Chinese consumers account for more than $7.4 billion in annual spending on luxury goods. This means that mainland residents make up almost a third of the entire global luxury market, numbers that, according to an August 2017 report from McKinsey, are likely to grow in the near future, as China is expected to have the most affluent households in the world by 2021. As for its current households, upwards of 7.6 million spend upwards of $10,000 on luxury goods annually, twice what French or Italian households are spending.
Meanwhile, in Japan, tourism is booming as large numbers of young Chinese women have taken to visiting the country, making Tokyo an attractive alternative to Hong Kong. Add to this the $22.7 billion-plus that Japanese natives spend annually on luxury goods, and you have the world’s number two luxury market behind the United States, and “a strategic market for luxury,” as Sidney Toledano, the Chairman and CEO of LVMH Fashion Group, put it last spring.
It is with these numbers in mind that Western luxury brands are actively “tailoring their marketing to the Asian markets that drive their sales growth, using familiar faces to promote their goods to consumers who spend as much time online as they do in stores,” according to Nikkei Asia Review.
“With the digital era, if we want to access locals very quickly, we need to talk to them with people who are appealing to them,” Julie Coine-Ollivier, president of LVMH Fragrance Brands Japan, told Nikkei, which noted that while luxury brands are “supervising marketing from their Western headquarters to carefully control their image … local approaches are taking on greater importance in order to stand out and attract new followers in the vast online marketplace.”
This has seen fashion’s top brands looking East not only for growth but more specifically, for the proper ammunition to appeal to this powerful region, which has included enlisting more localized celebrities and influencers, as opposed to simply relying on their Western campaign counterparts. Burberry, for which the Asia-Pacific region accounts for 40 percent of its annual revenue, linked with former EXO band member Kris Wu beginning in January 2016 in hopes of luring his core base into its stores and onto its regional e-commerce sites.
Gucci, which recently boasted growth to a valuation of $22.4 billion, has been aided in large part by Chinese millennials, willing to shell out on pricey handbags and other accessories. The Italian brand tapped Chinese pop singer and actress, Chris Lee, as a brand ambassador (on the heels of Lee’s stint with Givenchy during Riccardo Tisci’s tenure) in order to ensure targeted marketing.
Not to be outdone, Chanel, under the watch of creative director Karl Lagerfeld, has been looking to Eastern Asia for years by way of on-location runway shows (remember when the Paris-based design house descended upon Seoul for its 2016 Resort show?) and big-name ambassadors of its own, including K-pop mega-star G-Dragon.
These efforts all fall into a larger, more localized push of brands rethinking how they address Chinese luxury consumers, including the requisite move from what McKinsey calls a “sales push” model to “building long-lasting relationships at home.”