China’s luxury good market is the second largest luxury goods market in the world behind the United States and is expected to become the largest market for luxury goods in just five years. The luxury good market in China was valued at 9.4 billion U.S. dollars at the end of 2009 which accounts for 27.5% of the world’s luxury goods market.
As the larger cities in China become more populatedwith luxury good outlets and stores, the competition continues to heighten and companies have begun to turn to smaller cities in the country as an opportunity to sell luxury goods. This trend is where cities such as Shenzhen and Macau provide businesses with a new market for luxury goods. It is important to recognize the growing market for luxury goods in these second tier cities because thesecitizens have more restrictions on their visas whereas first tier city citizens have the ability to do their shopping abroad.
The specific target market for the luxury good market in China is known as the “Chinese Elite”. The age for this market is between 25 and 45 years old and includes both males and females with the average of Chinese millionaires being of only age 39. Popular cities where theluxury good market exists are Shenzhen, Shanghai, Beijing, Tianjin, and other various economic hubs. Characteristics of the “Chinese Elite” market are those whose monthly personal income is at least ten times that of the average national income and hold managerial, entrepreneurial, and professional positions within a company. Lastly, the education of this market includes those who have at least abachelor’s degree with many having earned a Master’s degree.
However, the chinese mainland luxury market is still in its formative stage. As chinese consumers turn toward luxury goods as a means of rewarding themselves for their success or as a token advertising their wealth, analysts believe growth in the world’s most populous country could boost Asia’s share of world luxury sales to 60 percent.China may however prove to be quite unlike any other developing market. Rapid change has become the norm, and as such, the past may be a poor predictor of future trends.
6. OUTPUT & FINDINGS: MID-TERM
Call it a reaction to years of austerity, but China is the world’s second largest consumer of luxury goods, excepted to surpass Japan, by 2015. In such fast‐growing and young market, companiescan do much to shape the taste, spending habits and loyalty of consumers.
Moreover, rising internet penetration levels, heightened digital literacy rates and greater trust in electronic payment systems are going to increase e‐commerce revenues in China $73.5bn in 2010.
Concretely, China’s online population grew by 28.9% in 2009. The percentage of the Chinese population that has access to theinternet has surpassed the entire population of the United States. While the United States internet market is nearly saturated, China has an immense opportunity for growth, especially in the rural areas.
It is estimated that only 8% of rural Chinese are completely disinterested in the internet, while all others have a curiosity in terms of what the internet has to offer.
Given these factors,China is becoming a huge market for Web search tools. Companies need to invest more heavily in digital and social media advertising at risk of missing out on a potentially lucrative (and relatively low‐cost) method of reaching and creating new customers, as digital is a tool of deepening engagement and building long‐term relationships with consumers. In addition,
Chinese consumers are increasinglybeing influenced by digital media.
For instance, there is a reported correlation between the growth of e-commerce in China and sales of luxury goods. Online shopping only accounts for 3% of total sales in China, but this statistic shows extreme opportunity for companies to enter and expand into the market.
In 2009 there was a 20% growth in e-commerce which shows that the sector is sharply...
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