This week in the news, the forecast for the Chinese luxury market is positive, Chinese consumers are infatuated with British luxury goods, Coach will open 30 stores in China by the end of next month, a new study examines ways to maximize online presence in China, and Chinese airlines have answered the demand for European flights.
According to a report by Economist Intelligence Unit, by 2030, the number of Chinese households with an income over $150,000 is expected to rise to 10.3 million. Furthermore, more than one third of households in China will make over $50,000 in income by 2030. Currently, only one percent of households exceed $50,000 in income. As for the wealthiest Chinese, there are currently 2.4 million with assets of over 10 million yuan (US$1.6 million), and 93,000 of those have assets of over 100 billion yuan. Last year, Chinese spending on luxury goods made up 47 percent of the world’s total luxury spending with $28 billion spent domestically and $74 billion spent overseas, according to the Fortune Character Institute.
A recent survey of Shanghai and Beijing consumers found that “Britishness” was a leading factor in why Chinese shoppers are so fond of certain brands. Just one look at luxury market trends and statistics will show that Chinese consumers truly are infatuated with British brands. In January 2014, British automaker Jaguar Land Rover saw a 39 percent increase in sales in China. Similarly, British fashion house Burberry saw a 20 percent increase amongst Chinese shoppers, and is poised to open eight more stores in China this year. Professor Qing Wang of Warwick Business School said on the attraction to British goods, “A very important factor that makes Britain stand out is that it incorporates tradition and innovation seamlessly.”
New York-based luxury handbag maker Coach will open 30 new stores in China by the end of June 2014. The new stores will add to the brand’s existing 147 stores in mainland China, Hong Kong, and Macau. While third quarter sales fell by 7 percent to $1.1 billion, Coach saw its China sales jump by 25 percent. With recent management changes that included the hiring of a new CEO, Victor Luis, and a new creative director, Stuart Vevers, Coach continues to remake itself as a lifestyle brand and expand its offerings to include shoes and clothing. The new product offerings in China could be a shrewd move as a study by Bain & Co. found that luxury goods in women’s categories such as shoes and clothing had growth rates in 2013 ranging from 8 to 10 percent.
For 60 percent of Chinese consumers who shop online regularly, the Internet is now the central source of product information. Another 30 percent of online shoppers consider Internet and non-Internet sources to be of equal importance. Brand education is essential for China’s online shoppers. A study by Boston Consulting Group found that 90 percent of their “product-related online activity” was spent conducting research on product quality, and immediate online purchases were rare. Consumers spent approximately two-thirds of this “online study time” looking at e-commerce platforms, such as Taobao. Prior to making a purchase, consumers looked at an average of ten individual web pages.
With an increased demand for European travel, Air China introduced the first flight from Beijing-Vienna-Barcelona. The International Air Transport Association predicts that the market for international air travel to Europe will increase 4.7 percent this year. Part of this growth is due solely to Chinese travelers. He Zhigang, the head of Air China’s marketing, said Chinese vacationers in Europe have doubled in the last ten years alone. The Beijing-Vienna-Barcelona flight is just one of the new China-Europe routes being offered. Air China will also introduce a Shanghai-Munich flight on June 6. The airline currently has twenty-three different weekly flights to nineteen European destinations including Geneva which was launched last year.
image credit: surface magazine