The big Chinese Luxury Market Is “Online” – Update 2020

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China’s online/ digital shopping is developing rapidly in the past recent years. Furthermore, the trend of e-commerce luxury is gaining popularity among the youth in China not only on the national level but also internationally. China’ s luxury market is770 billion RMB (110 billion USD) today and will double to 1.2 trillion RMB by 2025, delivering 65% of 2018–25 global growth.

In 2020 Chinese Consumers buy Luxury Brands Online

The trend of luxury buyers is a new addiction in the developing countries and the consumers not only in China but also many others like in India, Southeast Asia, Brazil are becoming the fan of luxury products. According to a release in Times, the number of lovers for the luxury goods increase in the recent times. In this regard, many of the luxury product manufacturing companies are now forced to implement a digital marketing plan for the Chinese customers.

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The primary reason behind this is to avoid various complicated laws of the Chinese government. Besides, digital marketing considered the perfect policy for the businesses to expand and to break the barriers both geographically and demographically.

However, the second reason is that there is a noticeable increase in the online shoppers in China which drove the internal luxury producers to shift their focus on the digital marketing. Moreover, 55% of the online shoppers use mobiles as a medium, and this could be an exceptional opportunity for the marketers to increase their profits immensely.luxuryFurthermore, one point we should keep in mind is that numerous luxury buyers in China are those rich young customers between 20 and 30 years. These young, affluent lords are very well aware of the modern technologies and also the digital world. Moreover, this awareness of the digital world also assists them to be updated about the latest fashion trends.

If on the one hand, it is convenient for the brands to sell online; on the other hand, it is a suitable option for the viewers to get the latest fashion online and this mainly concerns the brands which have no significant flagship outlet in China. E-commerce facilitates the branding.

Ecommerce, a must for Luxury Brands in China

In recent years, because of problems in retail and mixed consumer base, major luxury brands begins to strengthen their own e-commerce channels. The competition in this section is heating up. As indicated by a report by McKinsey (2019), “Chinese consumers are set to contribute almost two-thirds of global growth in luxury spending.” China’s young customers are reshaping the global luxury market.

According to the “2019 China Luxury E-Commerce Report”, although more than 60% of luxury online consumption is contributed by first- and second-tier cities, third- to sixth-tier cities have greater development potential, and sales growth is staggering. Areas where no stores are opened have huge room for development.

Therefore, in the face of this huge luxury market that still has development prospects, domestic e-commerce giants Tmall, JD.com and other e-commerce giants have also joined in. The pressure of luxury e-commerce competition is increasing.

China – Eldorado for foreign luxury products

As personal disposable income continue to increase, Chinese consumers are spending more and more on luxury goods. According to Statista, In 2019, the global luxury goods market is expected to grow by 4%, of which the Chinese luxury goods market is expected to grow by 26%, amounting to 98.4 billion euros. Chinese consumers contribute up to 90% to the continuous growth of the global personal luxury goods market, accounting for about 35% of the global total personal luxury goods’ consumption.

 

A new era for the luxury e-commerce market 

After 2015, luxury e-commerce began to develop on a large scale. Even for the giant of the United States, Apple also aspires to establish itself as a luxury brand with the introduction of its upcoming digital watch into the Chinese market.

The Chinese luxury market differs for the West

It is very important to notice the difference between the Chinese e-commerce ecosystem and other ones. Although digital marketing is a powerful tool for the brands to reach the luxury customers, yet there is a long way to approach the desired goals.

The rapid changes in China’s Internet environment have prevented many operational decisions from reference to past and other regional experiences. The story of luxury e-commerce in China is also a story of the”sinicization” of European and American luxury e-commerce. However, one thing is for sure that we are going to witness a new era about the luxury world’s engagement with the digital world.

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We are the top and most visible Web & Marketing Agency for China you will find on the web. Our Services: E-Commerce, Search Engine Optimization, Advertising, Weibo, WeChat, WeChat Store & PR.

How can foreign brands win the Chinese luxury market?

As in any other countries, brand awareness is very important to get high customer conversion rate. So for a luxury brand, especially for those who want to sell luxury products in China, it is essential to get the confidence of Chinese customers, because they don’t buy brands they don’t know.

Therefore, you need to create a very good e-reputation through all possible ways:

  1. Digital advertising & Searching engine marketing
  2. Social media management
  3. Cooperation with the most favorable e-commerce platforms in China

Digital advertising & Searching engine marketing

In fact, SEM has become a very effective tool for China’s marketing strategy. When we talk about SEM, we first think about the leading SEM platform – Baidu, a Chinese equivalent to Google in essence. Baidu holds between 60 to 70% of China search engine market. Being the second largest search engine in China, 360 Search is also a powerful alternative to Baidu.

Baidu web page when we tape in luxury product

As the picture above shows, SEO on Baidu can help brands to get higher rate of exposure. Since Chinese customers spend a lot of time in searching information of the products before buying, in order to make sure the one they are going to buy is the right one.

Social media management

WeChat, Weibo, Xiaohongshu (Little Red Book) are three biggest social media platforms in China. They are playing a very important role in Chinese modern lives and having an essential impact on fashion trends, e-commerce sales, etc. If you want to enter in Chinese luxury market, it’s impossible that you don’t have a presence on these three social platforms.

What are the essential platforms for luxury branding

WeChat – the biggest social platform

Since 2019, WeChat users have increasingly received advertising from luxury brands on their WeChat moments. Although magazines are the primary channel for understanding luxury goods, for luxury goods, digital transformation is an important measure to keep up with the times.

As the largest social platform in China with more than 1 billion users, WeChat is an indisputable place for luxury brands in the process of expanding the Chinese market. As of 2017, luxury brands have placed more than 500 advertisements on WeChat Moments, and Louis Vuitton, Cartier, Vacheron Constantin, Celine, and other brands have even opened their own official WeChat public accounts and mini-programs.

Weibo – ideal for luxury brand awareness

Official account in Weibo for Cartier (left) and Louis Vuitton (right)

Weibo is an open social platform, with more than 550 million users. The characteristic of Weibo is mass broadcasting. It is also an important platform for live streams, which is in the mode in China. Weibo is also a “meeting point” of KOLs in China, just as Xiaohongshu.

Xiaohongshu – a comment-generated platform

So far, Xiaohongshu has an excellent platform with more than 300 million users! Xiaohongshu was only a UGC application that mainly shared cross-border products and users shares notes in the community. Therefore, the users on this platform are those who are willing and ready to buy certain products, especially for the fashion, cosmetic ones. As it is trusted by users and has a giant user base, it now developed into community e-commerce, with high user stickiness.

Cooperation with the most favorable e-commerce platforms in China

Landing page of Tmall

Tmall Global, JD, and Secoo are three biggest e-commerce platforms for luxury products.

Tmall Global has selected 505 products related to the international luxury goods. Users can filter and find products based on popularity, price, sales volume and evaluation. Taobao only accepts foreign brands that already have brand awareness in China to guarantee the quality of products on this platform.

JD, the second largest e-commerce platform in China, is engaging into luxury industry. JD.com cooperate closely with foreign luxury brands to ensure high quality. This platform is well-known for its excellent logistic systems. It is also developing the AR system in order to give users more facilities.

Founded in 2008, Secoo is China’s largest multi-brand luxury B2C website. The site is currently working with Tencent to create data files for more than 3 million registered shoppers.

Do you want to know more about China’s luxury market? Contact GMA, a digital marketing agency, specialized in the Chinese digital market.

Choose GMA to Promote your luxury brand in China

  • A team of 70 digital marketing specialists in China
  • Experienced & Professional in supporting companies for their development in China
  • With a deep knowledge of the Chinese lifestyle
  • A passionate international team

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