Understanding Global Chinese Consumers in Luxury

What do we mean by the global Chinese consumer? It's the specific group of consumers who tend to have this international exposure and international experience. And I will further explain why and we believe this is important for the luxury brands. While the traditional way of looking at and segmenting our consumers still applies, of course, But we thought this anthropological and cultural approach might be interesting, especially for luxury brands. So who are we talking about exactly? Maybe now we can dive in a little bit more. So hopefully this so-called Venn diagram explains a little bit of what we mean by the global Chinese consumer from the perspective of how China intersects or connects with the world. And of course, as of today, the pandemic might have put the globe a little bit on the pause. But in the medium to long run, we believe this is how everything needs to be interconnected. And there are probably four typologies that we can look into in the way that we look at the Chinese consumer. Starting from the left, obviously, we have the majority of the Chinese consumer living in China domestically and they travel domestically. But at the same time, we know there are probably about 10% of the frequent outbound traveler. Today, they are traveling within China. But according to the Travel Observatory, once the border is open, it is more likely the more frequent and affluent travelers will be first back on the road. This is not only because of the economic power, it's mainly because of their motivation and a quest for experiences and for the things that they could not buy or experience within China itself, because we all know we need to expose ourselves to a broader spectrum of experiences. Then we have this new concept of nomadic Chinese. I think Xiaolei spoke about that. And obviously, this is a group of Chinese consumers more and more happening within the young generation. They choose to live in different parts of the world for a couple of years here and there, for education, for professional life, or sometimes just to travel to experience the world like a gap year. So this is really something that we observe a lot with the young generation. And we can typically see the profile of nomadic Chinese being international students, professionals like ourselves, but not only working for international companies, but also for Chinese companies, because the Chinese companies are venturing into the international stage, and they are sending talents to the rest of the world as well. And of course, last on the list, as we probably all can imagine and well understand, for a group like a high number of individuals, they are more likely to be nomadic because they're more likely to be having multiple homes and international networks. And the last one on this is the overseas Chinese. So the overseas Chinese is the people who have decided to migrate beyond China. And we knew historically there's always been waves of the migration going on. But here we are talking about particularly the immigrants who probably left China after 2000. Why is that so? Because this is the new generation of immigrants who probably have more power economically, and they have consciously made a choice to live a different life, at least for a big part of their life, to be overseas, to have a different experience, very different from the earlier generation of immigrants who might have left the country for a better living or for escaping poverty. So for the recent immigrants, what's also very special about them is they take a great... pride by being in Chinese and they remain very connected through the Chinese digital ecosystem. So this is how we actually see the four typologies. But essentially what's very interesting and we would like to really dive in a little bit more is really the middle group where we talk about the frequent outbound traveler and a nomadic overseas Chinese. This is actually somewhere we see that not only they are very much, you know, Chinese by heart, but they are international by footprint and by their mindset. And we believe this is something quite important for luxury brands to take note of, because China will continuously drive its multilateral relationship and the external circulation, as the way we call it. Today is an internal circulation. But this group of the people will continue to grow in size and influence. And they are the subcultural groups we'll bridge between China and the world for luxury brands like ourselves who really want to build our brand desirability and drive our brand equity. through an international landscape and with a universal set of values, we believe these are the two most important group of people that we should focus on. And lastly, of course, very importantly to say that this is constantly a dynamic notion. You know, the four typologies with the size of Chinese consumer and with the fast learning and evolution, we can see there's a lot of movement across. So with that, maybe I'll hand over back to Xiaolei to actually dive in a little bit more on why should luxury brands look into the global Chinese consumer, and then we can develop more thoughts from here. Xiaolei, over to you. Thank you very much, Rain, for setting up the scene and aligning the common understanding. So speaking of why this group of consumers, global Chinese consumers, are super important to our luxury industry. I'd like to start with the most obvious one, is that they have purchase power. So like Rain has previously already mentioned that they are the ones who are more affluent than their peers who are residing just in China or mostly overseas, because being able to frequently travel is a luxury itself, if we put it into a more global context. And in China, There's only 9% of the population who has a passport that allows them to travel overseas, not to say travel frequently, more frequently, and living a significant part of their life overseas. This already demonstrated that they have a certain level of purchase power and willingness to be open to a different world. And secondly, I think they are important because they have developed a global mindset like Corrine has already shared. or they're in the process of developing a global mindset. I think we can all agree travel is very powerful. So travel can very profoundly change or impact our personal as well as professional development while challenging us to see a world in a different lens. So not to say being able to live a significant amount of time in another country or even multiple countries. And I personally believe one of the key drivers, for the fast development of China is the fact that more and more people are traveling more and more frequently besides the economic fact. And as they choose to travel and live abroad, they choose to open up to new experiences, new cultures, new ideas that constantly redefines them. And then the third reason is that they are more mature. They have a higher maturity in their luxury perception. So I once worked on a study. to really look into what luxury is to Chinese consumers and what it will be to Chinese consumers in the next 10 years. So over the past 20 years we observed that the value drivers of luxury consumption and buying luxury products have already evolved from a mirror of their social status to an indication of fashion and taste and expertise. So at this moment style, quality and experiences are essential for Chinese luxury consumers. But in the meantime, we are also seeing a growing number of luxury consumers that are driving towards valuing luxury as self-realization and even value creation. And they are usually the ones we define as global Chinese traveler who very frequently travel across different continent. from the study samples that we did. And last but not least, and maybe the most important reason in my personal opinion, is that these consumers, these global Chinese consumers, they are trendsetters and change agents that are brain changes, drive changes to the Chinese society. So here I'm showing you a startup company. that a group of Chinese international students built up after they relocated back to China. It's called Know Yourself. At the very beginning, they were just a bunch of international students who studied psychology and they started a WeChat account called Know Yourself to introduce some psychological framework to help their young readers understand themselves and the things happening around them in a fast-paced society. But later and later as more and more people start to follow them and then they start to gain their influence. They already raised a series B fundings so that allow them to provide more therapist support, more offline coachings. to help their 10 million Chinese young readers to constantly explore who they are and then introduce new mindsets. So it's a group of international students impacting 10 million young Chinese. So the change also happened on a more micro level. So I would like to take myself as an example. After I relocated back to Shanghai and being able to stay with my family a little bit more. So it's a... My family is a relatively traditional family. My mom finally understood why a pair of Lululemon yoga pants is priced at a high pricing point like that. I'm not joking, this is a milestone for my mom and that generation and she actually started to buy Lululemon yoga pants herself. And this impact also happened beyond the consumption upgrade. One thing that I'm very proud of with the influence that I can bring to my family is they start to embrace some unconventional choices that my generation is making. And then they start to build understanding of some unconventional group of people like LGBTQ community and start to understand their rights. So once we manage to capture this group of global Chinese consumers, I think they will create halo effects to their home country. And we believe if we want to understand the future of luxury in China, it is extremely critical for us to understand this group of global Chinese consumers because they are setting the trend. So then the next question we shall. we shall all ask ourselves is really what is on their state of mind of and especially some of the hottest and most important topics of our industry today and these topics actually were previously discussed in uh in the morning sessions so i will start with individuality and then ring will explain diversity and sustainability so the reason why we want to start with individuality is because luxury is a lot about individualism and the personal taste, personal pleasure. But when it comes to Chinese consumer, we still categorize them in a more collectivist culture versus that of the Western world. What I want to highlight here from a global Chinese consumer perspective versus more like a generational or cultural regional perspective is that global Chinese countries, they see more fluidity on the concept of individualism. So fluidity meaning that the understanding and perception is not fixed, but rather fluid in reaction to different cultural contexts and where they are. So that is to say, they know how to appreciate individualism in the Western context. And in the meantime, they can also understand why it's super important to have conformity in a Chinese context. Individual future and collective decision-making is something that for sure applies to this group of consumers, but I truly believe they will be the ones to think about a connected future and drive changes through collective efforts. So I will turn the floor to Rain to add on her insights. Sure. Thank you, Xiaolei. So the other very important topic for many one of us is really diversity and inclusion. As we know, this is really a topic that's going beyond HR or just a corporate communication. It is becoming at the core of our brand purpose and for many of the brands, especially in the luxury sector. So obviously diversity and inclusion could be understood in many different ways. In the Western context, obviously we talk a lot about the gender, the ethnicity, the color, the subcultures, and sometimes we ask ourselves as Chinese, as we seem to be such a unified culture and even in our physics, and how do we talk about diversity? I would say today there are really many many different angles to look at that. And what you could see on the screen, it is really even the local luxury brands like a lingerie brand Nei Wai has really challenged the uniformed way of defining beauty. So they have this campaign to really give back the real beauty to all the different shapes and forms of the Chinese women. So obviously, this is really growing more and more at the heart of the luxury brand building. And in our point of view, the true diversity and inclusion, it is also about embracing multiple perspectives, embracing different ideas and possibilities, because we believe this is how the collective intelligence will work together. And it would be fair enough to say only people who have traveled and seen enough and interacted with different cultural and mindsets, they will be able to develop such diversity or such inclusion attitudes and a mindset. And the last one on the list, we will speak about sustainability, which was the topic that was just talked about in our previous session. So once again, sustainability is such an important and evolving trend and even in China or the Chinese consumers are really catching up and becoming more aware. And you can see even in smaller ways when we order our takeaways how we can contribute in our own way to the better world and a better sustainability effort. So it is all about sustaining our effort in big and small way. So Chinese it's a nation that's come a long way from fighting basically poverty and survival to today where we are gaining economic power but we start to really become more aware how do we give it back to the nature and how do we give it to our next generation and this mindset and the learning could be developed over just a few decades which is much shorter compared to the western world perhaps but culturally speaking Even historically, the Chinese understood mankind and nature need to live in harmony. So I'm very confident that this is really something that the Chinese deeply embrace in our culture. And it is our brands to really uncover that and to really facilitate and enable the consumer to make our efforts along the way. And you have seen and heard that Mellie Hennessy has made a very strong commitment in biodiversity. without leaving soil. So arguably what I would say is that what Mother Nature offers is probably the ultimate luxury. So with that, we're coming to the concluding part. Maybe I shall let Xiaolei start and then we can then try to see if we can take some of the questions. Great, many thanks to Rain on your elaboration on the two very important topics and also introduction of the great things that that Moët Hennessy is doing on sustainability. So to conclude on my part, because China is such a big market with 1.4 billion consumers domestically and a lot overseas as well, there are of different characteristics, different levels of maturity on luxury consumptions and even different consumption patterns. Then the key question for us as brand owners is really about how do we prioritize and more importantly strategize among all these texts with our ambition as a brand and our resources. So my personal conviction and I think Rain shared the same with me on this part is that by no means global Chinese consumers should be a priority for luxury brands not only for the consumption power that they possess and demonstrated but also for the fact that they are the sophisticated, they're the most sophisticated Chinese consumer, if I may say, and they will be the first ones to really resonate with what our brands really embody and the type of value that we want to deliver as a luxury brand to the world, not only to specific market. So am I right, Ren? Yes, could not agree more with Xiaolei. I think that is why the two of us are sharing the same conviction. We have been working on this topic for Voyage Hennessy. And the global Chinese consumer is not only a concept. It is really a concrete, tangible, and a real group of consumers where we can identify and take action with and to try to engage them with. But obviously, this does require the business and organization to think and organize ourselves a bit differently. putting the consumer at the heart and beyond just our organization working respectively, because as you understood by now, the consumers are moving across within what we have explained in this international context. But at the same time, we are trying to figure out what are the specific ways that we can really reach out to them, empowered by data, by better insights to the Chinese digital ecosystem. And of course, last but not least, Very importantly, the cross team collaboration. So the Chinese consumer, we believe, will continue to grow in their appetite and aptitude. And eventually they will be back on the road again to pursue their dreams and to pursue their inspirations. So we believe this is what we as luxury brands do as well. We create dreams and we create aspirations. And therefore, we believe that the Chinese, global Chinese consumers are going to be the driving force. to shape the future of luxury in Asia and maybe even in the world.

Maybe now we can dive in a little bit more. So hopefully this so-called Venn diagram explains a little bit of what we mean by the global Chinese consumer from the perspective of how China intersects or connects with the world. And of course, as of today, the pandemic might have put the globe a little bit on the pause.

But in the medium to long run, we believe this is how everything needs to be interconnected. And there are probably four typologies that we can look into in the way that we look at the Chinese consumer. Starting from the left, obviously, we have the majority of the Chinese consumer living in China domestically and they travel domestically.

But at the same time, we know there are probably about 10% of the frequent outbound traveler. Today, they are traveling within China. But according to the Travel Observatory, once the border is open, it is more likely the more frequent and affluent travelers will be first back on the road. This is not only because of the economic power, it's mainly because of their motivation and a quest for experiences and for the things that they could not buy or experience within China itself, because we all know we need to expose ourselves to a broader spectrum of experiences.

Then we have this new concept of nomadic Chinese. I think Xiaolei spoke about that. And obviously, this is a group of Chinese consumers more and more happening within the young generation.

They choose to live in different parts of the world for a couple of years here and there, for education, for professional life, or sometimes just to travel to experience the world like a gap year. So this is really something that we observe a lot with the young generation. And we can typically see the profile of nomadic Chinese being international students, professionals like ourselves, but not only working for international companies, but also for Chinese companies, because the Chinese companies are venturing into the international stage, and they are sending talents to the rest of the world as well.

And of course, last on the list, as we probably all can imagine and well understand, for a group like a high number of individuals, they are more likely to be nomadic because they're more likely to be having multiple homes and international networks. And the last one on this is the overseas Chinese. So the overseas Chinese is the people who have decided to migrate beyond China.

And we knew historically there's always been waves of the migration going on. But here we are talking about particularly the immigrants who probably left China after 2000. Why is that so? Because this is the new generation of immigrants who probably have more power economically, and they have consciously made a choice to live a different life, at least for a big part of their life, to be overseas, to have a different experience, very different from the earlier generation of immigrants who might have left the country for a better living or for escaping poverty.

So for the recent immigrants, what's also very special about them is they take a great... pride by being in Chinese and they remain very connected through the Chinese digital ecosystem. So this is how we actually see the four typologies. But essentially what's very interesting and we would like to really dive in a little bit more is really the middle group where we talk about the frequent outbound traveler and a nomadic overseas Chinese. This is actually somewhere we see that not only they are very much, you know, Chinese by heart, but they are international by footprint and by their mindset.

And we believe this is something quite important for luxury brands to take note of, because China will continuously drive its multilateral relationship and the external circulation, as the way we call it. Today is an internal circulation. But this group of the people will continue to grow in size and influence.

And they are the subcultural groups we'll bridge between China and the world for luxury brands like ourselves who really want to build our brand desirability and drive our brand equity. through an international landscape and with a universal set of values, we believe these are the two most important group of people that we should focus on. And lastly, of course, very importantly to say that this is constantly a dynamic notion. You know, the four typologies with the size of Chinese consumer and with the fast learning and evolution, we can see there's a lot of movement across.

So with that, maybe I'll hand over back to Xiaolei to actually dive in a little bit more on why should luxury brands look into the global Chinese consumer, and then we can develop more thoughts from here. Xiaolei, over to you. Thank you very much, Rain, for setting up the scene and aligning the common understanding. So speaking of why this group of consumers, global Chinese consumers, are super important to our luxury industry.

I'd like to start with the most obvious one, is that they have purchase power. So like Rain has previously already mentioned that they are the ones who are more affluent than their peers who are residing just in China or mostly overseas, because being able to frequently travel is a luxury itself, if we put it into a more global context. And in China, There's only 9% of the population who has a passport that allows them to travel overseas, not to say travel frequently, more frequently, and living a significant part of their life overseas.

This already demonstrated that they have a certain level of purchase power and willingness to be open to a different world. And secondly, I think they are important because they have developed a global mindset like Corrine has already shared. or they're in the process of developing a global mindset. I think we can all agree travel is very powerful.

So travel can very profoundly change or impact our personal as well as professional development while challenging us to see a world in a different lens. So not to say being able to live a significant amount of time in another country or even multiple countries. And I personally believe one of the key drivers, for the fast development of China is the fact that more and more people are traveling more and more frequently besides the economic fact. And as they choose to travel and live abroad, they choose to open up to new experiences, new cultures, new ideas that constantly redefines them. And then the third reason is that they are more mature.

They have a higher maturity in their luxury perception. So I once worked on a study. to really look into what luxury is to Chinese consumers and what it will be to Chinese consumers in the next 10 years. So over the past 20 years we observed that the value drivers of luxury consumption and buying luxury products have already evolved from a mirror of their social status to an indication of fashion and taste and expertise.

So at this moment style, quality and experiences are essential for Chinese luxury consumers. But in the meantime, we are also seeing a growing number of luxury consumers that are driving towards valuing luxury as self-realization and even value creation. And they are usually the ones we define as global Chinese traveler who very frequently travel across different continent. from the study samples that we did. And last but not least, and maybe the most important reason in my personal opinion, is that these consumers, these global Chinese consumers, they are trendsetters and change agents that are brain changes, drive changes to the Chinese society.

So here I'm showing you a startup company. that a group of Chinese international students built up after they relocated back to China. It's called Know Yourself.

At the very beginning, they were just a bunch of international students who studied psychology and they started a WeChat account called Know Yourself to introduce some psychological framework to help their young readers understand themselves and the things happening around them in a fast-paced society. But later and later as more and more people start to follow them and then they start to gain their influence. They already raised a series B fundings so that allow them to provide more therapist support, more offline coachings.

to help their 10 million Chinese young readers to constantly explore who they are and then introduce new mindsets. So it's a group of international students impacting 10 million young Chinese. So the change also happened on a more micro level. So I would like to take myself as an example.

After I relocated back to Shanghai and being able to stay with my family a little bit more. So it's a... My family is a relatively traditional family. My mom finally understood why a pair of Lululemon yoga pants is priced at a high pricing point like that.

I'm not joking, this is a milestone for my mom and that generation and she actually started to buy Lululemon yoga pants herself. And this impact also happened beyond the consumption upgrade. One thing that I'm very proud of with the influence that I can bring to my family is they start to embrace some unconventional choices that my generation is making.

And then they start to build understanding of some unconventional group of people like LGBTQ community and start to understand their rights. So once we manage to capture this group of global Chinese consumers, I think they will create halo effects to their home country. And we believe if we want to understand the future of luxury in China, it is extremely critical for us to understand this group of global Chinese consumers because they are setting the trend.

So then the next question we shall. we shall all ask ourselves is really what is on their state of mind of and especially some of the hottest and most important topics of our industry today and these topics actually were previously discussed in uh in the morning sessions so i will start with individuality and then ring will explain diversity and sustainability so the reason why we want to start with individuality is because luxury is a lot about individualism and the personal taste, personal pleasure. But when it comes to Chinese consumer, we still categorize them in a more collectivist culture versus that of the Western world.

What I want to highlight here from a global Chinese consumer perspective versus more like a generational or cultural regional perspective is that global Chinese countries, they see more fluidity on the concept of individualism. So fluidity meaning that the understanding and perception is not fixed, but rather fluid in reaction to different cultural contexts and where they are. So that is to say, they know how to appreciate individualism in the Western context. And in the meantime, they can also understand why it's super important to have conformity in a Chinese context.

Individual future and collective decision-making is something that for sure applies to this group of consumers, but I truly believe they will be the ones to think about a connected future and drive changes through collective efforts. So I will turn the floor to Rain to add on her insights. Sure. Thank you, Xiaolei. So the other very important topic for many one of us is really diversity and inclusion.

As we know, this is really a topic that's going beyond HR or just a corporate communication. It is becoming at the core of our brand purpose and for many of the brands, especially in the luxury sector. So obviously diversity and inclusion could be understood in many different ways.

In the Western context, obviously we talk a lot about the gender, the ethnicity, the color, the subcultures, and sometimes we ask ourselves as Chinese, as we seem to be such a unified culture and even in our physics, and how do we talk about diversity? I would say today there are really many many different angles to look at that. And what you could see on the screen, it is really even the local luxury brands like a lingerie brand Nei Wai has really challenged the uniformed way of defining beauty. So they have this campaign to really give back the real beauty to all the different shapes and forms of the Chinese women. So obviously, this is really growing more and more at the heart of the luxury brand building.

And in our point of view, the true diversity and inclusion, it is also about embracing multiple perspectives, embracing different ideas and possibilities, because we believe this is how the collective intelligence will work together. And it would be fair enough to say only people who have traveled and seen enough and interacted with different cultural and mindsets, they will be able to develop such diversity or such inclusion attitudes and a mindset. And the last one on the list, we will speak about sustainability, which was the topic that was just talked about in our previous session.

So once again, sustainability is such an important and evolving trend and even in China or the Chinese consumers are really catching up and becoming more aware. And you can see even in smaller ways when we order our takeaways how we can contribute in our own way to the better world and a better sustainability effort. So it is all about sustaining our effort in big and small way.

So Chinese it's a nation that's come a long way from fighting basically poverty and survival to today where we are gaining economic power but we start to really become more aware how do we give it back to the nature and how do we give it to our next generation and this mindset and the learning could be developed over just a few decades which is much shorter compared to the western world perhaps but culturally speaking Even historically, the Chinese understood mankind and nature need to live in harmony. So I'm very confident that this is really something that the Chinese deeply embrace in our culture. And it is our brands to really uncover that and to really facilitate and enable the consumer to make our efforts along the way.

And you have seen and heard that Mellie Hennessy has made a very strong commitment in biodiversity. without leaving soil. So arguably what I would say is that what Mother Nature offers is probably the ultimate luxury. So with that, we're coming to the concluding part. Maybe I shall let Xiaolei start and then we can then try to see if we can take some of the questions.

Great, many thanks to Rain on your elaboration on the two very important topics and also introduction of the great things that that Moët Hennessy is doing on sustainability. So to conclude on my part, because China is such a big market with 1.4 billion consumers domestically and a lot overseas as well, there are of different characteristics, different levels of maturity on luxury consumptions and even different consumption patterns. Then the key question for us as brand owners is really about how do we prioritize and more importantly strategize among all these texts with our ambition as a brand and our resources. So my personal conviction and I think Rain shared the same with me on this part is that by no means global Chinese consumers should be a priority for luxury brands not only for the consumption power that they possess and demonstrated but also for the fact that they are the sophisticated, they're the most sophisticated Chinese consumer, if I may say, and they will be the first ones to really resonate with what our brands really embody and the type of value that we want to deliver as a luxury brand to the world, not only to specific market. So am I right, Ren?

Yes, could not agree more with Xiaolei. I think that is why the two of us are sharing the same conviction. We have been working on this topic for Voyage Hennessy.

And the global Chinese consumer is not only a concept. It is really a concrete, tangible, and a real group of consumers where we can identify and take action with and to try to engage them with. But obviously, this does require the business and organization to think and organize ourselves a bit differently.

putting the consumer at the heart and beyond just our organization working respectively, because as you understood by now, the consumers are moving across within what we have explained in this international context. But at the same time, we are trying to figure out what are the specific ways that we can really reach out to them, empowered by data, by better insights to the Chinese digital ecosystem. And of course, last but not least, Very importantly, the cross team collaboration. So the Chinese consumer, we believe, will continue to grow in their appetite and aptitude.

And eventually they will be back on the road again to pursue their dreams and to pursue their inspirations. So we believe this is what we as luxury brands do as well. We create dreams and we create aspirations.

And therefore, we believe that the Chinese, global Chinese consumers are going to be the driving force. to shape the future of luxury in Asia and maybe even in the world.

Transcript for:Understanding Global Chinese Consumers in Luxury

Transcript for:
Understanding Global Chinese Consumers in Luxury