5 key facts about the luxury market in China

China’s population is growing and discovering new things every day. As well as the traditions that they have followed for centuries, the Chinese consumer of today is becoming more open to the idea of foreign goods. In fact, ‘made in the West’ is often seen as a guaranteed label of quality. This is more true of the luxury market in China than of any other.

We’ve put together five key facts you need to know about the Chinese demand for luxury items.

1. It’s big, and growing

The value of ecommerce in China this year is set to reach $296billion. Of this huge market, it is estimated that online luxury sales in China will be worth $27billion.

And it’s not going to stop there. Since 2011, the online luxury market in China has seen a 71 per cent increase in value. It is estimated that by 2015 the online luxury market in China will still be growing by 24 per cent per year. Clearly there is plenty of room for Western businesses looking to expand into this potential market.

 2. It’s men

China is bucking the trend when it comes to online shopping, with men making up 55 per cent of China’s online luxury shoppers. In 2010, Chinese men spent nearly three times more than women on luxury goods – a total of $1.1billion. Men in China also spend more on particular goods, such as fragrances and watches. In the luxury bag market, men account for 45 per cent, a huge difference when compared to men in the US, who account for just 7 per cent of the country’s luxury bag market.

3. Credit card users are on the rise

285 million credit cards were issued in China in 2011, and credit card sales reached 7.75trillion yuan: a year on year rise of 48 per cent. It is estimated by Mastercard that there will be 900million credit cards in use in China by 2020. This, combined with the rising wealth of the middle classes, can only be good for the luxury market in China.

4. Chinese consumers are more willing to make big ticket purchases

70 per cent of online shoppers in China are willing to try buying luxury products online. Not only are Chinese consumers willing to buy, there are willing to buy big. In just 90 minutes, online shopping mall Jingdong sold 300 Smart cars. For those with the cash to spend, you can even buy yourself a Lamborghini. Clearly, China is a great place to be for luxury businesses.

5. It is still based on the values of Chinese consumers

While people in China may value overseas goods and big brands, they are still influenced by their cultural heritage. Trust is a big part of Chinese culture, and consumers are more willing to buy from brands who can demonstrate their heritage. Social recommendation plays a huge role as well, which is why many big brands are investing heavily in social strategies.

(Data sources: www.mckinsey.com, www.legalweek.com,www.funggroup.com, www.chinadaily.com.cn, www.techinasia.com)

(Image source: “Lamborghini Gallardo On Display” | www.freedigitalphotos.net)