It may take some getting used to, but China’s luxury market is making its way into “affordable” luxury items. This trend to meet the needs of the growing middle and upper middle class consumers is creating opportunities for a larger number of brands, domestic and foreign.
We are working with a women’s fashion accessory company to launch a product line this year and the early research shows some surprising aspects of the affordable luxury brand purchasing among China’s consumers. Chinese buy brands for similar reasons as consumers from other economies, however, there is a sense of a dynamic in this market, compared to the same group of luxury brand consumers in other markets.
My analysis of China’s increasing inspirational consumer is setting up a niche market that is under the top price points, but significantly above the price of average products. This is driven by the rise in income and employment status of China’s growing middle class who want to buy quality, to convey an appearance of luxury, and who desire to portray being a “global citizen” by purchasing international products. In some cases, this category of consumer wants to blaze a new path by purchasing non-traditional, high quality products which is creating opportunities for small and midsize foreign companies to jump into China.
Need proof? Get this; Lamborghini contemplates a new “everyday” model. CEO Stephan Winkelmann, told the Reuters Global Luxury and Fashion Summit that increased sales in China are tempting the high-end auto designer to consider an “everyday” model for its current product line.
A key indicator in any market is to follow the money. China luxury brand categories are no exception to this rule. The lineup for Initial Public Offerings and listings on the Hong Kong stock market would delight the most vigorous name dropper, Prada, Coach, L’Occtaine among others. Luxury China jeweler Chow Tai Fook is creating a buzz as its IPO is on the ears and lips of investors.
My suggestions to those considering an entry into China’s hot fashion (or most any other) industry:
- Personnel must be here on the ground, China is not a “handle remotely” market
- Test pricing strategy as the “Affordable” luxury market is new for all parties, consumer, distributor, and manufacturer alike
- Public Relations in country can help build brand and create excitement around product launch
- Distribution options - while slim a couple of years ago are changing rapidly - be flexible even if you are committed to building your own storefronts.
If you have any interest in carrying – or purchasing High-End Brands within mainland China – Please Contact me and I will see what I can Help you with.