Chinese bought 46% of the world’s luxury products in 2014 – 76% of which was purchased overseas, a recent Chinese luxury report reveals.1
In dollar amounts, that was US$106 billion spent by Chinese luxury consumers.1
Simply put, the global luxury industry is becoming more Chinese. After all, Chinese luxury consumption is influencing this industry like no other nationality has before.2
Borderless travel & Chinese luxury boom
China’s population is becoming increasingly urbanised2, and its large and fast burgeoning middle class means more Chinese are able to splurge and travel.2
Over 100 million Chinese travelled abroad in 2014.10 By 2020, 200 million Chinese tourists are expected to travel overseas.11”
Also, as they travel more, Chinese have quickly realised the price benefits of buying luxury goods abroad, which resonate well with the typical Chinese value-for-money culture. This further perpetuates their desire to spend, and spend abroad.
However, it would be foolish to assume that Chinese buyers are all the same. As diverse as China’s many dialects and provinces are, so too, are the profiles of its consumers.
As the rising sophistication of Chinese consumers2 become more prominently recognised, it’s important to also note the diversity that exists within this group. These buyers range from middle-aged businessmen to young female shoppers to nouveau riche. For example, it’s been said that China’s nouveau riche tend to be more eager and willing to flaunt their newfound wealth.3
The end result of all this surging wanderlust, though, is the thriving economic impact that Chinese luxury consumers now have – whether in Asia, Europe or the US.3
Chinese effect on luxury brands
Given this boom, luxury retail markets worldwide have been scrambling to attract Chinese money, and we don’t blame them. Chinese travellers remain the undisputed fastest-growing luxury buyers in the world, and more enticingly, they allocate 71% their budget on shopping when travelling overseas.5
2015, however, will see luxury brands evolve. The role of e-commerce, for example, will play a more dominant role.
In the past, high-end brands have been averse to hopping onto the e-commerce bandwagon, which they perceived would tarnish their image and eliminate the inimitable in-store experience that comes with luxury shopping.
Now, however, luxury brands are increasingly embracing digital marketing strategies in lieu of the uprising digital and social media revolution – especially in China, where there are 632 million internet users and 519.7 million smartphone users.6
91% of Chinese go online everyday7, of which 81% access the internet via mobile.6 Additionally, 65% of China’s HNWIs (high-net-worth individuals) favour online social media as their preferred source of information.8
Yet navigating China’s social media landscape is complex, and quality social media marketing is key to the success of high-end brands transitioning to their digital storefronts without losing its exclusivity appeal and brand loyalty.
Luxury real estate online
Fortuitously, luxury real estate has been one sector that has been successful taken online – much like a duck takes to water.
Overseas property remains the top investment choice for China’s ultra-rich, and the first place to search for such a purchase is online.
We’ve seen visits on Juwai.com go from 1.5 million to 2.5 million monthly visits, and news of wealthy Chinese investors buying overseas properties without ever even viewing the property are making agents and developers salivate from all corners of the world.
In the past year alone, we’ve heard of wealthy Chinese investors buying million-dollar homes sight unseen and Chinese luxury property transactions completed entirely via social media. These stories have become the stuff of legends amongst property agents and brokers.
Somewhat unique to Chinese buyers is their marked penchant for generational driven investment:
97% of affluent Chinese are more inclined to buy a lifestyle property12, while 93% of Chinese HNWIs are more likely to purchase legacy homes for their children, usually worth between US$1 million to US$3 million.12
Truly, the impact of Chinese buyers on global luxury markets is impossible to ignore, and property agents and brokers would do well to tap into the market online if they want to remain relevant and on top of the game.