How Can International Luxury Brands Navigate the Evolving Chinese Digital Landscape?


Alexander Wei | April 02, 2021

Credit: Alibaba

Faced with the fast-growing Chinese luxury market, global brands need to first understand the market landscape in order to deploy strategies that are truly localised.

On the occasion of Tmall Luxury Pavilion’s third anniversary, Alibaba France recently organised a webinar entitled China and Luxury: Major Trends and Sharing of Experience. Hosted by Laura Pho Duc, Head of Marketing and Communications at Alibaba France, the webinar included presentations and discussions featuring Nicolas Cano, Head of Business Development at Tmall Luxury France; Pablo Mauron, Partner and Managing Director China at DLG (Digital Luxury Group); Kenzo’s Chief Client & Digital Officer Bruno Alazard; and Nicolas Santi-Weil, Chief Executive Officer of Ami, and revolved around the China digital ecosystem and trends in the Chinese luxury market.

While luxury sales elsewhere in the world remain sluggish because of the pandemic, demand has been picking up in China – partly due to consumer confidence following the country’s effective control of the pandemic’s local spread, as well as the continued investment in China by global luxury brands.

According to Bain, China will account for half of the global luxury goods spend by 2025. Brands banking on this market need to first understand the Chinese market and its consumers, then deploy relevant local strategies to capture their attention and drive sales.

Luxury E-commerce Traction

Launched in 2017, Luxury Pavilion’s increased traction with brands reflects international luxury brands’ determination to move forward with their digital transformation in China. As luxury brands gradually tap into China’s online sales channels, this section within Tmall dedicated to luxury goods now has more than 200 luxury brands across various categories such as fashion, beauty, watches and jewellery, and lifestyle. On top of that, international third-party luxury retailers such as Net-a-Porter and Farfetch have also established a presence on the platform, consequently expanding the brand portfolio of Tmall Luxury.

Tmall Luxury now has over 200 luxury brands on board

The luxury consumer experience has undergone a dramatic shift in recent years, and COVID-19 has only served to exacerbate it. “Luxury Pavilion’s strategy is to cater to the fairly new 360-degree experience needs of the customer,” says Cano. In a bid to distinguish itself from traditional luxury e-commerce, Luxury Pavilion is no longer just about closing transactions. It also focuses on developing exclusive and personalised product offerings, customised content, loyalty programmes, and offers brands tailor-made storefronts and related marketing strategies.

With 80 per cent of consumers on Tmall Luxury Pavilion platform under the age of 35, the platform has been upgrading the consumer journey through different digital innovations in order to address changing consumer behaviours. “All customer journeys offered via the application responds to the brand’s environment while integrating the codes of user experiences in China, and truly connects with the consumption models and consumer trends of young consumers, especially in China,” says Cano.

China’s Sophisticated Digital Ecosystem

As the China digital ecosystem evolves over time, both social platforms such as Weibo and WeChat and marketplaces like Tmall are becoming progressively multi-faceted, spanning even more touch points along the consumer journey. This not only changes the way consumers interact with the platforms, but also significantly alters the requirements of these platforms in terms of content. At the same time, as consumers become increasingly discerning their expectations of the content they interact with also grow. This creates a significant challenge for brands.

“Purely relying on global communication assets will not allow brands to fully meet the expectations of Chinese consumers. They expect personalised elements that take their preferences and culture into consideration,” says Mauron.

As such, brands need to produce more localised content on Chinese social platforms that fits the platforms’ content standards and is in line with audiences’ tastes and preferences. A good example of this is Gucci’s collaboration with Chinese rap group Higher Brothers on a video produced exclusively for Douyin. In doing so, the brand not only managed to present its new collection in a fresh and different way, it tapped into the younger generation’s preference for trendy short videos while being in line with the platform’s tone.

Besides keeping up with social trends, content is also key to driving conversions on transactional platforms such as Tmall. As a content and experience-rich platform, brands need to offer more than just product listings on their Tmall storefronts, and produce content that will allow users to discover the brand and engage with it. The demands on this platform are especially great as well, given China’s fast-paced local marketing calendar.

The digital ecosystem in China is increasingly segmented, with every channel and platform intertwining. Mauron notes that “it is extremely important to have very clear objectives and make each of your channels function based on the goals you hope to achieve on it.”

How Can Brands Ride This Wave?

The opportunities in China are significant, but the path to success is not an easy one. “I think that one of the challenges for a brand that is not supported by a group is to really understand how to ‘crack the market’ given the complexity and variety of China,” says Santi-Weil. He noted that Ami quickly realised that it was not a job that could be done alone, and that it required the help of partners in the market.

Given China’s intense consumer calendar, brands also need to learn adapt to the pace of these local marketing milestones – especially given the results that often come with it. Taking China’s biggest online shopping festival, Singles’ Day as an example, Alazard notes that Kenzo was surprised by the increase in its performance after participating in the event. That said, the biggest lesson it gleaned from the experience was to “anticipate”, especially given the amount of work that goes into making a shopping festival on this scale a success. It was Kenzo’s first time taking part in Tmall’s Singles’ Day last year, and the brand plans to give itself ample time to prepare for the 2021 edition of the online shopping extravaganza.

Alazard and Santi-Weil also discussed new online consumer trends – such as livestreaming – that have emerged in China in recent years and influenced markets outside of China as well. Santi-Weil remarks that in the past, brands might have only regarded China as a country for sourcing or manufacturing. But today, China represents the future of the industry. This shift in mindset is a consequence of the digital revolution that has swept China in recent years, changing consumer behaviours and the way brands approach commerce in this market. And as the digital landscape in China continues to evolve at a fast clip, it is on brands to keep pace with the changes and adapt quickly in order to stay relevant.

Cover image: Alibaba

China | Content | Marketplaces | Social Media