5 Key Facts About Chinese Luxury Goods Marketing

As the Chinese middle and upper classes enjoy increased disposable income, their tastes have grown more expensive. In 2015, luxury good spending in mainland China reached $19.3 billion or about 31% of the global market. But before you rush to get your pricey products listed on Alibaba or Tmall, consider these interesting facts about Chinese buyers willing to shell out more yuan for international indulgences.

1. They’re not just shopping in China.
Many Chinese consumers now buy luxury items in Europe and other parts of Asia, where lower taxes make prices significantly cheaper than in the mainland. In fact, it was estimated that 80% of China’s total luxury spending was made overseas in 2015. Though efforts are being made to slow down the “gray market” that has arisen for international purchases, for now Chinese travelers are as likely to buy expensive items abroad as they are cheap souvenirs.

2. It isn’t about logos.
Chinese consumers have evolved beyond simply loving labels, so brand alone no longer determines a product’s success in this market. A survey conducted by Simon-Kucher & Partners showed that China’s luxury buyers now place the highest value on product quality (74%), style (70%) and comfort (70%) when making fashion purchases, while Bain & Company found that 39% of wealthy Chinese don’t find logos to be a priority. That collective sigh you hear in the distance is from Louis Vuitton’s marketing department.

3. The consumers are younger than you’d think.
The average age of Chinese luxury consumers, at home or abroad, is 33.1 years. And more than 80% of all Chinese luxury consumers are between the ages of 25 and 44. This is a generation of shoppers that has grown up on luxury marketing campaigns and which embraces the concept of “Treat Yo’ Self.” But in China they call it Singles’ Day.

4. The Internet is where you’ll find them.
Chinese consumers are quite likely to research luxury brands on the Internet or apps, and are open to developing a relationship that goes beyond the point of sale with the companies behind them. Albatross Global Solutions found that about 75% of China’s most affluent consumers follow brands online and that almost 90% of them want to be contacted by brands they have purchased. Organizations now take advantage of these stats by allocating about 35% of their marketing budget to digital efforts, and that number is growing.

5. The brand story matters.
According to McKinsey&Company, Chinese consumers are now finding that the allure of luxury products can be driven by a brand’s cultural heritage. For that reason, outside luxury brands have found success in promoting their history and craftsmanship as selling points. But there’s also something to be said for assimilation as one-third of luxury consumers expressed a preference for items that incorporated Chinese imagery or that were designed specifically for China.

Thanks to rising incomes, the availability of products online and more openness towards displaying wealth, Chinese consumers now feel increasingly comfortable investing in luxury items. This presents an incredible opportunity for marketers accustomed to targeting less cost-conscious consumers if they’re willing to take the time to understand the nuances of this growing market.