Chinese brands to storm luxury market

28 October 2014

SHANGHAI: European luxury brands worried about the impact of a slowing China economy may also have to contend with the rise of home-grown luxury brands, as a new report shows the preferences of Chinese consumers are changing.

When Added Value, the marketing consultancy, surveyed 600 "luxury targets" as part of its luxury attitudes study, it found, reported Campaign Asia-Pacific, that 84% agreed with the statement: "In the future, Chinese luxury brands will be just as good as Western luxury brands."

And while there was no timescale for this development, the sense of a tipping point being near came in the statistic that 40% were already buying Chinese brands.

A mere 4% held exclusively to this approach, but 14% bought Chinese brands first while also considering Western ones and another 22% said they bought both international and Chinese brands.

Just over half (51%) bought Western brands first but also considered Chinese ones, while and 9% said they only bought Western brands.

The survey found that respondents had distinctly different views on what luxury brands from the two camps represented.

Thus, Western brands were seen as being expensive, exclusive and reflecting the latest trends.

Chinese brands, on the other hand, were focused on authenticity and a long history, with strong heritage and great craftsmanship.

And of these attributes, authenticity was the most defining element of what constituted a luxury brand, whether Chinese or Western, being cited by 61% of respondents.

After that came customer service (28%), craftsmanship (56%), quality and sophistication (both 53%), great design (52%) and heritage (48%).

Savvy Western brands are already designing products specifically with Chinese customers in mind. Earlier this year, Francis Belin, svp/consumer goods for Greater China at Swarovski, the crystal jewellery and accessories group, told a conference that some brands had a condescending attitude.

"You'd ask people if they're designing products for China, and they'll go, 'No; of course not. We are a French brand. We'll design it and they will buy anything'."

That was, he said, just one of a number of widely held myths about the affluent Chinese consumer. They didn't "want more stuff", he explained, they wanted quality and they no longer defined themselves by logos.

They also wanted a shopping experience rather than just buying online, but, Belin added, the best way to reach them was via mobile.

"We are going to move the whole interface on CRM to WeChat," he said. "They don't want to have the paper thing. They just think with their phone."

Data sourced from Campaign Asia-Pacific; additional content by Warc staff