Post on 18-Oct-2014
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CHINA
HISTORY
Confucianism - different understandings of luxury
Equality is very important and is also communicated by the government.
Change in the Cultural Revolution (1966-1976)
“Lost generation” showed a different understanding of luxury
Economic development transformed culture.
CUSTOMERS
Luxury Role Models
Annual Income >10 million Yuan
Relatively older than latter group
Higher social status
Higher purchasing power
Luxury Role Models
Fashion Fanatics, Middle class aspirantsAnnual income (in hundred thousands yuan ) Younger in age (WLA: 2007-35;2010-25)
Working class
Nouveaux Rich
White Collar Workers
Highlights– Male dominant market– Wealthy in China are 15 years (average)
younger than those in US or Japan– Gifting –a significant chunk of spending
Complex Consumer Structure
Distinct Product driven features
Signs of Differentiation in
consumption
Consumer psychology
influenced by Chinese culture
TRENDS
TRENDS
Chinese wine market growing 20% annually and set to overtake US by 2015
Pets have become a luxury good
Growing trend for Chinese art collection
LUXURY INDUSTRY
Global Luxury Industry in China Domestic Luxury Industry
Key Drivers• In 2011, 28% World Luxury purchases made by
Chinese ($13.87bn)• Insatiable appetite of conspicuous consumers
for watches & leather goods• Market is still supply driven• Successful branding practices by LV ( “Louis
Vuitton Voyages” at the National Museum), Gucci (Li Bing Bing as the brand face) , Chanel (“Culture Chanel” aiming at establishing an emotional connection with customers)
Key Challenges• Talent shortage and Rising labor costs for store
expansion• Market Saturation or “First Movers
Disadvantages” leading to controlled expansion
Key Drivers• After spending endlessly on Western
luxury, now they want a bit of their heritage and are asking “What did the emperor drink in the past?”
• High-key-low-key phenomena• $$ Huge pool of money!
Key Challenges• Perceived as being a cheap/mass
manufacturer• Direct competition with brands having a
rich expertise, heritage and craftsmanship
• World’s counterfeit capital
The Rise of Chinese Luxury Brandshttp://www.youtube.com/watch?v=JFb4AIV3OiE
MAJOR PLAYERS
22.520.6
11
8.75.6
4.6 3.5
10.6
Market Share (Total RMB 87 Billion)
http://blog.euromonitor.com/2012/05/china-driving-the-global-luxury-goods-industry.html
http://www.forbes.com/sites/bluecarreon/2011/11/02/can-china-produce-a-luxury-brand/
http://www.labbrand.com/sites/default/files/LAB_Luxury_Branding.pdf
http://www.thefinancialist.com/chinas-homegrown-luxury-market-expands-rogerio-fujimori/
http://www.cnbcmagazine.com/story/the-great-call-of-china/1423/1/
• The European Business Review, 2012,”Luxury consumer behavior in mainland China: What exists behind façade of new wealth?” {Online} http://www.europeanbusinessreview.com/?p=2418. Accessed: 27 September 2012.
• Lu, P., X. 2008,’Elite China, Luxury Consumer Behavior in China’ {Online}: http://books.google.fr/books?hl=de&lr=&id=m-PgS7sFRDIC&oi=fnd&pg=PT6&dq=history+of+china+luxury&ots=4HRXkbckmx&sig=IZzSUulwCIeQodgElEhyRrsNohw&redir_esc=y#v=onepage&q=history%20of%20china%20luxury&f=false. Accessed: 27 September 2012.
• China Luxury Market Study, December 2011, Bain & Company ReportREFERENCES
Anastasia Kozukhovskaya
Diviya Malhotra
Sarah Caffey
Sobia Farooq
Yil A M Schiele