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  • Andrew Thacker


Pt. 2/5 : Two Views Of The Chinese Consumer.

The biggest shopping event in the world, Double 11.

In 2020, the GMV of Double 11 surpassed US$137 billion.

The biggest shopping event in the world, Double 11 (including Singles’ Day), first initiated in 2009 by Alibaba now market wide. Along with 6.18 (Mid-Year Sale) and Double 12 (12.12), Chinese consumers are perpetually close to the next big online promotion season, and often wait for promotional periods to stock up on household goods or invest in a bigger piece.

In 2020, the GMV (Gross Merchandise Value) of all platforms across the duration of Double 11 this year (November 1 to 11) surpassed US$137 billion according to Pingan Securities. The top performer was Alibaba Group’s Tmall, which made US$76 billion, a 26.1% increase over the previous year. In second place was, whose GMV was US$41 billion — an increase of 32.8%

To give you some context, the Singles’ Day performance in China was higher than the five days from Thanksgiving through Cyber Monday when US shoppers spent a record $28.49 billion online last year, according to Adobe Analytics data. Meanwhile Amazon’s Prime Day, seen by some as the unofficial start to the holiday season, brought in $10.4 billion, up 45% from last year’s $7.14 billion in sales.

So, what does this mean in missed opportunity for brands?

And at what cost to brand equity over time?

Discounting has long been a tricky issue for luxury brands. They cannot do discounts regularly because this will affect their brand equity and the way they are perceived.

Abdullah Milhim, Istituto Marangoni School of Fashion, London - Jing Daily, 2020

And yet, in China, most do…

Younger generations recognise brands, and value quality, craft, scarcity, values, and are willing to pay for higher-end product

Older consumers with longer memories may value price over quality, but younger generations are more sophisticated; they recognise brands, and value quality, craft, scarcity, values, and they are increasingly willing to pay premiums for higher-end products

This opened the door to the rise of Cross Border eCommerce. In 2020, China’s cross-border eCommerce market reached about 205 billion yuan, and it is estimated that the average annual compound growth rate of this industry segment will be about 25% in the next five years. The unit price of overseas shopping is relatively high, and more than 64% of users have an average of more than RMB 500 per order in the past year.

2020 China’s cross-border eCommerce market reached $30 billion. It's expected to grow 25% in the next 5 years. 64% spend more than $80 per order.

China was the only country that experienced a positive 2.3% GDP growth during a global recession  prompted by Covid-19 in 2020. Chinese people, when taken as a whole, are savvy shoppers and often have different spending mindsets for different product categories. Hence, we sometimes see frenzied behaviours when it comes to luxury goods, travel, and spending that can show “face". And they love to shop!



Miànzi - a cultural understanding of respect, honour, prestige, social standing

It is predicted that by 2028, China will become the largest economy (CBRE - Centre for Economic and Business Research). China to become the world’s largest personal luxury market by 2025 (which includes clothes, jewellery, watches, beauty products and accessories), representing 40% of the global market (Bain & Co, Tmall Luxury).

With no discount or promotion, only inflating prices every year and an ever-growing lengthy waiting list to get on the waiting list for the most wanted Birkin and Kelly bags, Chinese shoppers are willing to pay for the power of scarcity.

For example, Hermès is said to have brought in at least $2.7 million in sales on the (re)opening day of its flagship in Guangzhou’s Taikoo Hui in mid-April 2020, according to multiple sources. This single-day tally, believed to be the highest for a single boutique in China, offers a confidence boost for luxury brands eager for their tills to start ringing again after the coronavirus outbreak.

Hermes’ Q2 FY2021 soared 127% YOY. Hermes’ Asia sales (excluding Japan) rose by 87% in H1 YOY and 70% compared to 2019. They were driven by the strong performance in Greater China and the acceleration in sales in Singapore and Thailand.


Campaign Asia reported it rather succinctly:

When there is desire, customers will be willing to pay, especially your best and most loyal ones. When there is a lack of desire, even your most drastic discounts will only have one effect: weakening the brand.

What’s good for the goose isn’t always good for the gander.

An improved in-store experience tops the wish list for Chinese shoppers, followed by lower prices and increased choice. Brands need to pay attention to the online and in-store integration, like MAC’s new experience centre in Shanghai, a fully omnichannel

Stay tuned. Part 3/5 to follow next week...


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