The luxury brands with the deepest pockets are wowing Chinese luxury consumers. However, the problem is that many luxury brands are not able to keep up because of the expensive demands of China’s ultra rich. The target is on those who spend more than around $158,000k on luxury goods and services.
So what fancies the Chinese luxury consumer these days? One recent night, the ballroom at Hong Kong’s Grand Hyatt hotel was transformed into an elegant Parisian salon. Several dozen very wealthy families from all over China were flown in for a weekend of cruises, property tours and a gala auction. Chow Tai Fook (CTF), a Hong Kong firm that is the world’s largest jeweller, paid the bill.
Adrian Cheng, an executive director at the firm and scion of CTF’s controlling family, put it all together to reward customers who spend over 1m yuan ($158,000) a year. Many come from the provinces in and around Beijing, Mr Cheng whispers: “closer to power and money” than Shanghai or Shenzhen.
A new report from CLSA, a stockbroker, forecasts that more than half of this year’s growth in luxury goods will come from China, where sales are set to soar by 24% in 2012. The country is already the largest market for jewellery after America, and for gold after India, and is gaining fast on both leaders. Prada and Gucci owe a third of their global sales to the rich in China. CTF saw same-store sales on the mainland shoot up by 45% from April to September last year.
Even in provincial cities like Kunming, the rich routinely expect luxury shops to pamper them with cocktails and massages, says Francis Phua of DKSH, a consultancy. However, these days China has so many people flashing gold and platinum cards around that the seriously wealthy expect luxury firms to treat them to ever more exotic and exclusive events, to maintain their sense of superiority. CTF has taken its “VVIPs” on junkets to Paris Fashion Week, on helicopter tours and rare-wine tastings.
What can one do to attract Chinese ultra rich to adore their luxury brand without gifting the entire store? Luxury brands are taking a fluff approach to capture the China luxury market same as like gifting luxury magazines for fluff media publications. Is it a smart luxury PR move to pay the luxury consumer to buy luxury goods?
The missing element to target Chinese luxury consumers is good old fashion luxury brand engagement. The very best luxury consumer is always well informed and ready to make a purchase for specific luxury goods. If more luxury brands focused on brand awareness and engagement the end result would be a demand for luxury goods. Buying the luxury consumer to make high-end purchases is not a sustainable solution.