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Chinese customers are having an increasing appetite for buying
big-ticket items. Global brands are using this attitude to tap Chinas luxury market.
is a constantly evolving, and a subjective concept, a state of extreme comfort,
or indulgence. Luxury brands stand for excellence, and are actually a social
code, that motivates the consumers to pay a premium price. This makes the
segment more interesting and explorable.
China is expected to become one of the worlds biggest
luxury markets in the next 5 years. A 2008 survey states that, the country
enjoys having 4, 60,000 HNI (High Net worth Individuals) households, holding an
asset value of more than 7 million RMB. Analysts predict, that this would
further grow to reach 7, 50, 000 households by the end of 2011. They further
predict that the total assets of HNI in China would double from 12 trillion in
2008, to more than 23 trillion by the end of 2011. The country is expected to
consume 29% of the global luxury items by 2015. A study by Merrill Lynch study
states that by 2014, Chinese customers will account for almost one fourth of
the global purchase of luxury products.
the total number of HNI in China is more than other countries such as France, and UK. The affluent population of China is mostly concentrated in the coastal areas of Guangdong, Shanghai, and Shandong. Currently, the trend is spreading in other areas such as
Beijing as well, and from I tier to II and III tier cities as well.
of the HNI population in China:
customers are exposed to more media awareness, and this makes them more
discerning. With a surge of magazines, and websites informing about luxury
items, they are well aware of the brands available in the market. The most
influencing reason for the purchase of luxury products is as a means of self
reward. When shopping for luxury products, shoppers prefer to buy clothes,
jewellery, and watches in branded stores, and other accessories such as
cosmetics in department stores.
research among luxury shoppers in 17 Chinese cities state that there is a
shifting attitude among Chinese shoppers towards displaying their wealth and in
buying more luxurious items. Rich customers will continue to dominate majority
of the luxury segment, while upper middle class segment trails closely. The
survey further states that out of the total number of surveyed customers, 50%
of them were able to remember brand names, and identify them. This was only 23%
until two years before.
rapid accumulation of wealth in the dragon land is attracting the eyes of
global luxury brands. More than 50% of Chinas luxury stores have been opened
during the past three years.
Vuitton, Chanel, and Gucci are the top three brands most preferred by the
Chinese customers. Followed by them are other brands such as; Armani, Christian
Dior, Rolex, Hermes, Cartier, Lancme and Prada. Emerging middle class
population of China is trying to improve quality of their life, and this proves
to be the main growth driver of luxury market in China. Brands such as Dunhill,
Hugo Boss, Ferragamo, Gucci, Burberry, Versace, Dior, Prada, and Chanel have
opened more than 80 stores during 2010. Sales figures in these stores are
showing positive signs of consumer spending.
Trends of the Chinese Luxury Market:
customers are now looking for aesthetic and social value instead of just
thinking about the basic needs of warmth and protective function of apparels. A
research report states that 60% of the surveyed customers expressed their
opinion to buy branded apparels. On an average, Chinese consumers buy
approximately 600 different branded products including both domestic and
international. Some of them also believe that foreign brands are better than
areas for improving market performance:
all the rosy future ahead, luxury brands still need to focus on some key areas
to enhance their market performance in China.
global economy builds a class of creamy segment in the Asian regions, luxury
market is booming therein. Traditionally regarded as fickle, this segment
currently goes through years of successive growth. Competition between the
domestic and international brands in the luxury market is resulting in
structural, geographical and institutional renovation of China.
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