The year that has just ended has been probably the most anomalous of the last twenty years, in any case e-commerce has proved to be the best sales system for every brand that has aspired to cross continental borders.
Continuous growth – The e-commerce market in China is the most important in the world, with over 900 million active users and sales that exceeded $1.5 trillion in 2019.
The luxury sector is the one that has grown the most, which accounted for 38% of the global market in 2019 in China, and has reached 80% in the last year. China is currently the second largest luxury marker in the world, but is set to be the first by 2025, representing 41% of the total global market. In fact, China has dominated the luxury market for a while now, but the majority of purchases have been made overseas (68% in 2019). In 2020, with the pandemic, luxury purchases were mostly done online. Although the global luxury market decreased 23%, in China the market improved of the 48%, bringing mainland China’s share from about 11% in 2019 to 20% in 2020. Even in Italy, the premium and luxury sectors have managed to maintain, on average, more than adequate levels, thanks to the fact that they represent the excellence of national manufacturing and craftsmanship.
The penetration of Italian luxury brands in China began about twenty years ago. It must be considered that Chinese e-commerce is a completely different market from its Western counterparts, in no way comparable to the European or American market. China has experienced an evolution of consumption level over the years that, according to Bain and Company research, will lead to constitute half of the luxury market by 2025. Sandrine Zerbib, founder and chairwoman of Full Jet, a company founded in 2013 when the luxury and high-end market in China was growing rapidly, can give a better insight.
How do you see the current situation in China’s premium and luxury e-commerce sector?
Made in Italy has always represented the appeal that lies in the words “handmade” and a product made of creativity. On the other, it’s an exceptionally young market – consumers at age of 20 start their luxury shopping and the under-30s were responsible for 47% of all luxury purchases registered in China in 2020. It is therefore essential for brands to win over consumers from a young age, who are always on the lookout for novelty, achieving consumer loyalty, because they represent the future. Moreover, young generation makes China a proper laboratory for the most advanced marketing strategies and technologies. In fact, the share of e-commerce in luxury purchases has increased from 12% in 2019 to 23% in 2020. This also makes the Chinese market very demanding: brands are being asked by young consumers to be at the forefront of digitalization.
Is Made in Italy still a must in China?
As I said before, Made in Italy is synonymous with handmade, creativity, design and exclusive products. Although Italy is considered a breeding ground of unique and exclusive ideas, I must add that today there is no longer a product that “sells itself”; in addition to the quality of the materials and the excellence of the workmanship, there is also the in-depth study of how to propose the product in the right way.
Today, thanks to digital storefronts, you can find many valuable products. The excellence of the offer is no longer a factor strictly linked to the brand, since there are many supply channels. At the same time, it is necessary to study a strategy that highlights the identity of a brand that communicates in a direct way the “Scent” of Italy, that stimulates a sense of belonging and desire and that triggers in the customer a real desire to buy. Once again, it is no longer enough to belong to “Made in Italy”, something more is needed, it is necessary to know the market and the customer’s way of thinking.
What is the typical profile of the luxury goods buyer in China?
China’s luxury-oriented customer base is on average younger than the European and American segments. The fact that the average age of customers is lower, normally well under 40, makes the Chinese digital market extremely different and variable, which is why it is really essential to thoroughly understand the trends and tastes of potential buyers. These trends can be so variable that they can change in a matter of months; trends are a very ephemeral and fleeting fashion. Full Jet has been present on the Chinese market for many years and has gathered considerable experience; I can say that the e-commerce scenario is truly unique in the world and once again, the market is different from the Western view and you really need to understand it in its nuances in order to exploit it.
What advice can you give to Italian brands to enter the Chinese e-commerce market?
Digital markets are constantly evolving, the average Chinese customer is much more detail-oriented, also paying attention to the customer experience they can live through a brand’s platform. As I was saying, the customer needs to feel a brand, to experience it and to be in front of a product that they can really want; brands need to create a precise identity, which aims to communicate the true essence of the brand, the true meaning of a certain product in an indirect way. We can no longer settle for approximations, Italy has the creativity and the art of savoir-faire. If you combine a customized strategy with an attractive brand identity, the result is guaranteed. This is the perfect moment for all Italian companies that want to enter the Chinese digital market, an aspect not to be underestimated.
The combination fo two experts like Baozun and Full Jet, what benefits does it bring to brands looking to attract attention in China?
Baozun is the e-commerce giant in China, whilst Full Jet focuses on strategy and brand awareness. I think this alliance can be summarized in the classic adage “United we stand, divided we fall”. The acquisition of Full Jet by Baozun can generate many advantages for Italian brands that have the desire to develop and expand in the Chinese market, basically any effort and striving for a result for a top quality product can be a great starting point, and we will take care of the rest. The joint experience of Baozun and Full Jet will certainly be a springboard for Italian brands. The two forces combined will use their knowledge of Chinese digital markets and know-how to develop a brand through targeted strategies. I think the picture is very encouraging for the world of high-level Italian craftsmanship.