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  • MAP Asia Pacific Ltd

What Kind Of Exclusivity Are Chinese Luxury Consumers Really Looking For?

According to market research company NPD Group, Chinese luxury consumers spent over $12.29 billion on luxury goods worldwide in 2020, accounting for almost two-thirds of the industry’s growth that year despite the impact of COVID-19. For brands, the sheer influence of this market has reached such significant proportions that its needs can no longer be ignored.

The repatriation of Chinese luxury consumer spending due to travel restrictions has directly led to a surge in local consumption in China, which now accounts for 80 per cent of total luxury spending (it stood at 43 per cent in 2019). As the pandemic remains severe at a global level, outbound leisure travel is unlikely to make full recovery until the second quarter of 2023 at best, states a new study from consulting firm Oliver Wyman. This means that stores in China will likely be the primary purchasing channel for the vast majority of Chinese luxury shoppers until then.

Luxury brands are increasingly regarding China as a standalone market (and not as part of the “Asia” or “Asia-Pacific” region) as it is now comparable in terms of scale to established luxury markets like the US, Japan and France. As the Chinese market continues to come into its own, the divide between this market and other Western markets is growing and international luxury companies need to tailor their strategies to cater to China and its unique consumers.

Luca Solca, Senior Analyst at Berstein, once said: “If the Chinese sneeze, the luxury sector gets pneumonia.” As the Chinese market becomes increasingly important, top luxury maisons are ramping up their investments in China. But the vastly different social, cultural and commerce landscape continues to present a challenge to them – and the numerous social media gaffes made by luxury brands over the years attest to that. Clearly, there is still plenty of room for Western brands to improve on this front. Customers want to feel recognised and valued, and a brand’s initiatives in a market – from merchandising to marketing – are clear indications of that.

When “Exclusive” Is No Longer “Exclusive” Western festivals such as Thanksgiving and Christmas have started to lose their charm for Chinese consumers in recent years, and traditional Chinese festivals such as Lunar New Year, as well as shopping festivals such as Singles’ Day and 618, are starting to heavily shape the marketing calendar in China. This makes the marketing landscape in China very distinct from the West, and luxury brands have to design their marketing campaigns and product releases accordingly.

Back when international luxury brands were still the early stages of their development in China, they tended to take a global – or in other words, “Western” – approach to marketing, says Iris Chan, Partner & Head of International Client Development at DLG (Digital Luxury Group). Global product lines and collections often took a longer time to find their way to the market, and in some cases, didn't make it to China at all. But as the market grew more mature and consumers more demanding, brands not only made it a point to ensure global releases made it to China in a timely manner, but also started thinking about market exclusives. “Launching China exclusive editions offers uniqueness among familiar products and a sense of urgency to purchase given the limited production runs. It also serves to address the burgeoning and more complex needs and preferences of Chinese luxury consumers,” she adds.

However, this practice has hit a snag in China of late. Consumer appetites have been diluted by a range of similar “Chinese” collections; and at the same time, the over-simplification of Chinese culture and preferences by some Western brands is starting to come under scrutiny. Balenciaga drew flak for its “tasteless” limited edition Hourglass bags that featured the Chinese characters for “I Love You” in a stylised scrawl during last year’s Qixi festival; Burberry’s 2021 Chinese New Year campaign showcasing a live ox in reference to the zodiac animal was deemed by netizens as “absurd”; and Gucci’s Doraemon collection for Chinese New Year this year was met with mixed reactions in the market.



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