It’s a well-observed fact which three studies now confirm, with figures and analysis that shed new light on the trend. Better still, these surveys clearly show that the travelling Chinese are buying more and more luxury items. And to top it all, there is more to come. Much to the delight of Swiss watchmakers, which are among the first to benefit from this travel bug and one of its main symptoms: the acquisition of a luxury timepiece… Swiss, of course.
The latest study by consulting firm KPMG shows that Chinese consumers continue to travel and are still very much in the market for luxury goods. Of the 1,200 people surveyed, 71% said they had travelled overseas in 2012, up from 53% in 2008. Almost three-quarters of respondents (72%) said they had bought one or more luxury items during their travels last year.
With a favourable exchange rate and a rise in international travel, Chinese consumers made 60% of their luxury purchases outside their home market last year, according to a survey by Bain & Company. The amount Chinese tourists spent while away from home rose 31% on 2011. These developments are not just annual but can be observed in the medium term too. According to a HSBC survey, published at end 2012, the Chinese account for a quarter of luxury purchases worldwide compared with 5% in 2007. A report by McKinsey & Company calculates that the Chinese now outspend the Japanese in the luxury segment. Their share of global luxury sales is expected to reach some USD 30 billion by 2015.
“As increasing numbers of Chinese travel overseas, brands need to measure the impact of their business strategies both in Mainland China and the travel segment. Brands need to therefore align their branding and marketing strategies both in China and for the rising number of travelling Mainland Chinese consumers,” observes Nick Debnam, KPMG China Asia-Pacific Chairman for Consumer Markets. KPMG has found that 32% of Chinese choose Europe as their destination, 30% Japan, 24% South-East Asia and 11% the United States. However, 53% of Mainland China’s residents still prefer to stay closer to home and make their luxury purchases in Hong Kong. If, then, the Chinese are purchasing more while on their travels, what exactly are they buying? The good news for Swiss watchmakers, again according to the KPMG survey, is that timepieces come second on Chinese travellers’ shopping list, at 47%, just behind perfumes and cosmetics.
In search of exclusivity
In 2010, more than 57 million Chinese travelled overseas, up 20.4% on the previous year. They spent USD 48 billion, according to China’s National Tourism Administration. Figures for 2011 and 2012 have still to be released, but the outlook is promising. Over the next decade, the Chinese tourism market is slated to grow by an average 17% annually. The world’s biggest luxury buyers, in 2012 the Chinese made close to two-thirds (63%) of their purchases outside Mainland China. A proportion that is still growing, confirms a report published by Bain & Company at end December.
Brand recognition also continues to rise in China. However, Chinese customers are also becoming more discerning in their choices. They are seeking experiential luxury more than brand-names, and the ever more exclusive products that can bring this. Respondents to this year’s KPMG study said they could identify 59 luxury brands. In 2010, they could name just 45!