Chinese appetite for luxury products remains strong
February 19, 2019 Category China News Round-up, Weekly
Chinese rich consumers’ appetite for luxury products remains robust this year, with strong growth in purchasing power among the younger generations, according to an industry survey by Ruder Finn and Consumer Search Group. The 2019 China Luxury Forecast surveyed 1,075 consumers in more than 130 cities on the Chinese mainland and 310 consumers in Hong Kong. About 46% of the survey respondents from the mainland and 32% from Hong Kong said they plan to spend more on luxury products in the next 12 months. Rich Chinese consumers spent an average of CNY240,000 on luxury items in 2018. The average annual income of the households surveyed was CNY1.4 million on the Chinese mainland and HKD975,286 in Hong Kong.
“What has remained unchanged over the past 10 years is that China and Chinese consumers are on an overall upward trajectory,” said Gao Ming, Senior Vice President and General Manager of National Luxury Practice, China, Ruder Finn Asia. Gao noted several key trends in the market, including digitalization of communications and marketing, as well as the massive increase in purchasing power among the region’s younger generation. Millennials have been the key consumer target group for almost every luxury brand over the past two to three years. The report found that total spending on luxury goods was on average higher among millennials aged between 26 and 35 over the past 12 months in China. Chinese mainland consumers purchased a higher amount of clothing, shoes and beauty products online, with over 70% saying they would be willing to buy any luxury item, except automobiles, online. They said they prefer to purchase goods from Chinese e-commerce firms JD and Tmall.
Luxury goods consumers mainly use digital channels to obtain brand and product information, the report said. Digital channels are dominant in China, as four of the nation’s leading information channels are all digital. Clothing and jewelry products were at the top of consumers’ overseas shopping lists this year. Half of the consumers surveyed said they plan to spend more on clothing in the next 12 months. Chinese consumers focus heavily on shopping, allocating nearly 30% of their total travel budget. On average, rich consumers from the Chinese mainland made 2.8 international trips over the survey period.
The report advised that, against the backdrop of market volatility, brands cannot rely on a one-size-fits-all approach. Rather, “companies must fully tap the wide variety of consumer market opportunities in order to successfully engage with the changing face of Chinese luxury consumers,” Gao said, as reported by the China Daily.
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