Understanding the dynamics of the Chinese ultra-luxury market

China's UHNWIS

Ultra-rich locals who are wealthy and demand high-level craftsmanship and quality – are there to welcome you. Amrita Banta is Managing Director of Agility Research and Strategy. She observed that UHNWIs in China are more resilient than wealthy people due to their high wealth. They are the last to feel the effects of an economic crisis.

The number of billionaires in China is growing faster than that of the United States. This means that the socio-cultural landscape of China is changing. For the third consecutive year, China is the top country on the 2022 Hurun Global Wealth List with 1,133 billionaire entrepreneurs. This is 75 more than the previous year. The United States comes second with 716 entrepreneurs. The two countries together represent 55% of global UHNWIs. They are therefore the greatest luxury drivers in the world, which is not surprising.

These are the main customers of the houses, which make the majority of sales. Mr. Banta said that while there has been a lot of focus on attracting new luxury consumers, especially Gen Z, this group is only a small piece of the pie. In addition, very wealthy local buyers are increasingly wealthy and willing to spend more. Elisa Harca is Red Ant's co-founder and chief executive. This means that we are witnessing the Matthew effect, where the rich get richer and the poor get poorer. “High net worth individuals increased by 1.3%, while very high net worth individuals in China increased by 2.5%. “We are seeing an increase in the super-wealth, who are willing to make major purchases that better reflect their needs,” she says.

Chinese customers are among the most demanding and educated in the world

UHNWIs want more than a monogram and an IT bag. They also want to make an informed purchase. Brunello Cucinelli said, “Chinese customers are among the most demanding and educated in the world today and have created a unique culture of quality. Cucinelli is known as the king of cashmere. Her knitted cardigans can be had for up to 6700 dollars (47,700 RMB). It saw its sales increase by 32% in the first half of 2022, surpassing the 28% of the luxury brand LVMH.

The founder of the Italian house said: “Today, Asia generates around 24% of our revenues and China alone represents around half of our Asian activity. There is still a lot to do, but we are optimistic that we will progress over time and stay true to our identity. Between 2011 and 2020, Cucinelli's business in mainland China grew eightfold, from $7.4 million (52.6 million RMB) to $61.7 million (439 million RMB). source https://touristechinois.com/comment-le-luxe-peut-conquerir-la-chine/

If a product becomes too common, it loses its exclusivity and is forced to leave the ultra-luxury market. Italian menswear brand Stefano Ricci has been present in China since 1993. CEO Niccolo Ricci said the Chinese customer wants an experience of personal pleasure based on craftsmanship and customer care. He said there was no need to use exotic skins or overdone colors. "Luxury brands often create 'shock' propositions while we do 'chic' propositions," he said.