CHINA

HISTORY

Confucianism - different understandings of luxury

Equality is very important and is also communicated by the government.

Change in the Cultural Revolution (1966-1976)

“Lost generation” showed a different understanding of luxury

Economic development transformed culture.

CUSTOMERS

Luxury Role Models

Annual Income >10 million Yuan

Relatively older than latter group

Higher social status

Higher purchasing power

Luxury Role Models

Fashion Fanatics, Middle class aspirantsAnnual income (in hundred thousands yuan ) Younger in age (WLA: 2007-35;2010-25)

Working class

Nouveaux Rich

White Collar Workers

Highlights– Male dominant market– Wealthy in China are 15 years (average)

younger than those in US or Japan– Gifting –a significant chunk of spending

Complex Consumer Structure

Distinct Product driven features

Signs of Differentiation in

consumption

Consumer psychology

influenced by Chinese culture

TRENDS

TRENDS

Chinese wine market growing 20% annually and set to overtake US by 2015

Pets have become a luxury good

Growing trend for Chinese art collection

LUXURY INDUSTRY

Global Luxury Industry in China Domestic Luxury Industry

Key Drivers• In 2011, 28% World Luxury purchases made by

Chinese ($13.87bn)• Insatiable appetite of conspicuous consumers

for watches & leather goods• Market is still supply driven• Successful branding practices by LV ( “Louis

Vuitton Voyages” at the National Museum), Gucci (Li Bing Bing as the brand face) , Chanel (“Culture Chanel” aiming at establishing an emotional connection with customers)

Key Challenges• Talent shortage and Rising labor costs for store

expansion• Market Saturation or “First Movers

Disadvantages” leading to controlled expansion

Key Drivers• After spending endlessly on Western

luxury, now they want a bit of their heritage and are asking “What did the emperor drink in the past?”

• High-key-low-key phenomena• $$ Huge pool of money!

Key Challenges• Perceived as being a cheap/mass

manufacturer• Direct competition with brands having a

rich expertise, heritage and craftsmanship

• World’s counterfeit capital

The Rise of Chinese Luxury Brandshttp://www.youtube.com/watch?v=JFb4AIV3OiE

MAJOR PLAYERS

22.520.6

11

8.75.6

4.6 3.5

10.6

Market Share (Total RMB 87 Billion)

http://blog.euromonitor.com/2012/05/china-driving-the-global-luxury-goods-industry.html

http://www.forbes.com/sites/bluecarreon/2011/11/02/can-china-produce-a-luxury-brand/

http://www.labbrand.com/sites/default/files/LAB_Luxury_Branding.pdf

http://www.thefinancialist.com/chinas-homegrown-luxury-market-expands-rogerio-fujimori/

http://www.cnbcmagazine.com/story/the-great-call-of-china/1423/1/

• The European Business Review, 2012,”Luxury consumer behavior in mainland China: What exists behind façade of new wealth?” {Online} http://www.europeanbusinessreview.com/?p=2418. Accessed: 27 September 2012.

• Lu, P., X. 2008,’Elite China, Luxury Consumer Behavior in China’ {Online}: http://books.google.fr/books?hl=de&lr=&id=m-PgS7sFRDIC&oi=fnd&pg=PT6&dq=history+of+china+luxury&ots=4HRXkbckmx&sig=IZzSUulwCIeQodgElEhyRrsNohw&redir_esc=y#v=onepage&q=history%20of%20china%20luxury&f=false. Accessed: 27 September 2012.

• China Luxury Market Study, December 2011, Bain & Company ReportREFERENCES

Anastasia Kozukhovskaya

Diviya Malhotra

Sarah Caffey

Sobia Farooq

Yil A M Schiele