China luxury sales growth may have been hit hard by the Chinese government’s ongoing anti-corruption crackdown, but a new report finds that luxury industry insiders still have high hopes for Asia in the start of the year—where China dominates the regional luxury market. In a new Q1 survey by wealth research firm Wealth-X, executives from a range of luxury sectors were asked about their feelings about the direction of the industry, and Asia remains one of their most important regions.
For 29 percent of respondents, Asia was their most profitable region in 2013, generating the highest share of revenue for the year. In addition, a total of 64 percent of respondents expect Asia to display the largest growth in the first quarter of 2014. Look below for five more trends the report found regarding luxury industry professionals’ opinions about Asia:
“Traditional luxury” hopes are still pinned mainly on Asia
Despite the anti-corruption crackdown, more than 50 percent of respondents in the “traditional luxury” sector expect Asia to post the largest growth rates. However, this sector was “markedly less optimistic” than others, according to the report—likely in large part due to China’s slowing growth.
Chinese tourists offer the biggest source of optimism
Meanwhile, the growth of Chinese tourism has the hospitality industry even more Asia-focused—67 percent of this sub-sector expected their largest growth to be from the region in the first quarter. This is no doubt due to rising numbers of Chinese tourists, who make up the world’s largest bloc of travelers.
Chinese interest in “alternative luxury” on the rise
Out of all sectors, Asia was most important for “traditional” luxury such as apparel, leather goods and jewelry, but is also growing in importance for collectible items such as art, wine, and spirits—in which China is clearly playing a key role. Rising numbers of Chinese collectors at auction means that more than 50 percent of respondents in this sector expect Asia to display the largest growth in the first quarter of 2014.
Their main target is the ultra-rich
Since Wealth-X focuses on researching ultra-high-net-worth individuals (UHNWIs), they naturally asked their survey respondents about how important they are to their overall business. It turns out that the super-rich are a top priority: 50 percent of respondents stated that more than half of their total marketing budget goes to UHNWIs, while 78 percent expressed optimism that these ultra-wealthy individuals would be spending more in the year to come.
They see person-to-person contact as the main way to target UHNWIs
Despite the importance of online marketing for luxury, companies still see face-to-face contact as the best way to engage with the richest of the rich. According to the survey, 74 percent of respondents said they used events to target UHNWIs. While not specific to China, this is certainly a strategy used there by many brands—which sometimes even fly their VIP Chinese clients on special trips to Europe to shop. When asked about how they reach UHNWIs, 88 percent chose “in person”, opposed to only 25 percent for “online”.