China will account for 20% of global luxury sales by 2015
According to US consultancy firm McKinsey, by 2015, China will account for around 20%, or $27 billion of global luxury sales.
Rapid retail expansion is a major factor for companies seizing the opportunity in China, but of equal importance is marketing, according to Nicole Chen, founder of NC Style, a consultancy that helps brands launch in China and counts Y-3 among its clients.
“I believe the goal is to get the consumer to understand the concept of the brand,” she said. “It’s not just about the name — you need to give people a reason to want to buy it,” she continued. “I believe Chanel became a bigger success in China because of the two films released about Coco Chanel. People in China really respect the stories and the history.”
In particular, stories that focus on craftsmanship or savoir faire resonate with Chinese consumers, said semiology expert and consultant Laurence Lim. “Certain products such as perfumes and diamonds have prestige because the Chinese still do not have the craftsmanship to make these products,” he said. “So it’s important that luxury brands communicate about their craftsmanship and differentiate themselves from other brands. There’s an appeal in how these products are made. This strategy is working like crazy.”
In terms of merchandising, there are certain product categories that offer significant opportunities in China. In a culture where gifting is prevalent, small leathergoods are extremely important. Luggage is also a key focus.
