Why Luxury Brands Need To Reframe Brand Origin In China

Brand origin is, in many ways, synonymous with the rise of luxury in China. Luxury groups have used this to create messages about quality, heritage, and craftsmanship. It’s proven to be an effective strategy, with many Chinese consumers attracted by the allure of owning high-end labels with a French or Italian heritage. Businesses continue to leverage positive associations from a nation’s image to demonstrate authenticity. Longchamp’s “Très Paris” campaign evokes the spirit of French art de vivre. And “Made in Germany” is so central to the identity of Porsche that the luxury automobile giant ruled out manufacturing cars for the Chinese market locally. https://www.youtube.com/watch?v=kU3cN_uo4Dcamp;t=12s Chinese consumers who are new to luxury can use brand origin to navigate an increasingly crowded market environment. But “made in” is no longer its sole reference. Audi, BMW M, and Mercedes have all opened manufacturing plants in the mainland, while BMW recently opened Plant Lydia in Shenyang that will produce the new BMW i3. Despite this geographical shift in production, German car manufacturers benefit from a positive national image. Indeed, a 2019 McKinsey survey reported that over 70 percent of Chinese respondents favor the European country’s automobile companies. The aspiration to own a German car “Made in China” is of course about German know-how — but it is also about image and identity. So, yes, brand origin still matters, but consumers are using a wider range of criteria to evaluate purchase intention. Deloitte reported that Chinese customers are becoming more educated about luxury timepieces and “the “Made in Switzerland” designation is no longer a draw. Strikingly, the study revealed that only 15 percent of domestic shoppers consider country of origin to be important when choosing a watch. Like so many things, the very meaning of origin is now being reframed by the younger generations. The growing popularity of digital garments and NFTs will mean that brand origin as a cue for quality will become even less relevant. Indeed, the success of streetwear in China is not based on country associations but draws inspiration from a diverse range of cultural sources. This is a trend that has gained greater visibility in recent years, and many names are now adopting a multicultural brand identity. Collaborations, too, such as Burberry x Supreme and Gucci x North Face — who would once have been considered strange bedfellows indeed — are breaking down traditional boundaries. Luxury houses can still leverage their brand origin as a positive asset but executives need to understand how this creates value in a differentiated way. For example, citizens are taking a greater interest in sustainability: brand origin can provide cues to convey how luxury goods are made and where. New messaging opportunities can certainly help build equity but also provide a layer of protection if the firm’s nationality becomes the target of a consumer boycott. A neutral image may not avoid a possible backlash against changing perceptions towards a country but it could help the outfit to recover more quickly. What is clear now is that brand origin is a multifaceted construct. It’s time for luxury brands to recraft brand origin beyond a traditional "made in" strategy. Glyn Atwal is an associate professor at Burgundy School of Business (France). He is co-author of Luxury Brands in China and India (Palgrave Macmillan).

Why Luxury Brands Need To Reframe Brand Origin In China

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Published August 05, 2022

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Why Luxury Brands Need To Reframe Brand Origin In China