How to Enter the Chinese Luxury Market
China's luxury market has grown steadily at high rates over the past few decades. With such growth, China is predicted to become the world's biggest luxury market by 2025, according to many expert reports. Without a doubt, the pandemic has caused some shifts and changes in the Chinese luxury market; however, despite some drawbacks because of covid, Chinese luxury market spending has almost recovered.
Pandemic and Luxury in China
The Covid pandemic has slowed the growth of the luxury market in China. The luxury market might not reach the 2019 levels until 2022. however, not all luxury industries have seen a decline, and for 2021, Xinergy Global predicts a 10% to 19% increase in the luxury market.
Do not forget this is the year when the pandemic caused the global luxury spending has fallen dramatically; China's domestic market has still managed an increase, as the country's wealthier class could not travel abroad due to coronavirus pandemic, they spend their money on luxurious clothing, leather products, fine wine, etc.
Generally, luxury markets in the western world have been powered by international travel, mostly by Chinese tourists. As we already mentioned, that trend has stopped due to the coronavirus. So, now the wealthy Chinese consumers will spend their savings and incomes in the local market for the years ahead.
Trends and Tips For Luxury Businesses
An increase in China's online spending is a significant trend that must be used efficiently.
Any business trying to achieve success in the Chinese market must acknowledge that Chinese consumers have adapted to digital payments very rapidly. With the recurrent restrictions and lockdowns, any business needs to go digital. Companies can expect that e-commerce will be the most effective channel for luxury spending globally by 2025.
Companies should use social and other digital media platforms to increase their brand visibility and establishment in the local markets.
Many digital trends in China can be used efficiently, such as Wanghong. Celebrity marketing has been effective for many luxury brands to establish their presence in the high-spending, Chinese consumer market. Wanghong is just a few ways to advertise and reach new customers online.
Go for the long-term plan
Many international companies tend to go for short-term profits in the Chinese luxury market. Your business should be based on building the relationship, not short-term focused and transactional. However, it is no easy task to establish a long-term luxury business in China.
It also offers excellent opportunities for China exporters to sell their products and services to the country's ever-expanding market. China's state-of-the-art infrastructure and massive labor force are also attractive sources for supplying goods and services to the global market.
According to Niv Schwartz There is a high chance that the global travel conditions will not return to normal before 2022 or 2023, and many luxury brands will see a positive domestic luxury market growth next year, to about a 30% rate. However, brands will have to convince Chinese luxury consumers that domestic shopping is a better choice.
If you plan to open a luxury business in China, now might be the best time. It is no mystery that Chinese people love to spend their income on quality products and respect the brand names. For many decades, Chinese consumer spending has been continuously increasing, and with closed flights globally, they are spending locally. Regardless of the potential for short-term changes, China's luxury goods market momentum is poised to continue.
This article does not necessarily reflect the opinions of the editors or the management of EconoTimes