The Chinese Luxury Market
China will count for a third of the worldwide luxury market (China’s luxury good consumption will be about $175 billions) in 2015. In 2012, China’s luxury consumption was very high (about $145 billions), despite the international economy’s decreasing. Indeed, Chinese salaries are rising and China owns nowadays an incredible concentration of millionaires.
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Who consumes luxury goods in China and how?
In 2012, China had:
- 1,020 000 millionaires
- 7500 billionaires (+3500 from 2011)
Who are they?
Initially, main luxury goods consumers were men, because the only people who could afford these expensive goods were members of the Party. Today, women buy more and more luxury goods, which could be explained by the rise of working women.
According to a KPMG study, in 2013, 60% of Chinese millionaires are men with an average age of 39 years old.
Concerning their job occupation, four major subcategories of Chinese millionaires are emerging:
- Stock market investors
- High salaried executives
- Privates business owners
- Real estate investors
Why do they consume luxury goods?
- To sustain their guanxi (professional relationship)
- To keep the face (Chinese concept of personal image, which is very important for Chinese people, showing their achievement and position in the society)
- High middle class
It represents 150 million people, but only 15 to 25 millions are frequently consuming luxury goods. This rising class is highly interested in that kind of brands and their images.
- The enai (the mistresses)
Every respectable businessman in China has to keep one or more enai up, and these young and beautiful ladies are greedy of luxury goods.
- Little emperors/princesses
China’s “little emperors” phenomenon is very specific to that country. Actually these young consumers are the consequence of the one child policy in the end of the 70’s. The ones that are born from this period and without any cousins and siblings are the centre of attention of six adults, parents and grand-parents buying them everything they want. That is why we can see a lot of college students, even the underprivileged ones owning an Iphone or an Ipad, which clearly exceeds their consuming capacity though. So, very pampered, this group represents a good target for many industries and especially the luxury one. The oldest have 30-35 years old, are working and so get a salary. As they always were pampered, they are naturally researching the best for themselves, and luxury goods are a very strong social symbol in China. According to the international association for luxury goods, 25-30 years old Chinese are the primary consumers of luxury products.
- Why Chinese people consume luxury goods
Luxury goods consumption motivations are not the same for men and women as shown in the graph below.
The first reason for buying a branded luxury product is self-reward, no matter is the sex. The most significant increasing is the social dimension for men, and enjoying the ownership for women.
Buying luxury goods is a guarantee of high quality and durability for Chinese buyers. The country of Origin is not very important but CSR (Corporate Social Responsibility) is the fourth reason people buy those items at such an expensive price. Surprisingly, the fashion criterias are less important than CSR.
- How do they consume luxury goods?
Psychological effects are a very important part of luxury consumption. What are the psychological criterias Chinese customers are submitting on when buying luxury goods?
- Chinese stereotypes countries for providing specific products.
France ends up being the most recognized country for its luxury goods. For example French company Ricard is the first whisky importer in China, but China is not so far away. This fact highlights the evolving of Chinese luxury brands on the luxury Chinese market, which will be developed in another article.
- Chinese consumers have different perceptions of luxury brand and luxury goods depending on which country they are from. Accordingly, the country of origin can strongly impact the sales and product acceptance.
- What are the main targets of luxury products in China?
Favourite luxury goods in China are:
- Watch. Luxury watch is a very appreciated business gift in China that is why this product is the most consumed by Chinese people. They don’t buy it for themselves, but to offer.
- Bags and shoes
- The evolution about luxury brands logo.
Still, Chinese behaviour is evolving like in western countries, the interest in brand and logo tends to be replaced by more discretion and elegancy. Another reason of this evolution is the China’s strengthening effort in anti-corruption.
By Leïla Hatoum