Chinese consumers account for a third of global spending on luxury goods, the figure to reach 45 percent or more by 2025

[beijingwalker]

Chinese consumers account for a third of global spending on luxury goods, the figure to reach 45 percent or more by 2025.

China leads luxury market in both style and cents
Updated 12:41, 08-Nov-2020

High-fashion conjures up images of exclusivity and class with its hefty price tag and craftsmanship. And China is leading the market in both style and cents as big names in luxury pull out all the stops at this year's China International Import Expo (CIIE) in Shanghai.

With their eye-catching displays, fashion houses likes Richemont, Kering and Tapestry are hoping to raise their brand profile in Shanghai – especially amid a pandemic, where China has become a tour de force in lifting the industry out from the doldrums.

CGTN had separate discussions with Kering's Asia Pacific CEO Cai Qingjing and Tapestry Asia Pacific President Yann Bozec to learn more about the luxury market in China.

China drives luxury market recovery
Chinese consumers account for about a third of global spending on luxury goods, and that figure is forecast to reach 45 percent or more by 2025, Cai told CGTN, adding China's dual circulation policy and "revenge spending" amid the pandemic are expected to accelerate that.

"Because of the repatriation spending from Chinese tourists who usually shop overseas, they are now shopping online, we have seen quite high growth from double digits to triple digits from digital sales," she said.

With a growing middle class, Chinese consumers are flush with cash to spend on personal luxury items, and fashion houses are keenly aware of this and launching products right in the country.

"We have a lot of products which are long in China before they are launched anywhere else in the world. It happened even more recently so it's not because you will go outside of China that you will have something newer than in China. That's not the case anymore," said Bezoc.


At this year's CIIE, luxury brands are showcasing their latest collections, with Piaget launching the world's thinnest mechanical watch and Ulysse Nardin displaying a limited edition enamel watch specially designed for CIIE.

Cashing in on the young, rich and tech-savvy

Compared to the West, the average age of luxury consumers in China is below 35, and fashion brands will have to speak their language and engage them using channels they are familiar with: livestreams, online stores and Chinese social media platforms.

With an eye on this market, Alibaba set up the Tmall Luxury Pavilion in 2017 to appeal to this segment of consumers. Just this week, Richemont and Alibaba secured a $1.1 billion partnership with Alibaba to invest in online luxury retailer, Farfetch.

For Kering, who owns brands like Gucci, Balenciaga and Bottega Veneta, engagement both online and offline is key, as physical stores still remain a key touchpoint for the company.


"Our goal is to provide a seamless experience, offline and offline," said Cai, elaborating that "many of our brands already have Chinese or '.cn' e-commerce websites and mini programs."

Tapestry is also doing the same by encouraging in-house associates to become key online influencers and providing training to do livestreams so the interaction continues digitally as well.

"The relationship between customer and luxury is not that much evolving in the quality of the connection. One customer, one sales associate around one product, that's how you build a brand, but the connection can be done in a store or digitally," elaborated Bezoc.

Leading the world in style
Chinese consumers may have looked to the West for the latest trends in luxury in the past, but the tide is turning as fashion houses now look to China for inspiration.
"Maybe 20 or 25 years ago, there was a time when Japan was cool. I believe now China is cool," jested Bozec.

"I think the Chinese customer path has come from a place where it was kind of studying luxury, extremely curious, being students of fashion, and now is really sitting into the driving seat," he added.

Cai revealed that Gucci and Balenciaga have also been looking to Chinese millennials in the design phase as they may very well be the future of luxury on the global stage.

"We are feeling a lot of trends from the younger generation who are actually very expressive. They want to share, and they are very confident buyers. They also think they are behind the the trends for the future of luxury. And we want to be very close with them – having a conversation rather than pushing products," said Cai.
Luxury brands are dependent on China now more than ever, and centuries-old fashion houses will have to adapt and engage to remain relevant.

CIIE 2020: China leads luxury market in both style and cents

CGTN had separate discussions with Kering's APAC CEO Cai Qingjing and Tapestry Asia Pacific CEO Yann Bozec to learn more about the luxury market in China.

news.cgtn.com

 

[ILC]

I am not sure if it's a good thing. Buying overpriced shit like LV bags is a waste of resources. And profit goes to European and American companies. It has everything to do with "face" looking rich while often being a wannabe.

Compared to the West, the average age of luxury consumers in China is below 35, and fashion brands will have to speak their language and engage them using channels they are familiar with: livestreams, online stores and Chinese social media platforms.

No wonder Chinese youth are loaded with consumer debt trap and they're no different than their American counterparts. Last few years Chinese consumer debt shot up, and I think fking Ant is the one to be blamed. Good that finally someone looked at what's going on, and changed the regulations for Ant.
In Poland, there were stereotypes about the Chinese being able to save and buying homes by cash. It was true about the older generations.

 

[925boy]

Cuz US consumers are BROKE.

 

[beijingwalker]

I am not sure if it's a good thing. Buying overpriced shit like LV bags is a waste of resources. And profit goes to European and American companies. It has everything to do with "face" looking rich while often being a wannabe.



No wonder Chinese youth are loaded with consumer debt trap and they're no different than their American counterparts. Last few years Chinese consumer debt shot up, and I think fking Ant is the one to be blamed. Good that finally someone looked at what's going on, and changed the regulations for Ant.
In Poland, there were stereotypes about the Chinese being able to save and buying homes by cash. It was true about the older generations.

Too much savings is not a neccessarily a good thing, Chinese still tend to save too much money in the banks.

THURSDAY, FEBRUARY 21, 2019
China's High Savings Rate

China has a remarkably high savings rate in a typical year--and sometimes its higher than that. In fact, the main reason for China's high trade surpluses is that with such a high savings rate, China doesn't consume either a lot of imports or domestically produced goods. A reason that China can invest so much, year after year, is that the investment is financed by high savings rates. A standard recommendation for China's economy for at least the last 15 years or so is to "rebalance" toward being an economy driven by domestic consumption, not by investment.

"Household savings in China have been trending up since the early 1990s and peaked at 25 percent in 2010 and moderated slightly in recent years. Globally, household savings have been falling (from 14 percent of GDP in 1980 to about 7 percent today). The diverging trend has led to an increasing gap between China and the rest of the world. At 23 percent of GDP, today China’s household savings are 15 percentage points higher than the global average and constitute the main drivers of higher national savings in China."

 

[OppositeDay]

I am not sure if it's a good thing. Buying overpriced shit like LV bags is a waste of resources. And profit goes to European and American companies. It has everything to do with "face" looking rich while often being a wannabe.



No wonder Chinese youth are loaded with consumer debt trap and they're no different than their American counterparts. Last few years Chinese consumer debt shot up, and I think fking Ant is the one to be blamed. Good that finally someone looked at what's going on, and changed the regulations for Ant.
In Poland, there were stereotypes about the Chinese being able to save and buying homes by cash. It was true about the older generations.

Agree. One of the greatest benefits of Trump's tech war on China was to reawaken the idea that to keep the economy healthy and sustainable a country has to make better things rather than buying expensive things with borrowed money.

Besides the curb on Ant, one key to the dual circulations strategy is redistribution. It's better if more people have access to more and higher quality basic goods than if a few get to spend big on luxury. China's current taxation system is highly regressive. This has to change. China needs a real property tax and a capital gain tax.

 

[beijingwalker]

Tax foreign luxury brands more and China's poverty alleviation job could've been done a decade ago.

 

[tower9]

I hate people who are obsessed with luxury brands. Totally fake and pretentious people with zero soul.

These Chinese people are fucking idiots to be spending so much money on foreign luxury brands, I'd have more respect for them if they were the ones creating luxury brands and marques.

 

[zectech]

I hope they don't spend much on junky luxury goods from the West (ie: handbags, weird fashion etc). Instead on artwork, Chinese antiques, jewelry, Persian wool rugs, Chinese silk garment, and Chinese made lacquer ware, etc, bullion coins. Craftsmanship of quality luxury goods, rather than mass produced handbags with a 10000 yuan sticker price, made for 50 dollars in Bangladesh.

Keep that money in China, stop buying over-priced junk from the Swiss. Develop your own industries - made in China.

China saved the global economy in 2008, and what did China get in return - a CiA bioweapon and hate China campaign.

 

[beijingwalker]

Dumb young consumers, old Chinese generations are well known in the world for being extremely frugal.

 

[Hamartia Antidote]

As @vi-va often trolls says:

"People are dying, 100's of millions are moving from extreme poverty to just abject poverty and you cheerleaders jump up and down for the DOW luxury spending. See a doctor, oh the humanity"

 

[zhxy]

If young people, instead of buying luxury goods, they use that money to support the nation. Maybe that would be better for China.

China can buy more new weapons and receive TOT to protect themselves. China needs Mi-28, Ka-25, Mig-35, Su-35, Su-57, T-14, T-15 ... technology.

 

[zectech]

Dumb young consumers, old Chinese generations are well known in the world for being extremely frugal.

Same generation that is buying iPhones. They are great as a kinder face of China that is intergrated into the global economy. While the nationalists buy Huawei.

Double edge sword in favour of China. The old save and keep China solvent and strong. The young consume and develop China into a world class consumer economy. So win-win for China. As they get older, they get smarter and save more. And the young consume and spend.

 

[S10]

You should always aim to save 20 to 30% of your take home pay. I'm not a fan of consumerism.

 

[retaxis]

India accounts for the other 55% did u know that? fact.

 

[Indus Pakistan]

I am not sure if it's a good thing. Buying overpriced shit like LV bags is a waste of resources. And profit goes to European and American companies. It has everything to do with "face" looking rich while often being a wannabe.



No wonder Chinese youth are loaded with consumer debt trap and they're no different than their American counterparts. Last few years Chinese consumer debt shot up, and I think fking Ant is the one to be blamed. Good that finally someone looked at what's going on, and changed the regulations for Ant.
In Poland, there were stereotypes about the Chinese being able to save and buying homes by cash. It was true about the older generations.

This is how modern economies work. Most of us can easily reach the basic needs of life without too much work. If everyone stopped pedalling afteer that point and just lived a basic life the economy would stagnate. The lust for more consumer products, more expensive products beyond normal need drives us to work harder to earn more money. That is one of joys of life besides sex. Take them out your just a modern monk and might as well give up on life.