University Fashion Management Report: Chinese Luxury Market Analysis

This report provides a comprehensive analysis of the Chinese luxury market, examining its evolution, consumer behavior, and key trends. It explores the rising disposable incomes and changing attitudes towards luxury goods, particularly among the upper-middle class. The report delves into the impact of Chinese consumers on the global luxury market, including their spending habits both domestically and abroad, with a focus on the influence of tourism. It further investigates the challenges posed by China's grey luxury goods market and the government's efforts to curb it. The report also analyzes different consumer groups, their motivations, and brand awareness, highlighting the shift towards more sophisticated consumer preferences. Finally, it addresses the role of digital platforms and social media in the Chinese luxury market, emphasizing the importance of adapting strategies to meet evolving consumer demands and maintain brand consistency. The report is a detailed analysis of the Chinese luxury market, providing valuable insights into the current state and future direction.

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Analysis and Discussion
Chinese luxury market
In today’s modern world, incomes are rising rapidly and luxury goods are getting
available widely, with the attitudes regarding the display of wealth shifting with time. Due to
this, more and more Chinese consumers are feeling more comfortable in buying luxury
goods. Because of this, the love for these products in china is moving down the economic
ladder, meanwhile creating challenges and opportunities simultaneously for the marketers
who are used to serving just the very rich consumers. The upper middle class account for a
large share of the market and their numbers are increasing swiftly. The interest in the luxury
goods segment is moving over jewellery, handbags, fashion and similar products. A large
number of the Chinese luxury goods consumers are also spending their money on spas and
other wellness activities. The consumption for such luxury services are rising faster in
comparison with luxury goods (Li, Li & Kambele, 2012).
Over the past decade the Chinese have directed the world towards luxury shopping. By
2015, China was offering more luxury retail selling space than Japan and was swiftly
catching up on USA, with the Chinese accounting for almost a third of the overall global
luxury spending. Particularly the wealthy Chinese tourists have been the key directors of the
international luxury goods sales for more than a decade. As stated by the travel data released
by Euromonitor International, the Chinese tourists made approximately 3 million trips to the
USA in 2015, which was an upsurge of around 8% from 2014 and a huge 206% upsurge
accounted for in the five years from 2010 to 2015 (Travel in China, 2016). In 2015 itself the
Chinese made around 5 million trips to Japan, 2 million trips to France and 285 thousand

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trips to the UK, with most of these trips related to shopping expeditions or significant luxury
retailers and shopping hotspots (Economic Impact 2016, 2017).
However, in the years 2014 and 2015, the mainland of China recorded its lowest growth
of sales of luxury products from the time when records began (Global luxury goods sales
growth to stabilise in 2015 - Bain, 2014). Among some of the other factors getting
influenced, this decrease in growth also implied that China would not be able to overtake
Japan and then go on to become the world’s second largest luxury goods market in the world
in the next consecutive five years and it is anticipated to uphold its current position ahead of
France and UK in the short to medium term.
China’s grey luxury goods market
China recently put in an effort of curbing the wrongdoings in the luxury goods
consumption. The effort became a crackdown on the grey luxury goods market that had
prospered because of the major price variances among luxury goods within and outside of
China. In cases of some Swiss-made timepieces, the alteration in price can be as high as 90%
between Western Europe and China (Hancock, 2017).
The major players in the grey market are mainly professional shoppers, who are
travelling abroad in most cases for buying luxury goods in bulk. They take that back with
them home for selling those wares either openly or online, and it has went on to become a
business that is worth billions of US dollars. Back in 2016, the government stepped in to
combat the grey market by stepping up their customer control and raised penalties for false
declarations, which resulted in the increasing numbers of professional shoppers getting
caught. However, this is just a single part of the crackdown. Beijing has even presented
harsher taxation laws in major categories, with hiking tariffs on watches from 30% to 60%
and on jewellery from 10% to 15% (Master & Wendlandt, 2016).

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These tariffs are applicable on the goods that are legitimately purchased through the
internet and delivered in packages to China, and even on goods purchased abroad and
brought back to China. The government also put a cap of CNY100,000 (US$15,473) per card
on yearly withdrawals at foreign UnionPay cash machines. This is a huge issue for well-
heeled Chinese tourists who are into shopping at luxury department stores like Barneys in
New York, Galeries Lafayette in Paris and Harrods in London (Lopez, 2016).
Several brand leaders in the luxury goods industry were bewailing about the adverse
international trading conditions for a long time, and their influence on China’s previously fast
growing luxury goods market. This fresh crackdown over overseas spending by Chinese
shoppers is another headwind to face and might be the most disorderly one till date. It was the
hope of the Chinese government that higher tariffs would help durable luxury goods demand
in the domestic market (Roberts, 2017).
Chinese luxury consumer group
The enormous and creating number of Chinese luxury buyers can be credited to the
rapidly rising disposable family pay rates in China. The amazingly well off Chinese families
are clearly exceptional drivers of improvement for luxury and the prime concentration for
luxury brands. In any case, the rising Chinese middle-class, including families with pay rates
between USD 9,000 and USD 34,000, have transformed into the fast rising buyer divide in
China – they have transformed into the subject of much thought from overall brands (Aroche,
2015)
These new contenders, whom are generally arranged in second tier urban groups, spend a
considerable measure of their pay on luxury, using their purchases as pictures to demonstrate
their extending social and money related status, and their desires to accomplish status. In
spite of the way that middle-class customers spend less out and out than their wealthier

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accomplices, their numbers are adequately basic to solidly affect indicate luxury spending in
China. According to McKinsey and Company, the overall organization consultancy firm, the
Chinese middle class included 500 million people in 2015 (Barton, Chen & Jin, 2013). This
number is foreseen to grow more than 550 million by 2022, tolerating that people numbers
stay predictable (Atsmon & Magni, 2012).
An interesting typical for Chinese luxury customers is that they are comparatively more
young than their European and American accomplices – 45% of Chinese luxury buyers are
under 35 years of age, they are all around 14 years more energetic than their European
accomplices, and 25 years more young than their American accomplices (Cbbc.org, 2015).
The ordinary time of Chinese luxury customers is 33.1 years, with more than 80% of all
Chinese luxury purchasers between the ages of 25 and 44.
Women have transformed into a crucial rising measurement in the Chinese luxury goods
exhibit, which has for the most part been overpowered by folks in the region of 35 and 45
years old (Yi, Yuan & Kumah, 2013). This is because Chinese women are beginning to get
up to speed with men in numbers in the workplace, and thus are expanding more cash related
flexibility and societal position. In like manner, their getting power has extended, and they
are obtaining more luxury goods than whenever in late memory to repay themselves for
steady work and individual accomplishments. With 25% of Chinese women increasing more
than their male accessories, they now speak to three-fifths of the luxury goods publicize (Yi,
Yuan & Kumah, 2013).
Regardless of the directing of domestic luxury use, Chinese tourists are spending more in
luxury retail territories abroad. Of the 27% of total overall luxury purchases by Chinese
customers, it is assessed that almost 60% of luxury usage occurs outside the mainland and
abroad (KPMG.com, 2017). As voyaging twists up obviously less requesting and all the all
the more captivating, Chinese tourism has exploded, with the amount of Chinese tourists

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outperforming 80 million out of 2012. It is assessed that 72% of Chinese tourists purchase
luxury goods abroad, and Chinese tourism is transforming into a basic jar to neighborhood
economies around the world (KPMG.com, 2017).
Brand awareness in Chinese consumers
Another basic example in the Chinese market is the growing advancement of the Chinese
luxury client, as tastes of arranged buyers create with stunning pace. There is a perceivable
move of enthusiasm from luxury products showing logos to more minimized and exceptional
products, leaving comprehended brands like Louis Vuitton and Gucci endeavoring to remain
mindful of prior yearly advancement rates. This ponder is most obvious in tier one urban
groups, for instance, Beijing, Shanghai, and Shenzhen, where clients have been acquiring
luxury for a long time and are getting the opportunity to be perceptibly capable about shape
and curious about what the world sees as in vogue. These tenured shoppers are beginning to
focus on brand heritage, craftsmanship, and lack in their luxury purchases rather than obvious
logos doubtlessly demonstrating wealth (Ye, Bose & Pelton, 2012).
At the same time, significant amounts of the Chinese middle class are coming into wealth
where they can endure the cost of luxury shockingly. Along these lines, there is up 'til now a
strong enthusiasm for most likely comprehended, logo-decorated products that clearly
demonstrate their newly found status in the Chinese social chain of significance. As the
luxury goods market sections transversely finished wage levels and social classes, luxury
goods associations are standing up to new troubles in fitting their product portfolios to meet
distinctive slants, while meanwhile keeping up consistency and particularity in their brand
cachet (Zhan & He, 2012). The need to use luxury goods is a direct result of the Chinese
masses wanting to exhibit their anomalous condition of wealth to others. The rising gaining
power and the effect of Western lifestyles have upheld luxury consumption and thus some

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first class brands have extending their embodiment in China with a particular true objective to
misuse that condition. Nowadays, the best way to deal with be known among Chinese
consumers in the luxury market is through the web using digital frameworks and tools.
Indeed, social media and e-commerce hold a strong effect over Chinese luxury buyers. A
generous number of Chinese purchasers knew accurately what they'll purchase before they
arrive at the store due with 90% of respondents communicating they plan their purchases
early (Chiu, Ip & Silverman, 2012).
Motivation for consumption amongst Chinese consumers
Chinese buyers give watchful thought to the brand and country of-base of luxury goods
and tend to hold slants for without a doubt comprehended foreign luxury brands with surely
understood logos. Disguising any indication of disappointment go up against" could be a
basic method of reasoning fundamental Asian purchasers' strong desires for indulgences
regardless of the low ordinary pay. Gifting has been identified as another basic manner of
thinking in Chinese luxury product obtaining. Eating up exorbitant gifts reflects the social
chain of significance and furthermore upkeep of the agreement between collect necessities
and individual needs. Asians a great part of the time purchase luxury goods for relatives and
"package" families with luxury brands to display family wealth and status. Past research has
associated gifting to working up guanxi in the Chinese society. Guanxi, illuminated as social
ties, expect a key part in various walks around Chinese regular daily existences. Chinese
purchasers tend to assume that the all the more exorbitant the gift, the greater affirmation will
be grabbed, the more "face" will be gotten, and the better relationship will be proficient
(Zhang & Kim, 2013).
Chinese purchasers are existing the components of unmistakable, likeness, self-delight
and the journey for quality, which is advanced in the theoretical luxury consumption

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motivation. Meanwhile, Chinese purchasers in like manner have the refinement of the luxury
shopper motivation: they have little motivation of regular self-explanation, however are of
unprecedented vitality for the mission for materialistic play and superstar motivation. Here
we can see the impact of customary culture of Chinese clients for their luxury shopper
motivation (Ko & Megehee, 2012).
Chinese shoppers' luxury consumption motivation has the going with perceptible
components. To the exclusion of everything else, with respect to Western buyers, they focus
on individual organized consumption regard; Second, in regards to Western purchasers, they
focus on having a place individual immensity; Third, concerning Western clients, Chinese
shoppers have a tendency to use the products' or brands' picture, and the consumption to
express their class and status in people in general eye. Fourth, with respect to Western
shoppers, they focus on the principle properties of luxury, when the Chinese clients pick and
purchase the luxury goods; there are more group motivations to avoid the peril of buyers and
to meet the mass intrigue. Fifth, in the luxury consumption of Chinese purchasers, there is a
huge bit of them are used to set up their social relations as favors, to address social issues.
Finally, starting late, due to the hoarding of social wealth, and furthermore the impact of the
contemplation of consumerism and intemperance, Chinese buyers have begun to have a
particular measure of individual arranged luxury purchaser motivation, for instance, self-
happiness, fine quality and self gift (Jiang & Cova, 2012).
Overview and current situation of luxury discount village
The luxury discount village of Bicester, UK, was opened at Clarks Village in Somerset in
1993, the past site of the Clarks shoe mechanical office and not far from the Shoe Museum.
McArthurGlen, set up by Harvard-taught Joey Kaempfer, by then started copying US-style
outlet malls in Europe with centers like Cheshire Oaks close Manchester. Today there are

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around 30 outlets in Britain, all things considered, a middle-class space with idealistic brands
and the earth to match. Retail outlets are a beating position in a troublesome market. Most
UK outlet centers have had yearly sales improvement of 10 for every penny over the latest
couple of years, according to Jonathan Adams, senior head of retail valuations at property
consultants CBRE. That is before designs for buyer spending: the Office for National
Statistics said UK retail sales volumes rose 4.1 for each penny in September year on year.
Outlet malls have similarly beated full-price shopping centers in capital regard, as
demonstrated by CBRE, growing by 40 for every penny overall since 2012; full-price
shopping centers created by under 1 for each penny (Shannon, 2016).
As the outlets wind up observably higher-end, so do the shoppers. Regard Retail, the
proprietor of Bicester, the most upmarket of the UK's outlet malls, says the well off and
middle classes come to search for regard rather than discounts — a fine, perhaps solely
verbal, differentiate. Certainly, idealistic luxury shoppers might be less arranged to treat
themselves to a section price pearl on Bond Street — yet grabbing it decreased cost at
Bicester is one of a kind. With the view of directing overall money related improvement, an
unfriendly to corruption crackdown on self important "gift giving" in China and dread attacks
counteracting tourism to elsewhere in Europe, top notch members, for instance, Time and
Gems offer an appealing customer base and superior to anything normal edges (Seo, 2016).
A common criticism of outlet malls is the idea of the stock since shoppers are clueless
that products can be made especially to be sold in these outlets. Value Retail rushes to point
out stock is not "made for outlet" in the watch and fine diamonds part, yet rather is from the
brand's past gatherings or is a bit of an assurance of reconditioned stock. Some are watchful
this contemplates well the brands. Having halted or unsold stock to fill these outlet stores
proposes either poor stock control or associations creating especially for the outlets

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Impact of international tourism on China
The Chinese economy has moved toward becoming enormously all through the last ten
to twenty years, and all inclusive tourism to China is winding up fundamentally speedier. A
part of the reasons behind this gigantic improvement are the general advancement of tourism,
the Chinese open-door course of action, more persistent flights among China and whatever is
left of the world, and unprecedented changes in Chinese transport establishment, lodging
settlement and tourist attractions. Also in China, widespread tourism is viewed as a
techniques for pulling in foreign exchange and as a lift to money related advancement. When
measuring the impact of tourism, the primary issue is that tourism is not typically named a
singular industry. In dealing with this issue, tourists' uses per thing total must be cured for
foreign imports, and ought to be allocated to the conveying family unit industry. Basically
after these modifications, would one have the capacity to assess the quick impact of tourism
on, for instance, regard included or work. The second issue is picking the kind of
underhanded effects one wishes to consider and, immovably related, picking of the exhibiting
approach for assessing of the picked impacts. Various circumlocutory effects are caused by
linkages between tourism-arranged organizations and diverse undertakings. Packs into these
linkages overwhelmingly show that tourist establishments and tourism-orchestrated
organizations have strong in turn around linkages with giving endeavors, however forward
linkages with supplying industries are in every way that really matters truant (Xu, 2013).
Re-thinking in growth strategies by luxury brands
Today, the financial returns on several luxury shopping mall investments seem much less
lucrative than they were five years age. This is due to the slower economic growth that is
being specially felt in the interior of Greater China. Crucially, as shopping malls faces slower
footfall and as retail sales subside, the luxury brands would require rethinking their growth

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strategies for the interior. The implications for the luxury industry totally are possibly far
reaching, with the situation that China’s interior was previously viewed as a beacon of future
opportunity. In case we look outside of Greater China, a noteworthy piece of the positive
sales compel saw in 2014 and 2015 in the made regions was truly fuelled by wealthy going to
Chinese tourists. In any case, after the Chinese government ruined the renminbi in August
2015, China's outside spending power has become appalling. Added to that, the Chinese
economy is set to continue cooling. These two troubles solidified will no doubt influenced the
business' property sales mix, possibly setting off another move in overall wage control in
2016 (Carcano, 2013).
The impact of a weakening economy is most likely not going to keep rich Chinese buyers
from taking off to buy their luxury goods, be that as it may it might change their objective of
choice and also signify in-objective spend. Short-pull objectives, for instance, South Korea
and Thailand could get the prizes. In case Chinese purchasers cut back on outside trips help
far from home, by then we could start to see yet another move to be resolved of vitality
between the locale. Spending in North America, Western Europe and Japan could go down,
while spending in China could even go up. It is difficult to envision how the condition will
make later on. What we can state, nonetheless, is that, according to the examination, 2015
wound up being a champion among the most purposely fundamental years ever for the
overall luxury goods industry.

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Reference List
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luxury-consumer/
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2020
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