In the next five years, China is predicted to become the biggest luxury market in the world. Forecasters predict that Chinese consumption of luxury goods, increasing at an annual rate of 18 percent, will reach about $27.51 billion by 2015.
In the early stages of this market’s development, Chinese consumers have leapt at the opportunity to purchase Western luxury brands. But the novelty of the West may be starting to wear off. Chinese consumers are increasingly leaning toward products that reflect not the consumerist heritage of the West, but the cultural heritage of Chinese consumers themselves: China, according to these consumers, is in.
Shanghai Tang, a Chinese brand, and the China-inspired Shang Xia label launched by Hermes last year, may be ahead of the curve in the luxury market. Shanghai Tang and other Chinese brands, including Queelin, a jeweler hailed as “Tiffany’s of China,” and fashion labels like Blanc de Chine and Ne Tiger, are gaining popularity in the Chinese market.
Brenda Wang, founder of Hong Kong’s Brandexcel consultancy, which counsels luxury and fashion brands planning to enter the Chinese market, describes the Chinese consumer as increasingly proud to be Chinese.
“With these dynamics in play and in particular for those sophisticated consumers who seek to feel unique rather than regard luxury as a show of wealth, embracing a unique and differentiated brand of the highest quality and craftsmanship are more important factors than country of origin,” Wang said.
To marketers, this means that while the Chinese are looking for designs to reflect their national identity, they are not necessarily looking for home-grown brands—although for now, home-grown brands are some of their only opportunities to purchase goods that reflect the Chinese sensibility.
“The importance of Chinese customers is critical, so it’s not surprising that more brands are starting to think about… products,” said Yuval Atsmon, a consumer retail practice consultant in Shanghai. “The best example of the move is Hermes launching Shang Xia.”
Shanghai Tang proves the success of strategies that cater to Chinese tastes. The brand currently has sixteen stores, and plans to open another ten over the next year.
“This part of the world is becoming the center of the economic strength of the world,” said Raphael la Masne de Chermont, executive chairman of Shanghai Tang. “Why on earth should it keep on absorbing creations from the West and not invent its own?”
photo credit: ne tiger