China's luxury consumption trends are changing fast. High-end brands need insights on how to grow a presence and prosper in the world's largest luxury market.

 

China is a challenging market for luxury brands – it is a major source of revenue but it is also a complex and unpredictable partner (from fake products and restrictive legislation to the uncertainties of the boom/bust cycle). Chinese consumers with spending power no longer assume ‘west is best’ and look to brands that offer the best of tradition and modernity. For both new and established luxury brands it is a challenge to find solid ground in these changing times.

Here we outline the core elements and building blocks that are required to grow presence and meaning in the world’s biggest luxury market.

The Chinese luxury market is forecast to hit $1 trillion by 2025 but brands need to take a new approach if they are to keep consumers interested. After a 10 or 15-year period in which most luxury brands have invested heavily in China, the Chinese perspective on luxury consumption is evolving fast.

Once luxury consumption in China was all about the ‘bling’ factor - showing off to friends and establishing people’s place in the social pecking order. Now the appeal of luxury has become more sophisticated. Out goes the ‘bling thing’, in comes a more refined appreciation and sense of connoisseurship, as well as a growing interest in the ethics of how things are made. This is partly a consequence of strict government regulations on luxury spending but more importantly it is a sign of a market that is becoming more mature, with a more ‘grown-up’ attitude towards brands, philosophies and consumer lifestyles.

As a result there is now a shift of emphasis away from extravagance and celebrity endorsement of luxury items towards subtlety in colour and design, understated branding and a new-found sense of personal sophistication. Traditional luxury cues such a a predominance of gold, conspicuous logos and celebrity endorsement have been replaced by understated branding and subtlety in colour, design and scale. Celebrity endorsement does not have the power it once was.

All of this reflects how consumers have become more demanding, defining themselves not just by what they buy but what they do.

 

Trends

Brands have to do more to meet these new expectations. It is no longer enough to show consumers how bright and sparkly their products are, brands have to immerse themselves in the social and cultural conversations of their consumers.

Here are four ways in which brands can prosper in the new China.

 

Minimalism

Less is more and brands that choose to speak in an understated way suggest confidence in the superiority and sophistication of their products.

In a world which is increasingly complex and loud with a seemingly never-ending supply of new products and services, brands which take a more simplified approach become associated with thoughtfulness and care to attention. Simple product and packaging design, subtle colours and and minimal visual compositions and motifs suggest attention to detail which is second to none. If the image of ‘bling’ is gaudy, extravagant, over the top (and ultimately, a bit cheap looking) then minimalism is a sign of extraordinary craftsmanship, restraint and true luxury.

Brands such as Cartier and Van Cleef & Arpels use simple layouts with a minimum of clutter and decoration in both their retail space and across all media.

 

Lifestyle

‘Exclusivity’ has always been synonymous with luxury goods and services but it is now turning towards a broader, more real-world manifestation where architecture, cultural events and the sporting arena are used as vehicles to convey this idea.

Burberry launched its Beijing store with a show that projected a choreographed holographic fashion show followed by a concert by Keane on the Great Wall of China. Hennessy and Chivas associated themselves with high end sports – such as sailing and polo – putting luxury goods in the same bracket as cultural refinement and an aspirational lifestyle. Other brands have used stunning architectural images to associate themselves with a sense of aesthetic elegance.

 

Naturalness

People’s perception of nature has been changed by environmental damage and pollution and this is particularly evident in China where human impact on the world has been ignored for centuries. As a result, the natural world has become associated with something that is rare and exclusive. It is something to be treasured and is an opportunity for luxury brands to associate themselves with something that connotes sophistication and wisdom.

Johnnie Walker tapped into this new-found enthusiasm for the ‘real world’ with a campaign that highlighted the personal journeys of 12 business people and creatives. It was indicative of a shift away from ‘success and status’ to ‘real and lived’. It is a trend that has also been reflected on images of the natural world in advertising and the design of retail space and shopping malls which are inspired by the environment.

Brands can borrow from nature to transform their own attributes. The natural world provides ideas and themes in which brands can immerse themselves using natural shapes and materials, earthy tones and the environment. In other words, luxury at one with nature, not at the expense of it, and a celebration of the world around us.

 

Local cultural confidence

As China has opened up to the world and its international standing has increased, its reliance on imitating the west has begun to fade away. A period of financial growth is followed by a blossoming of cultural confidence and pride, and this is now the case for China.

The past is seen in a new liberated light, acknowledged and respected for its value and contribution to the world. Brand philosophies become sophisticated statements drawing on both the past and present.

Products and the communications around them need to reflect this, combining traditional ideas and techniques with contemporary context and aesthetics, pride in the past with confidence for the future. Traditional motifs, elements and patterns re-emerge and are ‘re-imagined’ for the digital era, new materials and fresh combinations giving brands a sense of historical continuity and eternal, classical value while remaining absolutely up to date. Both local and Western luxury brands such as Mercedes and JW Blue have reimagined traditional motifs and symbols for their communications and product design.

Shang Xia, the ultimate in brand localisation, is a Hermes funded Chinese luxury brand selling fashion and homeware. It has a blueprint that translates the Hermes model into Chinese culture by connecting their common heritage in craftsmanship.

 

Cover image credit: Shang Xia


About the author

Laura Hurst | Panos Dimitropoulos

Laura is the Associate Director at Kantar Added Value UK | Panos is the Cultural Insight expert for Added Value Shanghai


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