China Traveller
July 2009
As China continues to contribute to the enlargement of the world’s high disposable income pool, five star accommodation is becoming par for the course amongst China’s burgeoning elite. Revitalized by this new market that is currently growing in stark contrast to the rest of the world, owners and managers of ‘luxury’ five star hotels and resorts are sparing no effort to attract the generals of opulence.
While even group package Chinese tourists have already proven their passion for purchasing luxury products when abroad it is the upper most section of the ladder that the decadent brands are pursuing. For those who have both a before and current view of China’s urban life the targeting of China as a new luxury market will come as no surprise. Previously dominated by RMB1.2 Xiali taxi’s (with exception of the government driven black Audi’s); RMB10 per dish meals; RMB6,000 per/m2 apartments and clothing & accessories not even attempting to replicate international fashion trends, urban China today is virtually another world with stretch limo Hummer’s (not to mention the previously unheard of Sichuan province based company that just bought Hummer!); fantasy restaurant bills under RMB200; RMB30,000 per/m2 apartments and Gucci/ Prada outlets seemingly everywhere. In fact, similar to other newly wealthy countries, China’s growing adjustment to wealth has gone from the sublime to the ridiculous resulting in a situation where it is now almost impossible to order a bottle of champagne in a club without the accompanying sparklers and fanfare screaming ‘look at me, look at me’. Even my favourite burger joint now has a promotion offering Moët & Chandon, seriously…, champagne with a burger?
Make no mistake, China’s new economic elite have serious money and they are happy to depart with a significant amount of it so long as the exercise heightens their social standing, music to the ears of luxury brand marketer’s intent on finding their emotional pressure points. But the challenge of targeting China’s economic elite is everything but child’s play, not only is the market unique due its relative youth but is further compounded by China’s cultural uniqueness long shut off from the rest of the world, which begs the question, how does an international marketer successfully attract the attention of individuals from a historically inward looking society?
Those in the best position to target China’s wealthy will not only have a reputed international brand but will also have dedicated operations on the Mainland itself targeting the source of the market. The aggressive entry of the world’s top luxury hotel brands is further depressing an already saturated market for the time being but the backroom planners are well aware that the pure numbers game that only China can produce will save the day in the near to medium future, and result in an enviable brand loyalty along the way essential in attracting a nation that is starting to look outwards.
Luxury hotel and resort groups without a China presence will find it more difficult in attracting sustainable Chinese numbers but do have the benefit of utilizing platforms such as the recently held Asia Luxury Travel Mart in Shanghai in addition to other traditional marketing tools. Such establishments might find it challenging to retain the loyalty of Chinese travellers however due to their lack of on-the-ground experience of satisfying particular Chinese clientele requirements, ranging from basic communication, hospitality offerings to cuisine.
Contrary to previous fears of Chinese group tour stowaway’s and the accompanied discriminatory visa procedures a number of informed destinations, led by Japan, are changing tack to target this lucrative Chinese luxury market by making provision for FIT visa procedures ensuring that those that have the means no longer have to be accompanied by tour guides and bank embarrassing deposits as a return guarantee. By cooperating with inventive partners such as VISA, who already have all required information of the potential traveller readily available, this trend is set to snowball.
So just how does a luxury brand marketer target China’s economic elite? If looking for a silver bullet you will surely be disappointed as the answer is: ‘by getting back to basics’. Throughout the various interviews conducted on behalf of the China Traveller since its inception I have rarely heard the word ‘research’ mentioned. Dissimilar to the heyday of ADS promotions, the shotgun targeting approach is no longer relevant if brands expect to see a return on investment. Market segmentation, the most basic of marketing concepts in any MBA course or ‘10-Day MBA’ book for that matter, will also have to dig far deeper than the current ‘white collar target audience’ declaration and shed light on the varying preferences held by wealthy consumers based in different geographic locations, different age groups, different gender, different industries, different language abilities and different behavioural segmentation etc.
Every luxury brand on earth will soon be gunning for the Chinese Yuan and if my Google alerts are anything to go by a new luxury hotel or resort seems to be launching every day somewhere on earth, ensuring that the international luxury market will remain a buyers market for the foreseeable future. Unlike the luxury market obligation, Chinese market share will not be served on a silver platter.
China Traveller
China Traveller 
China Traveller 
