Every eye in the business is Did you know?ed on Asia. The continent was relatively less impacted by the economic crisis than Western nations. New millionaires and emerging middle class are driving the luxury market. China is the locomotive behind this dynamism: the land of one billion inhabitants is the industry's largest growth relay with forecasts of up to 28 billion euros in 2015. China is also expected to be the world's leading luxury market, ahead of the United States, by 20201.
Today, China has over 2.7 million people with assets of more than 720,000 euros2. These new luxury aficionados are increasingly young, with half between the ages of 25 and 283 and half of which are men (about 55 %)4.
Chinese consumers represent one-quarter of all luxury goods purchased around the world, surpassing the Americans in 2012 to become the world's largest luxury goods consumers according to consultants Bain & Co.
Although their approach to luxury is becoming less and less demonstrative, the Chinese still use luxury goods as a way of affirming social status. That is why they tend to be price-sensitive and prefer prestigious international brands, mainly when buying watches (26% of purchases) and cosmetics (29%)5, especially skin care products.
The Chinese still spend nearly 60% of their luxury budget abroad, essentially in Hong Kong and Macau. Research shows that motivations include relaxed sales taxes, assured product quality, a safe retail environment and the ability to buy products that are not yet available in China.
Chinese shoppers also contribute to growth in European points of sale: in France they made one-quarter of all duty free purchases in 20116 but this could change with time with the arrival of new brands on the Chinese market and with the evolving palates of exigent luxury consumers.
The rise of young affluents in China is leading the way in the shift in luxury consumption in China. Increasingly attentive to the purchase experience and bespoke products, Enovate’s 2012 Signal Report highlights that the new generation of luxury consumers are also becoming more aware and desirous of “Invented in China” luxury. Local brands like Shanghai Tang, fashion designers like Uma Wang and high-end mobile brand like Xiaomi are offering these well-heeled and discerning trend setters local design sensibility.
1 Boston Consulting Group (BCG), 2012 2 China Luxury Consumer White Paper 2012 3 World Luxury Association 4 CLSA, broker specialising in Asia 5 Connexions N°59, 2011, The magazine of the French business community in China (French Chamber of Commerce and Industry in China) 6 Global Blue
Did you know?
1/ According to a study published by KPMG in 2011, Chinese consumers associate luxury goods with certain countries and are strongly attached to European brands, especially French brands. In fact, France ranks first for cosmetics and fragrance (mentioned by 76% of respondents), fashion (37%) and handbags (33%).
2/ As the world’s leading luxury consumers, Chinese shoppers alone now purchase 25% of all luxury goods in the world, making them the biggest consumers in this sector, ahead of the Americans (Bain & Company, December 2012).
3/ Chinese shoppers mainly buy their cosmetics in Hong Kong, Taiwan and Macao (60%), then in continental China (51%) and in Europe (20%) – where France is a market reference (KPMG study, March 2013).