Many Chinese Consumers Still Driven By Brand
As with many nascent luxury markets, China consumers have traditionally remained focused on acquisition — amassing as many purses, watches, and cars with as many logos as possible. However, emerging trends now indicate that Chinese consumer habits are moving from overzealous acquisition to a more curated type of discovery.
While Chinese luxury consumption has slowed, it remains strong, with a recent HSBC report finding that shoppers now have a stronger focus on quality, and subtlety has gradually taken the place of blatant branding. This changing focus means that consumers will no longer grab the first logo-festooned purse they see at a brand’s flagship store, but will spend the time to better understand and discover the product story and company history. In fact, another KPMG report on The Global Reach of Chinese Luxury found that heritage of the brand plays a significant role in the purchasing decisions of 72 percent of those surveyed.
This same study found a growing number (also 72 percent of respondents) of Chinese are now purchasing luxury items overseas. This is partially due to high import and luxury taxes in mainland China, but also because Chinese consumers still associate certain countries with specific products, such as Switzerland for watches, France for accessories and cosmetics, and Germany for automobiles. These associations may have begun with multinational name brands, but more Chinese consumer are becoming more adventurous and buying niche European brands that specialize in the items their countries are known for.
The Chinese luxury market is often compared to the American and Japanese markets in previous years, both of which have struck a balance between love for domestic and international brands. Yet the evolution of the Chinese consumer market has undoubtedly accelerated into the era of discovery very rapidly, due a younger luxury consumer demographic that has the advantage of cutting-edge technology. The aforementioned KPMG study also found that 70 percent of potential consumers in China search online for luxury brands at least once a month, showing a desire to learn more about brands and pricing. This dissemination of luxury brand information is what accelerates consumer sophistication and enables a growing number of Chinese consumers to not only discover new luxury brands, but also to make more discerning choices. The Internet also becomes a key point of entry for domestic brands that have started in second- or third-tier cities but grown rapidly to gain the attention of more cosmopolitan customers in Beijing and Shanghai.
Luxury e-commerce darling Shangpin.com has been able to compete with other vertical B2C luxury sites because it helps Chinese customers discover more niche American brands such as Cynthia Rowley, Laundry by Shelli Segal, Charlie Jade, Tracy Reese and Milly. Compare this to Shangpin competitors like 5lux.com, Xiu.com, and Glamour Sales, all of which remain steadfastly focused on European heavyweights. While most e-tailers focus on more mainstream brands, other sites such as Nuandao.com and Bundshop give Chinese consumers the chance to find and learn about never-before-seen local designers.
As multinational luxury products become more ubiquitous, and therefore lose status, the budding interest in discovery will lead more discriminating consumers’ to search for exclusivity. Whether this exclusivity takes the form of limited editions by well-known brands, niche designers or through luxury e-commerce, the fragmenting of the Chinese luxury market may draw them away from European powerhouses and towards luxury and fashion created closer to home.
Stephany Zoo, cofounder and marketing director of Bundshop, seeks to bridge her bicultural heritage and achieve a greater understanding of international consumer behavior.
(Opinions expressed by Jing Daily contributors do not necessarily reflect the opinions of the Jing Daily editorial team.)