China’s Luxury Consumers, Once Obsessed by Status, Increasingly Motivated by Taste and Enjoyment

July 22, 2010

2010 China Luxury Forecast unveils latest consumption trends

Conventional thought on China identifies status as the key driver for luxury purchases. The stereotype is of a shopper looking for the biggest logos and making the most ostentatious displays possible. The real story, however, is quite different with enjoyment and taste the main emotional driversbehind luxury consumption, according to the 2010 China Luxury Forecast.

Following the successful debut of the China Luxury Forecast in 2009, Ruder Finn Asia, one of the world’s largest independent public relations firms, and renowned Asian market research institution Albatross Global Solutions have launched the report’s second edition, which reveals a market that is becoming not just more sophisticated, but also more complicated.

The survey for this year’s China Luxury Forecast polled 10% more luxury consumers than last year, and includes Taiwan for the first time, in addition to Hong Kong, Shanghai, Beijing, Guangzhou and 17 second-tier cities in Mainland China. The average income of those surveyed was approximately RMB250,000.

The China Luxury Forecast examines the key trends in China’s luxury sector, focusing on the factors that will most influence the market, such as purchasing power, key motivators and information channels. With a better understanding of luxuries, Chinese consumers are becoming more discerning in their buying, and the report offers some startling insights into the future possibilities for online retail.

Purchase motivations

Consumers are becoming more sophisticated

Conventional thought on China indentifies status as the key driver for luxury purchases. However, our data suggest that “status” isn’t the most important factor, and that China’s wealthy are increasingly looking to bring pleasure into their lives. Two-thirds (65%) of shoppers buy luxury products because of the enjoyable experience they bring, and 55% indicate the importance of demonstrating “good taste” through luxury purchases, to distinguish themselves from the nouveau riche. Thus, enjoyment and taste, as well as status, emotionally drive Chinese luxury consumers.

Mainland China’s culture of gift-giving remains a distinctive feature of the luxury market

Among all respondents, 29% said they bought luxury goods as gifts for friends, and 28% bought luxury gifts for business partners. While personal use is still the primary use of luxury products across all Greater China markets, this year’s report demonstrates the enduring importance of gift-giving, especially for business purposes, in the luxury sector.

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