Chinese Consumers Eager To Purchase Luxury Goods – KPMG Report

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Over 70 per cent of Chinese consumers plan to head overseas once the country’s quarantine policy is lifted, new research from KPMG shows.

The rapid urbanisation and economic development of mainland China
has led to a booming luxury market, and purchasing habits of
consumers have become more complex than ever, a report released
this week by KPMG

According to the report, Chinese consumers are eager to purchase
luxury as a means of social advancement and self-differentiation.
They are also highly accustomed to shopping during their travels,
with over 70 per cent of Chinese consumers planning to travel
overseas after the lifting of mainland China”s quarantine


The 2023 KPMG and DLG report on China Luxury Redefined:
Building trust with Chinese consumers through authenticity and
is based on a survey of 2,653 consumers living in
mainland China and Hong Kong. 

In the study, KPMG identified key takeaways for luxury brands to
consider in targeting the evolving Chinese consumer, including
being purpose-driven, respecting local culture, leveraging
digitalisation, understanding the new luxury concept and
capitalising on Gen Z growth. 

The report also draws upon insights from in-depth interviews with
executives from the luxury industry to supplement the


Willi Sun, head of advisory, consumer and retail, KPMG
China, said: “Given the rapid development of the country
throughout the years, Chinese consumers are evolving fast and
have developed a global perspective within a relatively short
period of time compared with other mature economies. The
definition of luxury among Chinese consumers may not always be
the same as how the West views luxury.”


Purchasing power is a critical factor in the ability to buy
luxury items and drives the development of consumer mentality,
KPMG said in a statement. 

According to the survey, Chinese consumers were found to have the
confidence to spend, with increased income and economic
development allowing for greater purchasing power and thus a
growing appetite for luxury goods. 

They are eager to purchase luxury as a means of social
advancement and the expression of personality, and are highly
influenced by media content in their purchasing decisions.


Gen Z is rapidly becoming the largest consumer base for luxury
brands, and their propensity to consume is quite strong, KPMG
added. Based on the survey, 21 per cent of Gen Z survey
respondents are willing to spend more than 16 per cent of their
income on luxury – a relatively large proportion for individuals
who have just completed their first degree or recently entered
the job market. Their preferred channels for purchasing are key
e-commerce platforms and brand official channels.


Following nearly three years in relative isolation, massive
shifts in the global luxury market are to be expected once
leisure travel for Chinese shoppers resumes as well, KPMG

A couple of phases can be expected during this reopening process,
the firm said. The first phase will be a period of transition
where actual travel might be slow to pick up, and a second phase
is expected to kick in when travel truly resumes. Covid-19 has
irrevocably impacted the shopping patterns of Chinese consumers,
and an immediate rebound in spending and return to old habits is

However, an adjustment in the proportion of domestic and
international luxury spending can be expected. At the same time,
when international travel resumes for Chinese shoppers,
additional questions related to consumer data collection and the
reactivation of these shoppers when they return to China will
also resurface.


While WeChat has been the most appealing platform in China for
CRM because of its advanced data collection capabilities which
allow for better consumer segmentation and more effective life
cycle communications, international brands in the market do not
always have the right infrastructure in place.


Pablo Mauron, partner and managing director of China, Digital
Luxury Group, added: “Global brands have been able to get by with
a somewhat extended version of their global CRM infrastructure in
China until the Personal Information Protection Law came into
effect in 2021.” 

“With these new regulations, brands now have to completely
rethink their consumer data infrastructure to both meet local
regulations and maximise performance – something that is
exceedingly important at a time when customer retention and life
cycles have become a growing focus for brands,” he continued.


Young people are also increasingly adopting an environmentally
friendly lifestyle. This trend is reflected in the increased
demand for sustainable travel, with the consumer survey
indicating that 90 per cent of mainland China respondents agreed
to put more effort into achieving sustainable travel. 

According to the survey, the younger generation places a higher
importance on sustainability and corporate responsibility when
making luxury purchases: 30 per cent of surveyed consumers aged
between 18 to 24 think it is a key consideration, compared with
only 16 per cent for those aged between 45 to 54.


Jennifer Weng, head of tax, consumer and retail, KPMG China,
said: “Mindsets of Chinese consumers may change due to external
factors such as relevant policies on ESG and brands’ initiatives
around consumer education. Some of these top-down actions are
pushing consumers to think and act differently than they would
have without this influence, leading to higher awareness and
different purchasing behaviours.”


The definition of luxury is also changing, KPMG said. The study
found that corporate responsibility was the second most important
factor in potentially changing consumers’ purchasing habits and
mentality. In addition, when preferred brands are found to
conflict with a consumer’s personal beliefs or values, more than
40 per cent of respondents will stop purchasing from those
brands, and even persuade others to do the same.

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