The phenomenal growth of China and its openness to the world train in parallel an increase in wealth is a tendency to individualism and hedonism, conducive to spending, rather than the traditional savings. The luxury market in China represents a tremendous opportunity but also poses many challenges. Very competitive, it now hosts the biggest international brands, and many niche brands, and laggards , still seeking their place in Chinese sun. Chinese consumers are savvy and more than ever, for “over- informed,” most experienced and very busy; they become fussy and changing targets. In parallel of increasing marketing investment, the most prestigious brands need to differentiate themselves and set their segmentation.
On the Chinese territory, the growth of luxury goods to dedicated sales areas should stabilize and even slightly increased in the short term. All indicators confirm that the Chinese are buying more luxury goods in their own country. This should lead to an increase of stores located in China in China. The growing market for luxury goods in China is expected to grow about 20% this year. The current luxury market of the Chinese mainland market is an atypical, 60% of these products being purchased as gifts.
For example, Hermes International SCA , which released last Thursday its sales figures for the second quarter , announced an increase in revenues in Asia. Hermes has decorated its stores to attract Chinese customers with a large curtain, for example, to create a warm atmosphere at home .
More and more international brands locate in smaller towns still little explored because the potential market is huge in these places , according to Zhou
The markets for American luxury goods, European and Japanese do not have a great potential for growth within 1-3 years ahead. This is why more and more luxury goods companies in the world have rushed to China to invest in the Chinese market. With the continued growth in consumption of luxury goods by the Chinese, China will undoubtedly become the world’s largest center of commerce and consumption of luxury goods.
An element more differentiator of luxury brands is their country. This is the most important factor for 40% of buyers. They prefer the French brands for perfumes and cosmetics, skin care, ready to wear and accessories as well as wines and spirits. Switzerland excels in the fields of watch making and jewelry . Germany in the automotive and Italy in leather goods . Chinese consumers also associate countries at different luxury styles : French brands provide the feeling of being unique, the Italian right to be sexy. The Swiss brands , British , and German are associated with a more rational feeling of just being premium . Chinese brands give the feeling of belonging to a group.
China is the most promising market for luxury brands. It is the country with the highest consumption of luxury goods in the world. The Chinese market by its size and rapid sophistication offers more opportunities than challenges: the challenge today is to fully understand the evolution of consumer motivations and find the right balance between the Western heritage and local adjustment.