China’s growing affluent consumer segment has been attracting worldwide luxury brands for a long time. Gucci, LV, Zegna, and many other top brands tapped into the Chinese market in the early nineties, long before it started generating revenues1. And quite rightly so, as more than 300,000 Chinese now have a net worth of more than US$ 1 million. The mainland’s millionaires control about US$ 530 billion in assets and more than 170 million Chinese can afford to buy top-tier brands2. Indeed, it seems clear now that the Chinese luxury consumer market, which did not even exist a mere 20 years ago, is on the path to dominate top end retail.
But what about domestic luxury brands?
China has a long history in the appreciation of luxuries – for example, tea, jade, and silk – and given the impressive growth of domestic consumption of luxury goods, local brands should have plenty of opportunities to grow.
Despite Chinese consumers thirst for luxury, very few local luxury brands have taken off. In fact, several analysts have observed that when it comes to luxury Chinese consumers are more likely to buy products made outside of China3.
Previous Labbrand research has confirmed that consumers esteem towards luxury products is heavily influenced by the brand’s country of origin. Indeed, a “foreign/westerner” origin seems a given for many luxury product categories.
Still, if it is true that in industries like top fashion garments and accessories that foreign top brands dominate, in other industries, and specifically those having deep roots in China’s heritage and tradition, Chinese brands have good chances to gain the upper hand.
In fact, in a recent MasterCard survey, Chinese top spenders have been found to prefer Hong Kong born Chow Tai Fook over Cartier and domestic Wu Liang Ye and Maotai over Spanish, Australian and German liquors4.
Indeed, the same survey has found that high-end Chinese consumers rank quality ahead of other considerations with a notable 92.7% of respondents citing quality as the first criteria when buying luxury, well before brand recognition, still scoring a good 68.3%, or fashion design, with 58.5
Vladimir Djurovic is the founder and Managing Director of Labbrand, a Shanghai based innovative brand agency specialized in brand research, strategic and creative services. Labbrand website at: http://www.labbrand.com/ is also the portal to Labbrand branding blog: http://www.labbrand.com/brand-source which collects fresh ideas, trend analysis and reviews of branding related hot topics, with a special focus on China.