The global personal luxury goods market is expected to grow from 2,406 billion RMB in 2018 to 3,117 billion RMB in 2025 (a roughly 4% annual growth rate).
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Chinese people represent the biggest group of luxury consumers worldwide. Within them, Chinese Consumers aged 23 to 38, who account for roughly 70 percent of luxury sales are willing to spend on luxury brands, and financially able to do so, and no other luxury market in the world is younger or more digital.
What’s Powering China’s Market for Luxury Items?
Chinese consumers are still hungry for Luxury Goods
Chinese millennial consumers are highly educated, and very familiar with digital tools what maks them highly empowered. Nowadays, traditional market research is a waste of money in China because surveys focus on too few cities, because Chinese millennial consumers are already well informed about luxury and eager to embrace innovative trends, such as the convergence of high fashion and sportswear.
Only real-time consumer measurements of AI-powered social media listening techniques can steer brands accurately in China. Chinese social media networks are firewalled and challenging to analyze, but with the right expertise and machine learning, Luxury brands can correctly observe or analyze data on their Chinese consumers, brand, competition, and more.
Using the right communication content
Many Luxury brands fail in China because they convince themselves that the content produced for the rest of the world will also be relevant in mainland. Aside from the content itself, brands must considerate the importance of Chinese key opinion leaders (KOL) and influencers, given that they help brands successfully engage with potential customers on local social media platforms like WeChat.
Sometimes, western companies waste millions of dollars with “classic” advertising in China instead of fully embracing digital strategies that produce a measurable ROI. Creating the wrong type of content not only wastes money, but also can ruin your brand’s reputation and has lead to any significant sales.
Trust the power of Luxury brands in China
Chinese consumers love Luxury brands because they identify with them. That’s why brand storytelling is much more powerful in China than in any other place in the world. Luxury brands should create more end-to-end brand experience for Chinese consumers. That requires a thorough brand audit, a positioning exercise, and a customer journey assessment.
Winners strive to enhance their access to consumers through digital and influencer marketing, often attracting millennials with younger and more casual collections. Without an authentic and rich brand storytelling at each interaction point, luxury brands will lose the Chinese consumer, without exception.
Some luxury brands have a CRM (customer relationship management) system, but they do not use their most valuable asset: data about their consumers. And by not using their data, they are not servicing their consumers sufficiently. Brands should be more digital, in order to create great consumer experiences. Everything MUST be digital there, in fact, digitalization covers both e-commerce and consumer engagement through digital platforms, in terms of engaging customers.
Over the years, luxury brands learn more about how to integrate online and offline sales, how to use digital engagement campaigns to get customers into their stores and how to improve the in-store experience.
Prepare your Budget
For many luxury companies, China has become their biggest headache. Launching in China without a real budget and just hoping you’ll attract hundreds of millions of millennials in China is a another way to fail. Western brands in China with bad economics, unprofitable store locations, and expensive overhead costs will infinitely guarantee a big failure. Luxury brands should invest in the perfect launch, after thorough brand and strategy development.
brands need to rethink their approach when it comes to understanding China and its millennial consumers. They need to become consumer-centric, meaning that they must create relevant content and build a strong brand identity.
Luxury Brands should focus on the Online Channels
channels like Tmall flagship stores and WeChat commerce give brands some control while allowing them to benefit from the platform’s steady flow of traffic. Aggregators such as JD.com’s Toplife and Tmall’s Luxury Pavilion enable brands to outsource the responsibility of building and operating high-traffic channels. Finally, luxury vertical sites such as Secoo and Mei.com make it possible to move goods at a discount.
That requires a strong story and a rigorous customer journey design. They also need to become digital: If they think they are already digital, then they need to become even more digital. And they definitely can’t launch in China without investing first. This is the only way to have a chance at success in this highly competitive market.
Are you interested to promote your Luxury brand in China, and learn how you can target Chinese consumers digitally? You are welcome to call us for a friendly discussion and learn about your brand’s prospects in Chinese E-commerce market.
Our Digital Marketing agency provides, international brands with tools that are optimal to unlock this enormous market to earn their full potential. If you are interested in exploring Chinese Digital E-Commerce platforms, reach out to us for a customized advice.