End of April 2021, The Luxury track participants capped an enriching 5-day virtual trip to China that left many in awe of the skill and prowess of the movers and shakers in the luxury industry’s most valuable market. The cohort was fortunate to meet top executives, many of them were ESSEC alumni, at a range of companies including Ykone, LVMH Fashion Group, Cartier, Chanel, Tory Burch, Estee Lauder, L’Oreal Luxe, Moncler and Roger Vivier. The speakers from these companies brought a wealth of knowledge providing insights into a dynamic, fast-paced and ever evolving market.
The topics covered during the week started with an introduction to the Chinese market, digital ecosystem and e-commerce players before moving on to market strategies, trends and predictions. We were also fortunate to learn first-hand what brands are doing to build and retain brand value and engage consumers.
Below is a short recap of some of the key takeaways of the trip:
The Importance of Consumer Engagement & Gen Z
There’s no question that Chinese consumers love luxury products but with so many options available to them topnotch consumer engagement and quality service across touchpoints can be the key differentiation for a brand to retain clients. Many a speaker stressed the value they place on providing their clients with quality service throughout the consumer journey. A key touchpoint is online presence. To engage consumers luxury brands need to ensure their presence on the popular social apps unique to the Chinese market.
The average Chinese luxury consumer is 28 years old and spends three to five hours a week researching luxury products online. One of the tasks’ brands face is appealing to the young Gen Z consumer group. Brands leverage a number of tactics from exclusive collaborations to content creation with key opinion leaders or KOLs (the Chinese term for influencers) for the different social platforms popular with Gen Z. The strategy is to meet the consumer where they are and foster brand loyalty at an early age as a skillful investment to help ensure the longevity of the business.
The Digital Landscape of China
To do business in China it’s imperative to understand the digital ecosystem that permeates the everyday lives of Chinese people from super apps to e-commerce platforms. The recent Hootsuite and WeAreSocial Q1 2021 report shared that China has a population of 1.4 billion of which 930.8 million are active social media users, an impressive 64.6% penetration. The average Chinese internet user has 7 social media accounts.
The established players in this ecosystem are Baidu, Alibaba and Tencent. Baidu is a popular search engine akin to a Chinese version of Google. Alibaba is an e-commerce giant that owns the popular platforms T-mall and Taobao. Tencent is the creator of the super app WeChat. It is the most popular app in China with 1.2 billion monthly active users. Additionally, many experts cited the game changing company Bytedance, developer of the apps Douyin and its international counterpart TikTok.
It is eye-opening to understand the role of the different social apps like WeChat, Weibo, Douyin and Little Red Book. Together these companies provide platforms for Chinese consumers to connect on social media, follow celebrities and influencers, shop, pay bills, chat with friends, create social media content and look for product reviews. Luxury brands use these same apps to connect with consumers. Brands use the apps to livestream, launch mini-programs, video channels, work with celebrities and KOLs. The cohort was privilege to hear firsthand from both leading agencies and brands on the how they leverage these apps to engage with consumers including some fascinating videos and case studies that really brought to life the work brands do and the results it generates.
Nestled in this ecosystem are e-commerce platforms of Alibaba and JD that have fueled an e-commerce revolution with effects that ripple beyond China and into the surrounding region. Alibaba is credited with popularizing the shopping festival known as 11.11, a single day shopping event that generates more sales than the USA does for Black Friday and Cyber Monday combined. It’s a testament to the spending power of the Chinese consumer.
The week was a thoroughly engaging and enriching experience and it’s not over yet with more China focused conferences scheduled for early June. We’re looking forward to it.