In the image below, a line forms around the Louis Vuitton store in China. You might wonder, is it having a sale? But if you know Louis Vuitton, it never has a sale.
These people are lining up to buy from this luxury brand. One news report said China’s luxury goods consumption accounts for 25 percent of the global market, which makes China the world’s second-largest luxury goods consumption market after Japan. In 2011, China spent RMB (Chinese currency) 270 billion on luxury goods, with an annual growth rate of 25 to 30 percent.
And it’s not just fashion. China also surpassed the United States as the luxury carmaker BMW’s largest market in the first quarter of 2012.
Bain & Company revealed that Mainland China ranked in the top five luxury consumption countries in 2010, while Greater China (Mainland China, Hong Kong and Macao) ranked among top three. Just a few years ago you could only find a few luxury brand stores in Shanghai and Beijing, but today, luxury brands are quickly expanding into China.
China’s Internet population accounts for 25 percent of the world’s Internet users, so it’s no surprise that Chinese consumers use the Internet as their main platform when seeking luxury brand information.
According to a report, when consumers want to purchase a luxury good, 52 percent search for product information and prices on the Internet first. According CIC’s data, which is one of China’s main social media data research agencies, the handbag is the most popular luxury item on the Internet.
Influencers also play an important role in luxury brand communication in China. About 20 percent of them generate 80 percent of the content on the Internet about luxury brands.
Besides buying searching and buying products online, China has a unique Internet luxury culture. First, Chinese consumers like to show off their purchases on the Internet and post their luxury good photos on Weibo, forums and SNS.
Second, Chinese consumers like to discuss international online shopping and shipping experience on the Internet. Lastly, online fashion shows are prevalent and are becoming the new way to absorb fashion trends.
Brands, on the other hand, are leveraging Weibo to communicate with consumers. CIC’s data reveals Chanel was the most mentioned brand while Burberry is the most active luxury brand on Weibo.
In April 2011, Burberry showcased its Prorsum collection 3D show in Beijing. Burberry leveraged Weibo to broadcast this show through tweets, photos and a 3D video after the event. Meanwhile Burberry partnered with two influencers to promote the Prorsum show live.
One influencer was the editor-in-chief of l’officiel China and the other was a Chinese film actor. They used their Weibo pages to broadcast the Burberry show, which increased brand awareness in China.
In addition to the show, Burberry utilized its Weibo page as an interview platform. They posted a video of Christopher Baileys, Burberry’s Chief Executive Officer, answering selected fan questions about the brand’s design concepts. The video was forwarded around 5,000 times.
Besides Weibo, Burberry set up other social media channels in China which include Burberry Youku page (akin to a YouTube brand page), Burberry Kaixin001 page (akin to a Facebook brand page), Burberry Douban page (a brand page on a forum) as well as a Burberry Jiepang page (akin to a Foursquare brand page).
As luxury brands continue to sell in the Chinese market, they’re also entering the social space. Social media is increasingly playing a large role and becoming a new outlet for luxury brand to communicate with consumers and stay connected with them in China.
Sam Yu, Emerging Market Specialist, also contributed to this article.