How luxury brands are adapting to the reality of the Chinese market

In recent years the economic news tends to keep the same news as a highlight: the growth of the Chinese market. In the most diverse segments, the Chinese have established themselves as one of the main consumer audiences and, understanding their traditions, concepts and aspirations has become fundamental for companies and brands that want to succeed there.

For the luxury brands, China has already become a strategic market, and many of them are increasingly relying on Chinese soil revenues to close their balance sheet accounts. However, if the Chinese are perceived as an excellent consumer audience at the same time, their levels of demand and quality need to be met and, wherever possible, exceeded.

Research shows that up to 40 percent of global sales linked to the upscale market are through Chinese consumers inside and outside China, and the industry’s growth rate in China is around 20 percent. Many studies, however, have also found that most Western brands are not prepared to serve the Chinese market with the same excellence common in other nations.

A good example of this is the belief that older consumers are still the most demanding. The millennial generation’s profile proves that this idea is a thing of the past, and especially in China, young people are the most interested and demanding when it comes to looking for luxury brand products.

This is evident when it is analyzed that over 80% of luxury purchases are made by millennials in the Chinese market and in the rest of the world, this percentage is around 40%. These data also contradict the idea that young consumers have no money. Gucci, a brand that has long realized the power of young people in the luxury market and increasingly broadens its connection with this audience, is one of the most successful brands on Chinese soil.

According to an article published by business consultant Daniel Langer, “customer perception is reality. And that is why excellence in defining and executing luxury brand value is not optional – it is a must. And with most luxury brands currently losing money in China, the time to act is now. ”

The consultant’s warning is for brands that still treat the Chinese market with the same strategies as elsewhere to rethink their positions. Even market icons like Dolce & Gabbana, to cite just one example, have literally made it on the skin that Chinese customers are not kidding. If the country is a powerhouse in consumption, its inhabitants also want brands to be potential in terms of excellence in service.