China’s luxury marketplace has become a strategic operational imperative for global prestige brands. Western brands need to learn to approach emerging Chinese consumers as equals, understanding their unique worldview and embracing their newfound empowerment. China is already the second largest luxury market in the world, and with more than two million millionaires today, is on its way to becoming the world’s largest luxury market by 2020. A brand simply opening their doors to Chinese consumers is not enough to make them spend their hard-earned renminbi. Winning over Chinese consumers requires looking at the China consumer opportunity on a global basis, not country by country.
In December 2012 Bain & Co. reported that Chinese consumers have overtaken U.S. shoppers to become the world’s biggest buyers of luxury goods. The Chinese now account for 25% of global sales through purchases at home and overseas according to the consultancy firm, as U.S. consumers account for one-fifth of the world’s luxury sales China’s domestic luxury sales, estimated to be worth 106 billion yuan ($17 billion) in 2011, are expected to grow 7% this year – a marked slowdown from 30% growth in 2011. In 2012 it also became clear that more and more Mainland Chinese tourists are shopping in cities like London, New York and Paris, where they can save as much as 40% on luxury goods because of the weaker euro and on differences in tax or duties.