According to the most recent research from Bain, the Chinese personal luxury market is set to decelerate after a year and a half of breakneck growth in the aftermath of the outbreak of COVID-19, with low double-digit growth expected for full-year 2022. Nonetheless, the fundamentals of Chinese consumption remain in place, with the local market on track to overtake the U.S. as the world’s largest luxury market by 2025, accounting for 25 to 27 percent of the global total, with digital channels remaining a major driver of growth.
The consumption repatriation caused by COVID-19 and the reshaping of the global luxury demographic have aided the Chinese luxury market’s rise in the last two years. Given the resilience of this market, international brands are showing strong momentum. However, the market’s maturity has resulted in a unique luxury landscape in China, and global brands seeking to grow sustainably must understand the variables in this equation, including the unique consumer structure, the complex local digital ecosystem, and the sophisticated cultural context.
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WWD China, as a key observer of the Chinese fashion industry, has been closely monitoring the dynamism of the Chinese market since its inception. WWD China has collaborated with Boston Consulting Group and Tencent Marketing Solution to bring the online course – Luxury in China: The Driven Force and Ways to Create Efficiency and Growth – that dissects the major tides and showcases key drivers for growth in the Chinese market, with a focus on the luxury sphere, to help established brands stay relevant and to bring more international players to the ground.
Please visit: http://qa.wwdgreaterchina.com/
“As an international media platform, WWD China works to build the bridge of understanding and cooperation between the Chinese and international market,” Lena Yang, co-founder and vice chairman at WWD China, stated. “Together with Boston Consulting Group and Tencent Marketing Solution, these courses aim to offer the latest insights and marketing tactics to help brands to get into the Chinese market and to drive further growth.”
In the course, the three companies explain in depth the nature of the Chinese market and its consumers, as well as the corresponding best practices of brands in their respective areas of expertise.
According to BCG’s research, the incremental growth of the Chinese luxury market is driven by two main groups: high-spending consumers who spend more than 300,000 yuan per year on luxury goods, and post-1990s consumers. With their growing purchasing power, the latter now account for 50 percent of total consumers and 46 percent of market size.
BCG also presented a number of frameworks that depict the consumption behaviors of various consumer groups in China, as well as the impact of this generational shift on the luxury retail network.
The course also discusses how Chinese consumers require at least six touchpoints before making a final purchase. Chinese consumers, particularly younger generations, can now discover, research, and even purchase luxury products through a variety of channels, both online and offline, further diversifying the consumer journey.
This is why brands in China have accelerated their digital transformation in recent years, ensuring that they can stay in touch with and convert consumers who are not in-store or are not covered by offline touchpoints. Online purchases now account for one-third of total transactions in China, said Lin An, managing director and partner at BCG.
However, behind the brisk online market is a complex local digital ecosystem. The traditional AARRR model is being disrupted by the rise of digital platforms, and even more so in China. With greater online penetration and the rise of social commerce, China’s digital players are attempting to create a complete consumer journey on their platform, giving rise to innovative marketing tactics such as livestreaming e-commerce and augmented and virtual reality shopping experiences, and private traffic community management.
The Chinese digital ecosystem for luxury brands encompasses marketplaces such as Tmall and JD.com, as well as platforms such as Xiaohongshu and Weibo that drive awareness, but WeiXin, with over 1.2 billion monthly active users, is able to accompany a luxury client from awareness to loyalty.
WeiXin Mini Program gives international brands well-versed in the dot-com playbook another pivotal channel to develop their direct-to-consumer business locally, giving them much autonomy over data, marketing cadence and product assortment. Aside from conversion, the official account (content platform), channels (video platform), and in-platform CRM support assist brands in establishing additional touchpoints on WeiXin.
Meanwhile, Tencent, China’s leading tech conglomerate, provides other digital assets in various areas such as music, animation, and gaming for brands to collaborate on for marketing activations. Givenchy, one of LVMH’s fashion luxury brands, partnered with Tencent Games’ Honor of Kings, a multiplayer online mobile game, for its Chinese Valentine’s Day campaign in 2020, in order to reach the younger generation.
George Xie, planning head of CPG Industry at Tencent Marketing Solution, delves into a case study of Dior’s activation within the Tencent ecosystem for its fall 2021 show in Shanghai to elaborate on how Tencent’s advertising service and breaking the silos of Tencent’s digital assets helps brands maximize their social impact and effectively drive conversions.
The future of the Chinese luxury market is indeed promising, but there are also challenges for global brands, and WWD China anticipates that this course will serve as a catalyst for global brands to capitalize on their potential. Please visit http://qa.wwdgreaterchina.com/ to register and watch for more information on the course.