Chinese consumers travel thousands of miles to the U.K. to shop at places like Harrods, Harvey Nichols and House of Fraser, buying brands like Burberry, Gieves & Hawkes, Johnnie Walker and Aston Martin. It’s a huge market that includes not just the emerging echelons in China but also in India and other rising economies. What is it about British products that have such a leverage on this type of consumer? And how can British brands increase their success in these markets?
Some interesting answers are provided by a study coordinated by Professor Qing Wang, from Warwick Business School, showing that perceived ‘Britishness’ is a significant factor, and that personalities such as David Beckham and the Royal Family play an important part in giving products an aura that competitors from other countries cannot really match. We spoke to Professor Wang to find out more.
How would you identify ‘Britishness’ in products?
When I talk to interviewees during my field research, what emerges most is tradition, culture, royalty, upper class lifestyle, and elegance. All this is combined with innovation.
If you had to list the top five brands that best express what Chinese nouveau riche consumers are looking for in terms of Britishness, which would they be?
There is a large pool to choose from, but if I had to choose, they would be Rolls Royce, Aston Martin, Savile Row menswear brands, Harrods, and Burberry. But Jaguar Land Rover and Scotch whisky are right up there as well.
Do you think that British brands are doing enough in utilizing media such as TV and cinema product placements to promote their sales in China?
The short answer would be no. It’s as if they’re too shy to promote their Britishness. But they’ve started to change, and some bolder campaigns are now concentrating on the Britishness of British brands. And using David Beckham is a classic technique of promotion.
Your research shows that the Royal Family and other personalities help the U.K.’s luxury brands perform better than their global rivals. What is the mechanism involved here?
I have been interested in the psychological mechanisms in my study. Self and social identity is found to be a strong motive. David Beckham or the Royal Family, for example, express a range of qualities that the nouveau rishe consumers aspire to, such as style, sophistication, upper class identity, and history. China has a very long history, and used to have emperors and empresses, but this was swept away during the Communist era, especially the Cultural Revolution in the 1960s. Now with the rapid capitalist economic growth in the past thirty years, a new social order has been called for in the name of a “harmonious society” by the government. The majority of Chinese yearn for a well-structured society. It’s quite ironic that in the U.K., people don’t really like that sort of hierarchy, and class is considered a somewhat negative and out dated concept! In China, the rising middle class people are looking for a sort of certification of position in society, and that comes from learning, and reading. Classic British literature such as Shakespeare, Pride and Prejudice, Jane Eyre, or even Harry Potter, have an important place in their heart and mind.
Are you surprised that the U.K. is performing so well in comparison to its international competitors?
I’ve been in Britain for most of my adult life, and I know about the British mentality, and the conscience of a shameful imperial past, which in a way is quite admirable because it reflects a critical stance, an appreciation that not necessarily all in the past was good. In my research, I found that this is still a sensitive issue for some countries such as Australia and India. But in general, British businesses realize that we shouldn’t throw out the baby with the bathwater, and that we should focus on the positive things, such as the beautiful Georgian or Edwardian architecture that we built in the countries that used to be part of the Empire, and the other good things that we left behind. To draw a comparison with Italy or France, for example, it’s true that they have distinct style of glamour and romance, but their social and cultural heritage are not as influential as the British. Most importantly, perhaps is the ability of the British creative industry to evolve with time. Just think of the British music industry, which is global, where as French or Italian music generally remains local. And there is also our literature, and our film industry.
Sales of British products by brands such as Jaguar Land Rover and Burberry are growing rapidly in China, even in 2013 and early 2014 when Chinese economic figures seem to suggest that their economy is slowing. What potential would you say there is for continuing growth in the sale of luxury products to Chinese consumers? When do you see the graph levelling out?
If you look at the luxury market in China, you have to distinguish between buying luxury for gift giving for business purpose and buying for personal consumption. The demand for gift giving has been hit hard by the government clamp-down on corruption. Nonetheless, the demand for personal consumption remains very strong, and it is now fuelled by the new rich from the growing middle and upper classes. Even though the economy’s growth is slowing, there are still lots of people moving up to the next level. So, looking forwards, I think that the growth in the luxury market will remain comparable to overall growth. If this stays at about 6%, I wouldn’t think that the demand for luxury will flatten out.
Do you think that top luxury brands have understood the mechanisms and techniques of effective marketing in China?
Some of the top brands have already been bought by Chinese or Indian companies, such as Gieves & Hawkes, and Jaguar Land Rover. In several cases, the purchaser was the company that had previously been responsible for distribution in China, and so it already had many retail outlets there, and of course they understand their customers very well. When this happens, they generally respect the brand’s values, because that’s where the value lies. Otherwise, it’s difficult for Western brands to understand the Chinese market. There’s no doubt that other British brands are going to be purchased by Chinese companies – I don’t know whether this will be perceived as good or bad news in the U.K.!
Could you tell us something about the procedures that you used in your research?
Lots of field visits to stores, brands and outlets, lots of observation. I went to Shanghai and Mumbai to talk to people and find out their perception. I’m now starting to talk to companies and brand owners. This is going to be more challenging, because companies are very secretive about intellectual property and super protective of their client base. In addition, we run experiments with Chinese students in our behavioural lab, studying country image and perception, and their association with brands. For example, we tried to see whether the image of an unknown brand could be improved, in terms of prestige, by providing information on the product’s design and innovation, and we found a strong positive effect of design ability on brand image.
Beyond hedonism or having the economic means, why are Chinese luxury goods consumers so driven to buy designer brands that they are prepared to travel from the other side of the world?
There are two reasons. One is tax. The Chinese charge up to 100% import tax, according to category, and so cosmetics, bags, clothes, garments, shoes and so forth are all much more expensive in China than in their country of origin, so it makes economic sense for them to come to Europe. The second reason is more subtle. Chinese people feel that if you buy a brand in the country of origin, even though it may cost a lot to get there, the purchase is more authentic, and a more complete experience. Luxury brands are not just about the big ticket, and the object itself: it’s the whole experience of understanding where it comes from, the story, the history, the narrative behind it. You don’t get that experience in China. When they go back, they can show off more, saying, “I bought this bag in the factory!” and they may have indeed learned more about that brand. The experiential factor is massively important in luxury products.
Could you give us an example of a British brand that has impressed you in their approach to the Chinese market?
Burberry and Jaguar come out top. Burberry has a brave strategy of using new technology and this is very impressive. It is the perfect expression of British technology, in combination with innovation and tradition. I also liked the recent Super Bowl campaign by Jaguar about the British villains and “it’s good to be bad”!