毕马威中国奢侈品消费调查报告

China’s Luxury Consumers: Moving up the curve CONSUMER MARKETS Contents 1 Introduction 4 The passion for luxury 12 Defining China’s cities 16 Choice and brand visibility 20 The traveling consumer 26 Changing business models 30 Transfer pricing issues affecting the luxury sector 35 About KPMG 36 Contact us Luxury case studies – Sandra Shek and Allison Pyrah, Swarovski – Jeremy Hobbins, LiFung Trinity – Lawrence Lam and Edoardo Tocco, Diesel – Denise Lo, Chanel – Giovanni Di Salvo, StraBranding – Lars Hundborg, B&W Group – Nelson Chan, Dickson Concepts – Michelle Chen and Adrian Pick, Ports Design – Stan Lee, Xinyu Hengdeli © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. 1 Introduction George Svinos Nick Debnam It is less than two years since KPMG China published its first study of the luxury market, but in that short time things have advanced dramatically. Where luxury brands were once focused on establishing highly visible (but often barely profitable) flagship stores in Beijing and Shanghai, many are now reaping the financial benefits of their brand-building strategies and taking their ambitious expansion plans to China’s other major cities. We recognised the need to take a fresh look at the luxury market and seek deeper insight into the habits, tastes and motivating factors that are driving its growth. While luxury goods are affordable to an increasingly wide segment of Chinese society, consumers are also being exposed to brands with an unrivalled intensity. Many of the executives surveyed in this report acknowledged that while status and the “bling factor” lay behind much of the growth in luxury consumption, it was too simplistic to see the market solely in these terms. Our survey confirms this point: Chinese consumers are motivated by an increasingly complex range of factors and are becoming more interested in pursuing brands to experience their quality, to stand out from the crowd, or to reward themselves. This report also delves closely into the travel habits of Chinese consumers. Twenty percent of our survey respondents travel overseas more than once per year. As a result of their exposure to international trends and more niche brands, we expect consumers to become even more discerning in the years ahead. Globalisation, along with the increasing propensity of Chinese consumers to travel, is closing the gap between China and the Western world. Serious retailers must capture this opportunity and enter into the market early, otherwise they risk falling behind. If you are in the luxury or retail business and have an interest in China, we hope you find this report useful. KPMG China has advised and assisted a number of leading luxury brand companies on their financial management and growth strategies in China. We would welcome the opportunity to discuss this report and its findings with you. Nick Debnam George Svinos Partner in Charge, Consumer Markets Head of Retail, Asia Pacific KPMG China KPMG Australia China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. 2 About the survey In early 2008, KPMG China commissioned TNS to survey middle-class Chinese consumers about their changing attitudes towards luxury brands. In total, TNS received 902 qualified responses to the survey. These respondents were based in 15 diverse cities and were between 20 and 44 years of age. All earned upward of RMB 3,500 per month, with a minimum income of RMB 5,000 in the larger cities of Beijing, Shanghai, Guangzhou and Shenzhen. Fifty-nine percent of respondents were educated to university level, with 11 percent educated to postgraduate level. Fifty-six percent of respondents were male and 44 percent were female. TNS also conducted qualitative interview-based research with 14 higher-earning consumers to identify and corroborate the motivating factors behind their consumption of luxury brands. This survey data is complemented by nine case studies with executives of luxury and retail companies. These are based on interviews conducted by KPMG China’s Consumer Markets practice between December 2007 and March 2008. China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. 3 Key findings z As this report shows, China’s luxury market has become measurably more crowded over the past two years. Consumers are becoming aware of an ever-growing number of luxury brands, becoming more discerning in their tastes and making greater efforts to understand the heritage of individual brands. This is creating even more pressure on new entrants to rapidly find their niche and establish their credibility. z Chinese consumers are prolific shoppers when travelling overseas or to Hong Kong and Macau. However, the survey suggests that increased travel does not diminish the amount consumers spend on luxury when at home. Moreover, many people intentionally save or draw up a shopping list prior to travelling. This underscores the fact that it remains important to be on the ground and build brand recognition within mainland China. z It is essential for luxury brands to have a clear strategy which takes into account the scope and extent of intended market penetration. A growing number of companies are investing directly into the China market by establishing wholly foreign-owned enterprises (WFOEs), but there are still many advantages to working with a joint venture partner or licensee. z The choice of business model will also have tax implications, with China’s tax authorities increasingly looking at the transfer pricing issues relating to management fees, royalties and other transfers of intellectual property. z This year’s survey reveals little change in the conservative attitudes towards credit, which suggests that the recent pace of growth in luxury consumption has not been driven by unsustainable patterns of credit-based consumption. China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. 4 The passion for luxury KPMG findings z As China’s luxury market grows in sophistication, differences in tastes and preferences are becoming more discernible between cities and demographic segments. z The “bling factor” remains a key to the growth of luxury consumption, but Chinese consumers are also gaining greater appreciation of brand values and heritage. z The market for accessories has continued to see stronger growth than apparel. One reason is that bags, jewellery and fashion accessories offer more versatility and visibility to consumers with a limited budget for luxury. KPMG China’s 2006 report Luxury Brands in China illustrated the extent to which China’s middle classes have embraced luxury brands, while indicating the continued potential that exists in this growing and highly aspirational market. The report showed that China’s middle class consumers strongly associate luxury products with success and good taste. This was particularly true among respondents in Beijing and tier-two cities. By contrast, very few respondents expressed negative opinions about luxury brands or owners of luxury goods. Continued growth in consumption Income and retail spending levels have continued to rise strongly since our last report. This has led even more international brands to reappraise their strategy in the China market. In 2007, retail sales in China topped RMB 8.9 trillion (USD 975 billion), an increase of more than 17 percent from 2006. This amounts to a doubling of China’s retail spending in the space of just six years. Income levels have also risen strongly, but remain low compared to more developed economies. Yearly disposable income per capita among urban households rose by 18 percent to RMB 13,876 in 2007, while per capita consumption expenditure stood at RMB 12,667, a year-on-year increase of 14.7 percent.1 1 China National Bureau of Statistics, China Biweekly Economic Statistics (ɻਝ຤Ꮬ଻߮҄ం), KPMG and TNS analysis. China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. Overall 35-44 yrs 30-34 yrs 25-29 yrs 20-24 yrs “I long to buy luxury goods, but I cannot afford them right now” 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Agree strongly Agree 5 While these income and expenditure levels represent an average, they are naturally far higher than this in many of China’s coastal cities. Nevertheless, an income of RMB 5,000 per month is still modest by the standards of Europe or North America and as such a luxury purchase can represent a significant proportion of their disposable income. Forty-nine percent of respondents claimed they could not afford to buy luxury products now, but they aspired to own luxury products in the future. This figure rose to 62 percent among respondents aged 20 to 24. These statistics are modestly lower than in 2006 when they stood at 54 percent and 58 percent respectively. The economic realities facing Chinese consumers also dictate which product categories have been most successful, with many executives commenting that the market for accessories and jewellery has grown more strongly than apparel. Within apparel, several executives observed that brands need to carefully position themselves, citing examples where companies have been successful in the sales of premium casual wear, but struggled to retain the connection to their origins in more high-end couture and ready-to-wear. Chinese consumers remain cautious about credit. In most product categories fewer than 10 percent said they were willing to buy luxury items on credit. While the survey suggests no significant change in attitudes towards credit since our last survey in 2006, it shows that luxury consumption has the potential to sustain itself, or even to grow more strongly, in the future. Twenty-nine percent of respondents still do not own a credit card, while only 19 percent claim to own three or more cards. Consumers are most willing to buy big ticket items such as watches and jewellery on credit. While consumers in Beijing are often assumed to be more conservative in their habits, they expressed the greatest willingness to buy on credit in many product categories. China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. Cosmetics/perfume Watches Jewellery Footwear Bags Clothes Willingness to purchase luxury goods on credit (2008) 0% 5% 10% 15% 20% 25% 30% Total Other Tier 2 cities Shenzhen Guangzhou Beijing Shanghai Number of credit and debit cards owned 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% None 1 card 2 cards 3 cards 4 or more 6 Segmenting the market Luxury goods companies in China face several challenges in sustaining growth and developing their market position. Besides the enticements of status and prestige, companies need to consider what other emotional appeals can work with consumers as the market becomes increasingly crowded. China is not a single, homogenous market for luxury and is showing increasing signs of segmentation and differentiation, with consumers motivated by more diverse factors and seeking satisfaction in different ways. Two important needs that are guiding the evolution of luxury are the need for individuality and the need for a rich and indulgent experience. Based on these dimensions it is possible to identify four broad segments, where these needs interact in different ways. These are status-seeking or the “bling” factor, connoisseurship, indulgence and trend setting. This report includes nine case studies with executives in the luxury goods sector. Each has sought to position their company with a different combination of these emotional appeals. China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. 7 Source: The Changing Face of Luxury, TNS, 2007 Individuality Conformity Ownership Experience Trend-setter (individuality) Connoisseurship (taste and discernment) Indulgence (enjoyment and experience) ‘Bling’ (status) Key drivers for luxury consumption The “bling” factor Conformity and status seeking are widely agreed to be key motivations for luxury consumption among China’s emerging rich. This appears to be true across age ranges and locations. For example, 60 percent stated that they were willing to pay a premium for products that were popular or famous, with this proportion rising to 66 percent among tier-two city respondents. The fame and status of a brand are particularly strong factors among the youngest (20-24 years) and oldest (over 35 years) age brackets. “I am willing to pay a premium for luxury goods that are popular or famous” Other Tier 2 cities Shenzhen Guangzhou Beijing Shanghai 0% 20% 40% 60% 80% Agree strongly Agree (by city) 35-44 yrs 30-34 yrs 25-29 yrs 20-24 yrs 0% 20% 40% 60% 80% (by age) Exclusivity is an important factor for Chinese consumers, but they also seek status and recognition among their wider peer group. For example, a relatively low figure (23 percent) believed that goods could only be considered luxury if they were known and appreciated by the minority. The figure was particularly low for respondents from Beijing and among those in the 20-24 age bracket. China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. “Only those brands known and appreciated by the minority can be considered luxury goods” (by city) Other Tier 2 cities Shenzhen Guangzhou Beijing Shanghai (by age) 35-44 yrs 30-34 yrs 25-29 yrs 20-24 yrs 0% 20% 40% 0% 20% 40% Agree strongly Agree Motivations for buying luxury goods To reflect my personality To stand out from the masses To reflect taste and discernment Connoisseurship To pamper myself 0% 10% 20% 30% 40% 50% 60% Other Tier 2 cities Shenzhen Guangzhou Beijing Shanghai 8 Connoisseurship Connoisseurs and collectors are still a rare breed in China, but they are growing in number and can exhibit high spending power. TNS identifies these consumers as being typically over 35 years of age, male and based in first-tier cities. Their favourite collectible items include watches and expensive furniture. For female connoisseurs, their collections would also include bags and jewellery. Connoisseurs are identifiable by their appreciation of uniqueness and heritage, and their expectations for a high level of craftsmanship. While undeniably seeking status, they also see themselves as opinion leaders among their peers and derive a high level of internal satisfaction from their luxury collections. Connoisseurship was cited as a factor for luxury purchases for 30 percent of respondents in Guangzhou and 24 percent of respondents in Shanghai, while elsewhere it was lower, suggesting this is still not a critical motivation for most consumers. Outside of the super-rich segment, many people still do not have an environment in which to house their luxury collections. The growth of luxury housing and increased spending on homes may be a precursor to further growth in this segment. China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. 9 Indulgence One of the strongest findings of the 2006 report was that over 70 percent of consumers bought luxury products as a form of self-reward. This suggests that the desire to spend money for indulgence, relaxation and enjoyment could become an even higher factor over time. The wealthiest consumers are becoming increasingly familiar with the luxury of five-star hotels, spas and high-end restaurants and constantly craving new forms of gratification. Many join luxury brand clubs not for the exclusivity but because they are regular consumers of luxury experiences and privileges and expect a consistent level of service or additional “perks”. The survey reveals some interesting discrepancies between cities and regions. Thirty-six percent of respondents say they buy luxury goods to pamper themselves, with that figure rising to 51 percent among respondents in Shanghai. Respondents in Guangzhou, Shenzhen and tier-two cities showing a stronger preference for luxury experiences over purchases of luxury items such as bags and clothes. “Compared to buying luxury goods such as bags and clothes, I prefer to pay for luxury experiences” Other Tier 2 cities Shenzhen Guangzhou Beijing Shanghai 0% 10% 20% 30% 40% 50% Agree strongly Agree Trend setting A small but growing segment of Chinese consumers no longer wishes to use luxury brands as a badge. These consumers use brands more creatively to express their identity and individuality. They would be the early adopters of new or niche brands, but may still mix these purchases with more well-known brands. The survey reflects some marked differences in attitudes in this area, with respondents in Beijing and Shanghai most willing to pay a premium for fashionable goods and brands. TNS believes this trend-setter segment is typically younger than average, working in white collar roles and well-educated. However, fashion was also seen as relatively more important among the over-35 age group. These consumers exist in every city, not just the first tier. Celebrity endorsements are not seen as an important factor for most consumers, although they were appreciated more highly in Shanghai. China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. “I am willing to pay a premium for goods that are fashionable” (by city) Other Tier 2 cities Shenzhen Guangzhou Beijing Shanghai (by age) 35-44 yrs 30-34 yrs 25-29 yrs 20-24 yrs 0% 20% 40% 60% 80% 0% 20% 40% 60% 80% Agree strongly Agree “I believe celebrity endorsements are a good reference when choosing a brand” Other Tier 2 cities Shenzhen Guangzhou Beijing Shanghai 0% 10% 20% 30% 40% 50% Agree strongly Agree 10 China’s Luxury Consumers: Moving up the curve © 2008 KPMG, a Hong Kong partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International, a Swiss cooperative. All rights reserved. 11 Clear-cut appeal Sandra Shek and Allison Pyrah, Swarovski Swarovski, the Austrian producer of high-end lead crystal, has found China to be a receptive mar