Kering, the second most important luxury group in France, which includes prestigious brands such as Gucci, Balenciaga, Bottega Veneta or Yves Saint Laurent recently sued Alibaba for letting counterfeited products being sold on their different E-Commerce platforms (Tmall, Taobao, Alibaba and Aliexpress). Not only Kering is adopting a radical solution but they are also claiming that Alibaba is encouraging the sales of this kind of products, in order to generate profits.

A faux-pas from Alibaba.

Choosing such a solution will affect the commercial relationships between these 2 important groups. Alibaba’s Jack Ma is strongly regretting this decision, saying he would have prefer Kering to work in cooperation with them and find a solution all together. The commercialization of counterfeited goods is raging on Chinese E-Commerce platforms, what strategies can be adopted by luxury brands to counter this tendency?

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Establish consistent Price policies

Did you know that luxury goods in China are on average 51% more expensive than in Europe for example? Prices variation are a huge issue for consumers, they will automatically seek for the more affordable solution they can have. Indeed, not all Chinese consumers are part of the middle class or higher and can afford vacations to foreign countries just to do some Luxury Shopping.

Adapt the brand to the local culture

Offering adapted products is highly valuable for consumers, they will feel exclusive and important. Cosmetics already understood this need but there is still work to do. Maybe a more customized product will convince a consumer to pay higher for it than to the global model already worn by a ton of people around the world.

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Make sure to have strong relationships with E-Commerce actors

Unlike Kering, you should make sure to work with E-Commerce giants such as Alibaba, JD.com… It is highly important, knowing the size of the market in China. The first E-Commerce market is seeking to improve its offer giving it a more Premium range. More and more luxury brands are looking to settle on these platforms such as Burberry or Sephora. Online Shopping is slowly replacing “Normal Shopping” in China, a luxury brand should then seize the potential of this.

Always stick to your brand image

Only have your products available on the Chinese market is not enough, you need to create a real presence on the market so that consumers can be aware of your brand, what you represent, which values you want to share. Having a brand image is essential and even more on the Chinese market where this kind of strategy can really change the way you sell on the market.

Like the brand Burberry which brand image didn’t suffered when they opened a Tmall store, because they managed to stick to their values, their authenticity by communicating with consumers on Chinese social platforms, by adopting a story telling strategy…

If you don’t have the right strategy it is easy to fall and miss your chance on the Chinese market, especially when you are a Luxury brand.

Further reading