The one-child policy has caused a shift towards individualism and centrism. With millions of “only childs” entering adulthood, they have a strong desire to be unique and to differentiate themselves from their peers. To them luxury goods are a way to represent themselves and convey who they are as individuals. Therefore, many young Mainland Chinese buyers are particularly interested in exclusive and/or limited editions of handbags, watches, and fine jewelry.
China’s one-child policy has shifted a once communal social value system to one more similar to Western society where the focus is generally on the self. As a result, these one-child only offspring tend to be more self-indulgent than prior generations. This strong sense of self has translated into a fierce need to be unique and to effectively differentiate themselves from their peers. Panelists’ verbatims when asked why they purchased their most recent items include, “wanting to not follow others,” “to be myself,” “don’t blindly follow the trend,” “believe in my own taste,” “liking unique things” and “liking only what I like.”
Print is alive and well among Mainland China luxury goods consumers. Over 80% of panelists used magazines as their information source for designer handbags, watches and fine jewelry. However, magazine browsing is showing a declining trend similar to the magazine distribution decline in Western countries. It is the older generations that are keeping magazines afloat, the younger generations are moving to the web as their primary means of information gathering.
Discounting is the number one promotional tool that motivates panelists to purchase more designer handbags, luxury watches and fine jewelry. While most luxury goods manufacturers will recoil in horror at the idea of discounting their brand, it is important to note that our panelists were less concerned about the amount of the discount; they just wanted to receive “something.” Partly because of they acknowledge their position as luxury buyers in a global recession and partly because the Mainland Chinese love to bargain. Many Mainland Chinese obtain great satisfaction by feeling that they “got a good deal.” When interviewed, one panelist described an experience where she spent 10 minutes bargaining to buy a blanket and felt hugely accomplished when the vendor agreed to lower the price by $1 dollar.
The days of using Mainland China as a dumping ground for excess inventory are over. Luxury goods companies can leverage Mainland China consumers’ desire to be unique and stand out from their friends by offering limited edition and the “latest and greatest” to their Mainland China boutiques. Importantly, they will buy if they know that the item is in limited availability (e.g. only available for purchase in Tokyo, New York, Paris and Shanghai or Beijing, but NOT Hong Kong…)
In our original recruitment, there was a group who had not purchased a designer handbag, luxury watch or piece of fine jewelry over the past 12 months. While this group was not part of our main survey and associated key findings, we wanted to understand this group better and issued a short follow up survey to better understand their attitudes towards these luxury items. Interestingly, the majority of respondents indicated that they had purchased something from the list of brands provided in the survey. 77.8% of respondents indicated that they purchased beauty and/or fragrance items. Importantly, 100% of respondents said that they were planning to purchase additional products from the same brand. Handbags were the top item cited as the next product to be purchased. Not surprisingly, beauty products ranked second.