CHINESE LUXURY MARKET: LESSONS LEARNED IN 2012

CHINESE LUXURY MARKET: LESSONS LEARNED IN 2012

The Luxury Institute indicated that 43 percent of wealthy Chinese consumers plan to spend more on luxury products in 2013.

Before moving to the new year, what are some lessons marketers learned in 2012?

Chinese Prize Eastern Hospitality

Although most well-known Western hotel groups have built hotels in China, Chinese luxury consumers remain very interested in Eastern hospitality. China’s luxury hotel brand Tanglahas positioned itself to offer Eastern hospitality. There are subtle differences between hospitality in the East and West, “The fine line between being Chinese-friendly and becoming too Chinese will decide how we survive and win this battle” said by Simon Yip, vice president of sales for The Peninsula Hotels.

Made For China Only

Chinese customers want to be surprised. Touches of Chinese traditions in branding or products designs have higher possibility of winning consumers. Ferrari, Rolls-Royce, Bentley, and other luxury brands have released special edition model exclusively for China.

The Future is Mobile

With over a billion smartphone users, China is the world’s largest mobile market with a substantial 81 percent year-over-year growth compared to just 5 percent growth experienced in the U.S., according to Catalyst.

Think Tank L2 reports, “Mobile is becoming an increasingly influential path to purchase and point of purchase. Ninety-seven percent of Chinese smartphone users research products on their phone and 59 percent have made a purchase. Still in its infancy, mobile shopping accounts for 5.5 percent of digital commerce.”

Expand E-Commerce


Luxury retailers and brands such as Neiman Marcus and Coach have launched Chinese e-commerce sites this year. More brands are expanding their customers base in China through e-commerce. According to Bain & Company’s publication, China E-Commerce: Heading Toward RMB 1.5 Trillion, China’s e-commerce sales is expected to reach 1.5 trillion in next three years and may overtake the U.S. as the world’s largest e-commerce market with online sales growing to represent 7 percent of all retail sales.

Navigate China’s Digital Landscape

Understanding culture differences is not enough to win in the Chinese market. Luxury marketers have to navigate China’s digital landscape with different key players and where western digital marketing strategies often do not apply. As noted in a recent L2 China Digitalreport, “Google has ceased to be relevant for Chinese consumers.” Baidu remains dominant with 73% of the Chinese search market. Up and comer So.com, which launched in August 2012, has captured a 10 percent market share.

Manage Social Media

“China is home to the world’s most socially active online population. Ninety-five percent of Internet users in Tier 1, 2 and 3 cities are registered on at least one social media site and more than half use microblogs,” according to L2. Nearly all of the luxury brands have a social media presence in China.

If social media is managed well, it can yield great results for the brand. If not, it can devastate the brand. Social media management requires careful, 24/7 attention and skills that include PR management, marketing promotion, customer service, and much more.

Finding Talent is Hard

Finding talent will continue to prove difficult. Last year Robert Chavez, CEO of Hermes US told Harvard Business Review, “In Hermes, we can teach you about the leather, the scarf, but we can’t teach you how to smile, it comes from nature.” Hiring for personality and attitude are important; however, there are many other essential factors that need to be considered when hiring, such as how to hire, train, and maintain the talent both who can speak the local language and understand the culture of the brand.

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