Actually China is the fastest growing market in the world. It’s just a question of time (exactly it’s a question of next five years) when it become also the biggest market for luxury goods in the world. Currently it is in the second position, just after Japan.
Under the name of luxury goods we understand items not so necessary but very desirable, possession of which gives a sense of comfort and indulgence. Most of them belong to one of these sectors: fashion, accessories, footwear, perfume, cosmetics, jewellery and lingerie.
The recent 21st Century Deluxe Report effectively describes what types of products are most wanted in China. For all the high-end Italian brands it seems to be an opportunity not to be missed. Until recently the purchases were made with little awareness – today situation is completely different. Rich Chinese know exactly what they want and what they need. That’s why many fashion houses are looking to open more boutiques in the country of the Rising Sun. But luxury is not only fashion and accessories – it’s simply a lifestyle.
Here are the brands favored by the new rich Chinese:
- Jewelry & Watches – Cartier (France)
- Fashion – Gucci (Italy)
- Airline – Air France (France)
- Hotels – Peninsula (Hong Kong)
- Alcohol – Martell (France)
- Cars – Mercedes-Benz (Germany)
- Christmas gifts – Omega (Switzerland), Swarovski (Austria)
Crisis? Not for Chinese millionaires
The Chinese people love and buy luxury goods. Their passion for luxury is irresistible and the market seems to be rising despite global crisis. In 2009 they bought a quarter of the luxury goods produced in the planet, at a total of 9.4 billion USD. This sum could be even higher, if account were taken of the purchases made by the Chinese outside the country. It is undoubted opportunity for all those who want to start their own business in China. Business opportunities which offers the country widened to a new field.
This trend has been noted by luxury brands (mainly French and Italian) which invest all the time in Chinese market. Louis Vuitton, Bally, Gucci, Salvatore Ferragamo are one of the first brands that have opened their first stores in the country of China.
Among those who drive the situation on the higher-end products are mainly young people of China that are 20 years younger than their counterparts in the United States and Japan. It is the new rich class that are potential consumers of the best quality goods. China has great potential for this type of market, primarily due to the huge population living in large cities. Not without significance is that the young consumers wish to emphasize their status. Being an influential person of high social status impresses others. And how to let others know with whom you’re dealing with? Of course with branded gadgets.
According to Fortune Business Insights The global luxury goods market size was USD 316.16 billion in 2019. The global impact of COVID-19 has been unprecedented and staggering, with luxury goods witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the global market will exhibit a huge decline of 18.63% in 2020. The market is projected to grow from USD 257.26 billion in 2020 to USD 352.84 billion in 2027 at a CAGR of 4.6% in the 2020-2027 period..
Which are the basic strategies for those who plan the opening of luxury brands in China? First of all, investment in promotion of new brands with sufficient incentive to the client is very important. For example, organizing promotional, closed events necessarily with the presence of celebrities. Second of all, it is necessary to involve local elements to the production of luxury brands, mainly by moving the factories into China and by cooperation with local partners.