Chinese Buy Global 1/3 Luxury Goods, The Millennial Generation Is The Main Consumer.

China has now become a good place for the international luxury industry.

Management consulting firm Bain recently released the annual "China luxury market research" shows that in 2018, the overall sales of China's luxury goods market continued to record a record growth in 2017, and the growth rate reached 20% in second consecutive years.

The report's author, Bain Bruno Lannes, a global partner, used the word "amazing" to describe such a growth rate of two.

Such growth is attributed to many aspects, for example, in some parts of Europe, there is a channel for luxury sales in China, namely, the electricity supplier.

In China, people who like to place orders online are obviously more than other countries.

On the other hand, there is a consumption reflux. More and more Chinese consumers choose to buy luxury goods in the mainland market under the joint action of the Chinese government to cut import tariffs, strengthen the control of the gray market, and constantly adjust the price gap between the domestic and foreign markets.

According to Bain's data, in 2018, the proportion of luxury goods consumed by Chinese consumers in the mainland rose from 23% in 2015 to 27%.

It is expected to reach 50% by 2025.

So, who are buying luxury goods?

Bruno noted that the average age of Chinese luxury consumers is lower than that of other countries in the world.

He said that China's millennial generation has led the development of the luxury market. The growth of the market in the past year has been almost entirely contributed by consumers aged 23 and -38.

It sounds a bit surprising, but it has become a norm in China.

In the past few years, many consumer goods Brand Company have been playing a younger role in marketing strategies.

In the general trend, luxury brands with more expensive prices are also beginning to tilt towards young Chinese.

They are gradually opening up shop in several well-known big business platforms in China. They will even launch some products that are specially designed for the electronic business platform. Please cooperate with China's popular traffic stars and KOL, and the posters on the covers and windows will be full of artistes' faces. Those names only started a few months ago.

The reason for this strategy is only to cater for younger buyers.

Why do Chinese young people have such purchasing power?

The Bruno study concluded that a considerable portion of China's millennial generation already own their own homes, and some sources of capital can also be obtained from the family. At the same time, they also have their own wages, so that money can be spent.

On the other hand, the millennials have a better understanding of the luxury industry because they have many information channels to understand these luxury related information.

His views are based on an earlier report.

In 2017, HSBC released a survey of global homeowners: "brick and tile: the meaning of housing". China is the country with the highest housing ownership rate of the millennial generation, ranking 70% in the leading position in Europe and the United States.

However, 85% of China's respondents were from cities.

In any case, the consumption of Chinese consumers in the global luxury market can not be ignored.

According to data provided by Bain, the total amount of luxury goods consumed by Chinese buyers has accounted for 33% of the global market share, that is to say, the Chinese bought nearly 1/3 of the world's luxury goods in 2018.

3 years ago, this ratio was 31%, 18 years ago, the figure was only 1%.

The corresponding change is that after recognizing that China is the world's largest potential consumer market for luxury goods, the world's major luxury brands not only adjust stores and marketing strategies in China, but also create limited edition products for Chinese consumers, and more and more luxury goods are selected in China.

Taking Hermes as an example, the fourth quarter results released by the top luxury goods company in February showed that its Asia Pacific market recorded a 11.6% fixed exchange rate growth, excluding Japan's 8.1% growth rate, reaching 13.1%.

At the beginning of this year, the brand set up three new Chinese stores in Hongkong, Changsha and Xi'an, and renovated and expanded the IFC stores in Shanghai.

Although some predict that China will develop into a certain extent, it will enter Japan's "low desire" society.

But for luxury companies, it's too early to talk about such a problem.

Those who hold an optimistic view believe that such a growth rate will last for some time.

China's millennial generation will not lose interest in buying luxury goods or will.

A recent survey by Rui Yin (UBS) said that 71% of the millennials expressed optimism about the financial outlook, and 81% expected revenue to rise.

However, for those luxury companies, there is also a need to be vigilant: as the cost goes up, including rent, organizing marketing activities, and cooperating with KOL, the cost of brand operation in the Chinese market is also rising.

Each brand's increasing investment in digital marketing.

"We can see that compared to the number of investment in digital marketing in 2015 increased from half to more than half of the level, in 2018 this proportion is generally 60% to 70%."

Bruno said.

Author: Liu Xiaoying