Chinese luxury brands on the rise

Isaac Mostovicz writes that Chinese consumers are driving a surge in home-grown luxury brands...

As I discussed in a previous post, Beijing recently banned advertising in the capital that promotes hedonism or used the word luxury. However, according to a report by Reuters yesterday, this doesn’t appear to have affected a surge in home-grown luxury brands, thought to be driven by a desire from Chinese consumers to seek out goods that emphasise their culture.

Western luxury brands have on the whole experienced strong sales from the Chinese market in recent years, with consumers buying into the perceived heritage and exclusivity that the brands represent. However, with China expected to be the world’s biggest luxury market within five years, Chinese culture and preference cannot be ignored. More than 100 second-tier cities have populations with more than 1 million people and consumers in these cities have both the buying power of their tier-one peers and an interest in luxury brands, according to a report by PricewaterhouseCoopers.

Hermes last year launched its China-focused label Shang Xia, and the trend is set to continue.

That’s not to say sales of Western luxury brands in China will decline, according to Reuters, Sunny Wong, managing director of Hong Kong-based Trinity Ltd, said: “Luxury means heritage and it takes generations to build heritage. The Chinese customers want heritage brands — they want the story, they want the history.” It seems Wong is referring to Lambda personality types, who are likely to make choices based on how it will help them stand out, and how a decision benchmarks them against others. Western luxury brands are still very much a status symbol in China.

While focus for Western brands has traditionally revolved around marketing, now it is turning to the products themselves, presenting a new challenge for Western luxury brands.

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