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The Chinese luxury market is getting more mature

The Luxury division of Ifop recently published the results of the Luxury Trend Report, a yearly look at Luxury trends as evaluated by luxury professionals (general management of luxury houses, heads of brands, marketing and commercial directors, experts from agencies specialized in luxury, etc.) from all sectors of luxury.

This year, in a context of moderate optimism for the luxury industry as a whole, China appeared once again as the most strategic market among developing countries. It remains quite strong in terms of prospects, especially as compared to other BRIC markets, notably Russia and Brazil that are losing a bit of appeal in terms of strategic priority as compared to previous years.

While a year ago, due to a slowing GDP growth and to the impact of anti-corruption measures, a majority of luxury professionals were expecting the Chinese luxury sector to continue to slow down in growth, this year their perception is much more balanced and the general opinion is that we are heading towards a stabilized growth situation.

Luxury professionals generally agree that Chinese consumers are changing rapidly and most of them underline the fact that they are becoming more demanding and more critical towards major global luxury brands. This is a sign that Western brands cannot compromise their quality of product, service and purchase experience with Chinese consumers. It also implies that these brands are expected to be at the top of services that are common in China but may not be as critical in other markets such as e-commerce, home delivery, social media connection, etc. which is rarely the case today. In this demanding market, luxury brands must therefore not only keep their core promise of quality and uniqueness but also deploy it in locally sensitive areas of the brand-consumer relationship.   


The new chinese consumer

China has become a huge and essential consumption market. Its enrichment brought a society of consumers where rich elites go alongside a middle class who displays its purchasing power. This population of over 350 million will continue to grow to reach 850 million by 2030. The Chinese consumers of today – and of tomorrow – will not be those of yesterday.

In a time of global economic crisis, most experts consider that domestic consumption is what stimulates the growth of China. For now, China is still the major country where consumption represents the smallest percentage of GDP, less than 50% compared to about 70% in Europe and 80% in the US, while investments represent nearly 50% of GDP vs about 15% in G8 countries, a record in economic history. This shows how much room there is for consumption to grow further.

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