After a dip in 2022, Deloitte forecasts that China’s luxury market will hit RMB580 billion this year, accounting for 25% of the global total. Furthermore, China’s market share is expected to rise to 40% by 2030, surpassing Europe and the Americas to become the largest single market globally.
This will be driven by the continued consumption willingness of high-net-worth individuals, new incremental volume brought by the post-90s generation, extended reach through online channels, and the optimization of pricing, products, and marketing by brands. Jewelry, watches, and bags are the strongest-growing segments due to their investment potential and asset preservation, the rarity of their brand and design elements, and versatility.
Tianbing Zhang, Deloitte Asia Pacific Consumer Products & Retail Sector leader, says, “In 2023, China’s luxury sector is on a trajectory for a robust recovery, solidifying its position as a critical market in the global brand landscape. Our analysis indicates a maturing Chinese consumer base, where luxury items are increasingly seen not merely as social capital, but as assets for personal enjoyment and long-term investment. On the channel front, the accelerated digital transformation of China’s luxury marketplace has elevated online platforms into indispensable touchpoints along the consumer journey. Looking ahead, the future competitive advantage for brands will hinge on deploying diverse and innovative content strategies.”
Multiple touchpoints, rich content, and a complete value chain in China’s digital landscape are building a distinctive local luxury ecosystem. Chinese luxury consumers are shifting to more diverse online platforms, with 53% having purchased via online channels, including official brand websites (48%), official flagship e-commerce stores (43%), content platforms (39%), and luxury e-commerce platforms (26%).
Online content platforms have become integral to the luxury consumer journey, with 34% of consumers believing short video product descriptions are more detailed and 28% stating that short videos have richer content. Apart from product reviews and unboxing, Chinese consumers also want to understand the story behind a brand. Short videos and livestreams are the best carriers for this authentic content with stories, surprises, and fun. Thanks to its distinctive content creation and distribution system, Douyin has amplified the luxury industry’s voice within its ecosystem.
Xueqin Wang, vice president of the Ocean Engine Consumer Goods Business Center, adds, “In recent years, the digitalization of the global luxury market has been transformative, fundamentally altering consumer behavior within an increasingly digital content ecosystem. Short-format video, a vital content medium, is progressively ingrained in consumer interest cultivation and purchase decision-making. Douyin, one of China’s leading short-video platforms, is setting new standards in online marketing efficiency through data-driven insights, key performance metrics, and strategic optimization. In collaboration with Ocean Engine, a comprehensive data and content platform, and Deloitte, we offer a tailored approach enabling luxury brands to precisely identify their optimal business channels and consumer touchpoints. This strategic alignment serves to bolster market sustainability in China.”
According to the white paper, Chinese consumers rank easy to wear every day (49%), self-rewarding (47%), and fashionably designed (35%) as the top three considerations when buying luxury. Douyin E-commerce achieved exponential growth in gross merchandize value (GMV) and paid users and merchants over the first half of 2023, with GMV surging even higher during festivals and shopping seasons like Qixi Festival and Valentine’s Day, underlining the effectiveness of emotional marketing.
Qing Mu, vice president of Douyin E-Commerce, says, “Douyin E-commerce has been upgraded from interest e-commerce to omnichannel interest e-commerce. By skillfully merging compelling content that sparks shopping interest with a well-designed product shelf catering to active consumer needs. Douyin offers a holistic approach to the consumer journey, unlocking significant growth opportunities. Over the past two years, numerous brands have ventured into Douyin’s ecosystem, rigorously testing and validating its business models. By utilizing a well-curated mix of high-quality content, superior service, and officially authenticated products, these brands effectively satisfy the diverse consumption patterns of Douyin’s user base. This creates a streamlined, end-to-end consumer experience, from brand engagement to transaction conversion. The synergy between luxury brands and Douyin E-commerce promises a future filled with potential.”
Webin Lin, head of Ocean Engine Business Analysis, adds, “As of the first half of 2023, Douyin stands as a pivotal channel in China’s luxury narrative, captivating an impressive 150 million users with a keen interest in high-end products. Notably, 73% of China’s luxury consumer base actively engages with Douyin, a statistic unmatched by any other platform regarding reach, brand engagement, and conversion rates. As we move forward, we are eager to collaborate with brands to effectively communicate the nuanced attributes of luxury – elegance, intelligence, and heritage – through the expansive reach of Douyin.”
Crystal Wang, Deloitte China Consumer Products & Retail Sector Financial Advisory leader, concludes, “As Chinese luxury consumers’ mindset and channel preferences continue to evolve, the key to success lies in delivering excellence at every touchpoint by understanding their deeper needs for products, content, and services.”
Click here to read the white paper.
