Luxury Goods Are Selling Well In China, But The Long Term Challenges Are Still Facing Consumers.

　　 Luxury goods It is a high barrier industry. Now, China is undoubtedly the most urgent market for luxury brands. China's strong performance has become the main source of the decline of the luxury goods industry in recent years. However, the Chinese market is facing challenges as well as opportunities.

Domestic sales share keeps rising

Excellent performance in China has booster the luxury group's overall recovery. Through sorting out the sub regional income of major companies or brands, we can find that in the case of sharp decline in revenue in the US and Europe, China's strong performance has become the main source of the decline of the luxury industry in recent years.

According to the latest analysis by the financial times, China's consumer upgrades are good news for foreign brands selling more high-end products, and as the price gap shrinks, sales of luxury goods are returning to China, and domestic sales share in the global luxury brand income.

From the consumption volume of luxury goods in China, the growth of luxury consumption in China was strong in 2017. Bain statistics show that the mainland market has reached 142 billion yuan. After bidding for a four consecutive year of slump, it rebounded strongly in 2017 for the first time, increasing by more than 20%, ranking first in the world, far exceeding the global average growth rate of 5%.

It is reported that last year China contributed 27% of sales to Kai Yun group. According to the Chanel annual report, luxury goods consumption in the Asia Pacific region has made great contributions. China has always been a big consumer country and is the main force of luxury consumption. Kai Yun group's revenue growth in mainland China is as high as 18%. Moncler and other clothing brands in Greater China also maintain two digit growth.

Luxury brands in France Hermes In the first quarter of fiscal year 2018, the results showed that Asian market Sales reached 540 million euros, an increase of 16% over the same period last year. In the report, Hermes reported that the brand was in addition to Japan. Asia Pacific market The strong performance is mainly due to the growth of the Chinese market and the performance of the Crown Prince store in central Hongkong.

Axel Dumas, chief executive of Hermes, said in a 2017 earnings report that as Chinese consumers re purchase luxury goods, the sales growth of brands in the mainland of China is accelerating. At present, the Asia Pacific region has become the largest market in Hermes.

French luxury group LVMH recently released its financial report in the first half of 2018. Although it is affected by the Sino US trade war and the depreciation of the renminbi, the sales situation in the Chinese market is still steady. Jacques Guilloni, chief financial officer of LVMH, said that for the Louis Weedon brand, the demand from China in the two quarter was even slightly higher than that in the first quarter.

According to the reporter, as early as the beginning of last year, the Chinese government, in order to stimulate consumers to buy more luxury goods in China, reduced the import tariffs on clothing, cosmetics, household products and jewellery, Louis Vuitton also lowered the price of its products in the Chinese market, and the price reduction of products ranged from 3% to 5%, which will continue to enhance the market performance of the brand.

In addition, Bain statistics show that in 2017, Chinese consumers' luxury consumption in the whole world also achieved a strong growth. In 2017, the contribution of Chinese consumers to the global luxury market rose from 30% in 2016 to 32%.

Luxury consumption reflux opportunities and big competition

At present, many luxury goods in China are still higher than other markets, and the habit of Chinese consumers buying luxury goods overseas still exists.

Luxury is a high barrier industry. Now, China is undoubtedly the most urgent market for luxury brands. At the same time, China is trying to re spanfer overseas shopping to the mainland, and cultivate the luxury consumer market in the mainland, thus driving the overall consumption economy.

For luxury brands, in order to deal with the pressure from Yu Hai, we must solve the problem of the spread of global luxury goods. According to data from the Institute of wealth research, the average price differentials of major categories of luxury goods in China in 2017 narrowed considerably compared with 2011.

In recent years, the government and brand dealers are working together to return luxury consumption to the domestic market. The Chinese government is committed to bringing luxury consumption back to the mainland and into domestic GDP. To this end, our government has strengthened the control over the gray market, promoted the development of cross-border electricity providers, and reduced the import tariff of many luxuries in a timely manner.

In response to the national tariff concession policy, Gucci announced the adjustment of all retail prices in the mainland, including the new and classic ones, with an average fall of 5%. The aim is to attract more Chinese consumers to spend in local areas. Coincidentally, Louis Vuitton and Hermes have also lowered the prices of Chinese products.

With the efforts of other parties, Chinese luxury goods are showing signs of reflux. Decades ago, the Japanese luxury market went through a similar process. At the same time, the purchasing space in the future was constantly compressed and the proportion of seafood washing down was inevitable.

According to many data, China is becoming the largest consumer of luxury goods, and the location of consumption is changed from abroad to domestic.

The global luxury market monitoring report 2018 Spring Edition shows that in 2018, the global personal luxury market sales revenue is expected to grow by 6% to 8% over the same period, reaching 276 billion to 281 billion euros.

The report points out that Asia is expected to become the main market for the growth of luxury goods sales, with an increase of 12%. The sale of personal luxury goods in the mainland market is expected to increase by 20%-22% over the same period last year, far more than that in other parts of Asia. About 1/3 of global personal luxury sales revenue is contributed by Chinese consumers.

Bain said China's influence on the trend of luxury goods market is increasing. Consumption upgrading continues to ferment and purchasing power continues to rise, which is expected to continue to stimulate consumption expenditure of Chinese luxury consumers. Driven by China's millennial generation as the main purchasing power of luxury goods and the continuous improvement of China's luxury business channel, China's luxury market will remain strong in 2018. At the same time, the world's major luxury brands in China. market Online channel laying and offline consumer experience promotion will help the growth of major luxury brands in the mainland market.

With the return of luxury goods, more and more e-commerce providers are developing online and offline to get a big development in the field of luxury goods. From the perspective of the line, there is still a certain distance between domestic luxury goods service experience and after-sale service, so how to improve the consumer's sense of experience is the first problem to be solved in line development. At the same time, the recent incidents of consumers buying fake goods in counters are frequent, and the after-sale regulation of luxury goods needs to be strengthened. In addition to the luxury brand's spontaneous development line, luxury goods have also joined the major electricity supplier camps. Domestic electronics giant Alibaba, Jingdong, temple Library in the field of luxury strategy layout, attracting major brands to enter. With the return of the luxury market, the electricity market is facing opportunities while competition is increasing. market Will also face a big shuffle.