini Programs, venturing into livestreaming and offering best-in-class gifting and product customization, aftersale services, and omnichannel functionality.
Much of Cartier’s success this past year is due to its strong celebrity portfolio and successful Tmall launch.
Dior saw one of the biggest improvements over the past year by upgrading its WeChat Mini Program functionality and experimenting on emerging platforms targeting Gen-Z consumers.
Tiffany’s new brand ambassador, proven engagement driver pop idol Jackson Yee, combined with significant paid media investment boosted the brand’s new T1 collection and buzz across social media platforms.
In July 2020, Burberry opened its Shenzhen flagship store in partnership with Tencent, enhancing the offline experience with scannable QR codes, gamification, and social currency via Mini Program
Chow Sang Sang climbed into the top ten with an amplified content strategy on both social media and e-commerce.
Swarovski saw major improvements in its online buzz and social media engagement after naming hot young actor Wang Yibo its new celebrity ambassador.
Prada increased its investment in social media with more celebrity and KOL content and upgraded commerce functionality.
The meaning of luxury products in the Chinese culture is an important aspect of the consumption of luxury brands by the affluent Chinese consumer.
For some, conspicuous consumption and the necessary high brand awareness are the important decision factor for a purchase; for others, functionality and quality are the key decision factor for a purchase of a luxury brand.
These are opposing values in the mind of the affluent Chinese consumer: the first is the new ideology of modernity, wealth, success, and achievement, and the second are the traditional Confucian values of frugality, economy, modesty and humility.
The majority of the Chinese consumers of luxury brands decide their purchase based on conspicuousness because of their social awareness and that here are relatively few that decide based on their needs, such as the satisfaction of possession. For this reason the vast majority of the Chinese affluent consumers prefer owning a Rolex watch due to its flashy luxury brand and high price image to the sophisticated pleasure of owning a little know Breguet watch.
Luxury brands that want to succeed in China must obtain high brand awareness. This because the Chinese affluent consumers choose only from among famous luxury brands that satisfy his need for conspicuous consumption and are unwilling to risk paying a high price on an unknown brand in China, even if the brand is internationally recognized as a luxury brand.
In the past decades, the best strategy for luxury brands to penetrate the Chinese market was to get a reasonable understanding of the Chine affluent consumer, then create 100%-owned stores in luxury shopping areas of every targeted city.
Today thanks to the digital tools you can create and empower your brand image through social media platform and moreover, you can create your own online store to finalize the interest of the Chinese consumers.
Start getting your brand visible, start getting your brand digital.
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