Everything has changed over the last two years. International tensions have modified attitudes to travel, and this has radically affected the luxury retail sector. A few brands have come under new ownership, while others formerly accustomed to year-on-year double-digit growth have had to come to terms with falling sales. In addition to this, considering the UK, the Brexit has added another point of uncertainty to the equation. We spoke to Professor Qing Wang, from Warwick Business School, who for years has been researching marketing in the luxury sector, and above all the way in which western companies approach the Chinese market. Click here to read our 2014 interview with Professor Qing Wang.
LUXOS: Is it true that high-net-worth individuals are travelling less today?
Qing Wang: I haven’t really seen a change in the travel habits of high-net-worth people. As they are often business people, travel is part of their lifestyle. Often they are not citizens of just one country, and they travel where they need to be. Something that I’ve noticed over the last two years is that high-net-worth people from China are now buying properties in places like London, Paris and New York, and they tend to spend more time outside China for both business and leisure, partly to escape the air pollution problem. The Chinese nouveau riche are investing abroad, buying properties and businesses. At the same time, increasingly strict regulations have been introduced by the Chinese government to prevent people moving their assets abroad. For example, when Chinese individuals exchange money to a foreign currency, they now have to explain why they need that currency, and while this is still allowed, it’s not permitted for property purchases.
Are there specialist agencies in places like London that help Chinese high-net-worth people relocate?
Yes, exactly. They have mushroomed. There are now many agencies that call themselves landing services. They provide consultancy for their clients including financial investment and British passport application, and much more, starting from when they arrive in London, to finding property and schools for their children.
Some brands in continental Europe have seen that there has been a drop in Chinese visitors to their boutiques in Milan and Paris, and an increase in London, due to a greater perceived security in the UK. Can you confirm this?
I think that it’s true. Visitors are more security conscious and selective. The attacks in continental Europe have generated unease about security, and that has helped London to some extent. The other factor is the Brexit, which has pushed down the value of the pound, making the UK a more attractive place for luxury brands and for investment.
Just after the Brexit vote, it looked like there would be a negative effect on the UK in this regard...
It’s still too early to know what the symbolic effect of Brexit will be. It symbolizes anti-globalization and suggests that people from abroad are perhaps not so welcome. On the other hand, people can see the economic effects of Brexit very clearly. Their money gets them more goods and more travel in the UK. Then there is the general image amongst Chinese people that London is civilized and a cosmopolitan city. This is something fairly abstract but positive.
Do you think that the Britishness you mentioned in 2014, things like royalty, tradition, upper class, style and elegance, are still important for Chinese consumers?
Yes, they have become even more important. Chinese visitors have heard about these things, but they haven’t had any personal experience of them. Once they arrive in London and experience them, they become even more interested. So it’s gone from awareness of those cultural aspects to wanting to experience them, and then experiencing them reinforces them even more. It seems to have become more deeply engrained in consumers, not everybody of course, but particularly for those customers who are interested in the culture and heritage of a country like Britain and the stories behind luxury brands.
Two years ago the brands that you identified as being the best expression of what consumers are looking for in UK products were Rolls Royce, Aston Martin, Savile Row boutiques, Burberry, Jaguar and Scotch whisky. Are there any newcomers?
Yes, there are. This is where things are changing, because Chinese high-net-worth consumers are becoming much younger. They are in the age group from about 22 to 34, much younger than the typical luxury consumer in the west. They like brands such as Vivienne Westwood, Alexander McQueen, Victoria Beckham, British luxury retailing stores such as Harrods and Liberty are also attracting large crowd of Chinese consumers as they soak into the ambiance. Luxury purchase itself becomes an experience for them, which they cannot get anywhere else. This change has been accompanied by another trend: Chinese companies are purchasing some of these brands, not necessarily the top brands, more in the middle range, such as House of Fraser, but in any case, brands with consolidated British heritage. That is a signal of the power of British brands.
Are there some interesting examples of promotion by British brands that have been particularly effective for the Chinese audience?
Many of those brands have now realized that they have to promote in China. The Chinese have some special characteristics, so communication has to be tailored to Chinese consumers, with the use of Chinese social media, above all WeChat. According to a recent report by L2, out of the 102 luxury brands entered China, 92 per cent already have WeChat accounts, an exponential growth of 87 per cent since 2014. Content marketing (e.g. story telling and product tutorial, and real time streaming of fashion show) is the main function of WeChat, which is a great fit for luxury brands. Good examples of British brands using WeChat include Burberry and Mulberry. Since 2014, every year Burberry developed special Apps to enable on line streaming of its fashion show with Chinese celebrities as commentators. Mulberry provided interactive functions on its WeChat account during major Chinese festivals such as the Lunar new year and the Chinese version of Valentines Day on 7 July to encourage consumers design personalized products and messages to send to their loved ones. Many luxury brands such as Burberry, Jaguar Land Rover and Kent & Curwen use Chinese celebrities or celebrities that are familiar with the younger generation of Chinese consumers who are highly visible and with many followers on social media to promote their brands. Whoever the personality is, he or she has to have a demeanor of elegance, classy and sophisticated taste that echoes with the Chinese understanding of what Britishness is.
So, even though the international situation is difficult, can we be optimistic at least as regards the market of Chinese consumers in London?
I think that London is fairly safe for Chinese tourists coming to experience the culture and to buy luxury goods, in comparison to other cities such as Paris, or even Milan or New York. Also there is the element of price. In London, they get everything, the culture, the products, and the price differential, which can even pay for the trip. Chinese people are very shrewd in that sense. But there is a deeper reason. I wrote a paper, currently under review for an academic journal, titled “The love for the house extends to the crows on the roof.” This is a Chinese saying, and it means that if you love a culture, there is a meaning transportation of the love for that culture to the brands of that country. When Chinese visitors have experienced the culture of London and Britain, they can better understand the heritage of the luxury brands, because they can see where they come from. So for example, after visiting Chelsea and going to musicals, they want to purchase something of that culture, and so there is a ready-made link to a brand such as Mulberry. Luxury brands are highly contextual, therefore problems start when they are trying to sell overseas, in China, Hong Kong, Shanghai and Beijing, because when the context is missing, some meaning of the brands is lost in translation. It’s not perceived as authentic.