For Foreign Luxury Brands In China, Charity May Be Best Form Of Promotion

China Luxury Forecast 2010 Finds Corporate Social Responsibility Particularly Important To Wealthier, Educated Shoppers


Chen Guangbiao donated US$130 million last year, putting him at #4 on the Hurun Report's Charity List 2010 (Photo: Beijing Today)

Chen Guangbiao donated US$130 million last year, putting him at #4 on the Hurun Report's Charity List 2010 (Photo: Beijing Today)

Corporate Social Responsibility (CSR) may be somewhat new to China, but in recent years there has been a groundswell in charitable giving not only by major corporations but also by the country’s wealthy elite and middle class, driven by events such as the devastating Wenchuan earthquake in 2008. According to the new China Luxury Forecast 2010 by Albatross Global Solutions and Ruder Finn Asia, CSR isn’t only good PR in China, it’s perhaps the best form of advertising. In a survey of 1,100 luxury consumers in China, Hong Kong and Taiwan, CSR was found to be especially important to wealthier, more educated consumers, 2/3 of whom said a given luxury brand’s CSR would make an impact on their choice to purchase its goods.

Ruder Finn found that the aforementioned Wenchuan earthquake marked a real turning point in the history of CSR in China, with companies that were quick to donate immediately after the disaster praised and those that were perceived as “not doing enough” labeled as “iron roosters” (tie gongji) or cheapskates. But in the two years since Wenchuan, consumers in China have begun to look for companies to do more than just donate money.

From the FT:

“Consumers are looking at what companies do beyond donations. They want to know how companies are getting the society involved,” he says, adding that “when you talk about luxury in China, you are talking about European brands.”

The study found that among the 15 most popular brands in China, Hong Kong and Taiwan, 14 are from Europe, with the most sought-after being Louis Vuitton, Chanel and Gucci. The only American label that made it to the list is Estee Lauder, the cosmetics company.

Along with CSR, look in the years ahead for more and more visible charitable giving by China’s wealthy elite. As Pierre Lu, author of Luxury China, recently pointed out, after wealthy Chinese who see themselves as the country’s “new nobility” have stocked up on luxury goods to show their status, they often find “the channels for the public to see their contributions to the society are not much and they are anxious to show some images to distinguish themselves.” Thus, very public charitable giving is becoming something of a new form of competition in society. As Nels Frye presciently told Jing Daily earlier this year, in the months and years ahead, “Charity [in China] will become one of the main subjects of conversation and it will start to be a loss of face for anyone with any money not to be giving.”

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