Archives: February 2016

How can brands connect with the sophisticated luxury consumer in China?

Only a few years ago Chinese consumers were novices in the world of consumption, but things are changing. A new determined affluent class of urban Chinese professionals has emerged. This demographic, made up of well-travelled and brand-aware individuals, has a taste for European design and quality and the emphasis has moved away from the functional and towards the emotional. So how can premium consumer brands capitalise on this new consumer trend?

Social change and a trend towards urbanisation have changed this on a scale seen nowhere else in the world. China’s middle class will help lift consumption share in GDP from 36 per cent in 2014 to around 50 per cent in 2015. Several years ago, Chinese consumers either sought out big-ticket products to show off their status. Today, however, millions of consumers are adopting the mainstream spending behaviours and patterns that we are familiar with among consumers in the West, with high brand awareness and loyalty.

With the sense of new found freedom, comes an opportunity for young affluent Chinese to travel, absorb new cultures and adopt lifestyle trends. Young Chinese consumers are looking for a better

and healthier life where they can enjoy advanced technology, products that showcase more subtly who they are, their values, and only naturally, an opportunity to indulge in self-reward for their hard work.

However recent research, from Nielson, indicates that its not just high net worth Chinese individuals who are trading up to premium, but average income households are also showing more interest in a wider variety of products they perceive to be higher quality and higher status. This new kind of Chinese consumer is engaging with premium products, brands and services that allow them to demonstrate their ‘unique taste’, according to McKinsey’s recent research of young consumers in Beijing and Shanghai, ’21 percent of people surveyed listed this as one of their key purchasing indicators‘. So what are the attributes that appeal to China’s new brand savvy consumers?

Chinese consumers tend to experiment with a variety of consumer brands before settling with one or two. They tend to be fiercely loyal, meaning producers must ensure a clear identify combined with a unique point of difference that marks the ambition of their brand. Another key attribute behind any successful brand in

this emerging market is to engender a perception of quality and durability. These remain fundamental qualities for Chinese consumers across the economic spectrum and premium consumers are no different. Furthermore, the Chinese consumer tends to opt for demonstrable evidence of high quality craftsmanship, and provenance over showy expressions of status.

During the communist revolution in China, not only was so much of the country’s own history and heritage torn apart, but there are also existing limitations to creativity that are imposed in the society. As European design is booming, it seems to have been able to fill this gap and allow the emerging Chinese consumer to express themselves in new and meaningful ways. In a way, adopting western brands, music, books and websites has helped fill this void and provided an alternative to being able to develop and create freely internally. It will be interesting to see how long this consumer demand and trend will be satisfied with western creations as an alternative and whether new design initiatives will emerge to respond to this thirst for more premium, high-end products as well as high quality craftsmanship.

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