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Chinese Luxury Market Essay

909 words - 4 pages

In 2005, Ernest & Young published a report on Chinese luxury market stating China has become the world’s third largest consumer of high-end fashions, accessories and other luxury goods and accounts for an estimated 12% of global sales (Young, 2005). Along with other similar reports on the booming growth of the Chinese economy and the luxury market in particular, many of the luxury brands originated from Western countries such as France, Italy and United Kingdom has already tapped into the market, those who haven’t already has plans for it are starting to do so. Although many reports have expressed the importance of the Chinese luxury consumption, large disparities exist; some say China accounts for 12% of global sales, some say 8% (Young, 2005; Movius, 2005). According to Zhu & Wang(2005), although inconsistency in data exist, most reports come to similar conclusion that China is the third largest luxury market and it is expected to grow and become the first in 2015 (Sachs, 2005) with the amount of consumers rising from 175 million to 250 million in 2015 (Young, 2005).

The future of the Chinese luxury market is undoubtedly promising, however it is important to realize that the current market is in fact smaller than imagined and the size still remains limited, with only 3% of the global sales took place domestically in China while more than half of the total sales happened abroad (Movius, 2005). Luxury brands that have placed their focus highly on emerging market due to the continued growth of the luxury industry should be aware of the fact and hence develop responsive marketing strategy instead of transferring the same traditional strategy from the western world (ChinaDaily, 2011). As the market is far from mature (Anestis et al, 2009), it is beneficial to establish an appropriate marketing strategy corresponding to the local customers’ need. It is more important to build a good long term relationship with Chinese customers comparing to the West due to its fundamental beliefs in long term orientation (Lee & Dawes, 2005). The cultural concept that has supported the rising trend that does not apply elsewhere in the world should be investigated clearly.

It has always been an obstacle for Western marketers to recognize the relative importance of the various cultural concepts that influence consumers in the Eastern markets. Anderson & He (1999) pointed out that this understanding is particularly essential for business that are already mature in developed countries but in the introductory or early life cycle stage of other target countries. Marketing mix should be adjusted accordingly due to different consumers’ need; higher attention to local responsiveness is required in emerging market, especially China (Fryxell, Butler, & Choi, 2004). Most multinational companies have relied heavily on the Hofstedes (1980)’s model in analyzing host country’s culture, however, some have...

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