Report shows Chinese consumers prefer European luxury brands
A new report by KPMG on the Chinese luxury goods market has found that French, Italian and Hong Kong brands top the list of favourites with wealthy Chinese consumers.
French and Italian products grabbed the first and second positions in the survey, while Hong Kong products were the third most popular. Hong Kong jewellery brands were particularly sought after by Chinese consumers, with several Hong Kong-owned premium clothing brands also doing well.
French cosmetics and perfumes, fashion and bags all notched up the highest percentages in these categories at 76%, 37% and 33% respectively. Italian brands gained the top spot for footwear (43%) and Switzerland for watches (87%). However, Chinese consumers preferred their own domestic alcohol brands (37%) thanks to the popularity of Chinese liquor.
The report entitled, "Luxury experiences in China" is based on a survey of 1,200 consumers in 24 tier-one and tier-two cities across China, conducted by TNS, the market research company. Respondents were between 20-45 years of age, earning a minimum of RMB 7,500 (USD 1,154) per month in tier-one cities and RMB 5,500 (USD 846) elsewhere.
Nick Debnam, Partner, KPMG China, and Asia Pacific Chairman, Consumer Markets, said: "China continues its march towards becoming the largest luxury market in the world. Year-on-year as this market becomes more crowded, it is harder for luxury brands to enter this space. We also see rising brand recognition, 57 this year up from 45 last year. Brands therefore need to be innovative and explore new marketing avenues."
The survey also found that China's luxury buyers are basing their purchasing decisions on a wider range of factors. "Consumers increasingly choose to reward or pamper themselves as opposed to seeking higher social status via their brand purchases. Chinese consumers also continue to place a lot of importance on the heritage of luxury brands," Debnam added.
Unique to China is the large number of relatively young multi-millionaires, far younger than their western counterparts. This spells opportunities for brands using new technologies to interact with a younger consumer generation.
Digital marketing and building online sales formats are being combined with the in-store experience. The survey found that nearly 70% of respondents said they search online for information on luxury brands at least once a month, while 30% do so more than once a week. While official brand websites are often used as the first point of call for specific product information, celebrity blogs and other micro blogs also play an important role when building a brand image in China. "Luxury companies therefore need to think about how their strategies reach key online influencers," Debnam explained.
"The traditional entry route for overseas brands has been through partnerships with local franchises and distributors. In recent years, as the business landscape has become more open and transparent, many
companies have now fully acquired their retail operations in China, including some that have entered the market directly with a wholly foreign-owned enterprise (WFOE) model," he added.
Email this article to a friend
You need to be logged in to use this feature.
Please log in here