Who are the consumers of luxury goods in China? 

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China is now the 2nd luxury market in the world, only next to Japan. But China is also the most promising market for the luxury industry. All major luxury brands in the world are focused on this new Chinese market that dominates more than 15% of global consumption of luxury goods.

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luxury consumers

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Party members

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Party members

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Consumption of luxury goods has been historically for males in China, because the only people who could buy these rare products have long been party members.

This demand for luxury goods was often the result of the corruption of civil servants who amassed personal fortunes for decades.

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Wealthy Chinese

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Wealthy chinese

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In this picture you can see Mr Zong who is the richest Chinese with an estimated fortune of 12 billion $.

320,000 Chinese are millionaires and 60 are billionaires in USD.

These people – mostly men-  took advantage of the opening of China to free trade since the Deng Xiao Ping reform of China in 1978. In ten years they benefited a lot of the fact that China moved toward a market economy.

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Why are they important consumers of luxury goods ?

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To put it in a nutshell wealthy people in China are consumer of luxury goods in order to foster their Guanxi and because luxury good will provide them “face”.

Guanxis is the social networks. The more influential people you know in the business world or in the public administration, the more sucessful will be your business.

Business gifts to politicians and businessmen continue to be a major cause of the demand for luxury products. Alcohols, such as Moutaï or Chateau Lafite took advantage of the high demand for this reason.

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Who are the consumer of luxury goods in china

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The Face: how society perceives you as a person with high status. Wealthy people like to show their wealth and confirm their social status.

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White-collar workers

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Chinese executive

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Managers in China is composed of an rapid expanding wealthy middle class of 150 million Chinese and are potential buyers of luxury goods. Regular customers of luxury are estimated rather between 25 000 000, slightly more than 1% of the population.

This social class tends to grow and should be in the coming years the leading consumer of luxury goods in China.

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Chinese mistresses

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 chinese mistress

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Nicknamed  “ErNai”, “XiaoSan” or “XiaoLaoPo”, they are more common in the South of China where every business man who respects himself must have several mistresses, who will take good care of him one or two days per week, or during his business trip or travels.

These mistresses are fond of luxury goods and ask their rich lovers to buy them such gifts. In China, you can often see an old and rich Chinese man coming up with a pretty girl at a Cartier or Louis Vuitton store without any shame.

You can also add to mistresses prostitutes or escorts girls found in KTV places or other place of entertainment that are crazy for cosmetics and clothing luxury brands.

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Chinese tourists

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chinese tourists

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The Chinese tourist are well known to be greats buyers of luxury goods. During their trip abroad, they will buy handbags, jewelry, watches and other luxury goods they could hardly find in China in order to testify that they visited such places.

Countries like France, Italy and Great Britain are the biggest beneficiaries of this luxury oriented tourism.

Shopping is the main occupation and source of spending abroad for Chinese tourists. Hong Kong, where taxes on luxury goods are 30% lower than mainland China is also one of the main destination of Chinese tourists.

Despite the fact that they often have a rather low purchasing power, many Chinese tourists will adopt  surprising attitudes to  save large sums of money to pay  their Louis Vuitton’s bag. They are a target of choice for the next future, as their number is expected to increase.

It is important to notice that the average age of Luxury consumers (34 yo) in China is rather low in comparison with western countries. Many young Chinese are fashion victims and fans of luxury brands.

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More information on the sector of luxury goods in China

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Marketing to China