Luxury gifting in China is experiencing some considerable changes as consumer tastes and brand awareness shift.
Overall spending on gifts has decreased by 30 percent over the past two years. Tech products are also becoming more popular choices for gifting than the fashion brands that dominated the sector in the past. American tech giant Apple, for instance, is experiencing tremendous growth in China, with a 70 percent revenue growth in the country during the last quarter and another surge anticipated as consumers begin to purchase gifts for the Chinese New Year.
The Chinese Luxury Consumer Survey 2015, a recent study by the Hurun Research Institute, examined gifting trends by surveying 376 millionaires from 40 cities in Mainland China, including Shanghai and Beijing. All respondents had a personal wealth of at least $1.6 million, and twenty-seven had a wealth of at least $16 million. The average age of those surveyed was 38.
The survey found that both men and women consider Apple to be the number-one brand for gifting. Apple’s competitor Samsung also made the top 10. Fashion brands, however, showed less popularity. Hermès, once the most popular brand for gifts among affluent Chinese consumers, dropped to seventh place this year. Prada and Burberry both fell out of the top 10, while red wine, the most popular gift of 2014, fell to third place as jewelry and watches eclipsed its popularity.
According to Brian Buchwald, CEO of Bomoda Group, the shift indicates that the way Chinese consumers think about luxury is changing.
“As gift giving is in large part tied to business, the rise of Apple and relative decline of fashion brands demonstrates both the lifestyle import of Apple the brand and the challenges for luxury brands that traditionally benefited from the corporate market,” Buchwald said in an interview with Luxury Daily. “Going forward, with the government crackdown and the increase in consumer sophistication, brands that have obvious intrinsic value to the beneficiary of the gift but not the hangover of the ‘bling’ or showy aspects will see appreciation in purchasing,” he said.
Recent travel trends are also contributing to changes in gift spending. Luxury consumers spend an average of eight days per month traveling for business, and “super wealthy” consumers are often away for 11 days. Eight to 12 days of the year are spent on holiday, with the Chinese New Year coinciding with the most popular time for travel. Australia is the most popular travel destination, followed by France, and then the Maldives. Unsurprisingly, consumers now purchase seven out of 10 of their luxury products in other countries.
Buchwald notes that the Chinese retail tourist “has much more freedom in purchasing abroad without prying eyes but with the cheaper prices of the international rather than domestic market.”
He also points out the the current drop in gift spending may have some benefits for the luxury sector.
“The decrease in spending means more time spent building the emotional connection with the consumer rather than just the transactional value of a status symbol on your wrist or around your neck. It also opens up the opportunity for even greater focus on the female as she is becoming for many the safe harbor in the storm.”
image credit: m-s-y