In China, it’s not unusual for millennials to drive luxury Porsches and sport Louis Vuitton bags and Balenciaga sneakers.
A 2019 McKinsey report indicates that by 2025, China will account for 40% of global luxury sales. In 2018, 28% of luxury consumers were born after 1990; this younger generation spends 25,000 RMB (US$3,700) per year on luxury products.
There are many reasons why millennials are driving luxury consumption in China:
- Wealthy parents play a bigger role in the lives of millennials after they graduate from college. Parents still give their adult children pocket money, subsidize rent and even buy them houses and cars. Such generosity is partly because of China’s one-child policy, partly because graduate salaries are low, and partly because these parents have profited from China’s economic boom over the last 20 years. The same McKinsey report estimates that upper-middle-class parents give their children at least 4,000 RMB (nearly US$600) per month.
- Millennials also tend to live at home. It’s common for women to live at home with their parents until they get married, leaving them more money to spend on luxury products. This trend is also common in other Asian countries like South Korea, Japan and Hong Kong.
- Millennial consumers are less frugal than older generations. Those born after 1995 (Generation Z) have only witnessed rapid economic growth, and many don’t know what poverty was like before their arrival. As a result, they are more optimistic about the future and more willing to splurge than save.
These reasons explain why conspicuous spending on luxury products has increased so much over the last few years, and why luxury brands are doubling down on the China market.
China’s young, Justin-Bieber-like pop stars appeal to millennials
In November 2019, Dior chose 20-year-old pop star Wang Junkai (Karry Wang) to be its brand ambassador in China.
His claim to fame was through the popular boy band TFBoys, when he was 16 years old. Since then he has gone into acting and remains popular among both millennials and older women. Aside from Dior, he has also modeled lipstick ads for the likes of Lancome.
From an American’s perspective, pop stars like Karry Wang look feminine; they’re pale-skinned, skinny, and look like teenagers.
But in Asia, millennial women prefer more feminine, pale-skinned, skinny metrosexual pop stars.
Muscular, rugged-looking celebrities are not popular, much in the same way that tanned, risque-looking female celebrities from the West are not popular in China. This distinction explains why luxury and beauty brands targeting women can use male pop stars as their brand ambassadors in China.
Here are a few other examples:
In July, Fila also announced that celebrity Cai Xukun would be its new brand spokesperson. Cai Xukun, just 22 years old, became famous by participating on American Idol-like reality TV shows, and debuting in a boy band, Nine Percent. He has since gone solo, has more than 30 million fans on Weibo, and is also the brand spokesperson for Prada.
Celebrity Haoran Liu also became the brand spokesperson for Richemont’s Piaget watch brand in July; the celebrity is just 23 years old (born in 1997) and has more than 30 million fans on Weibo. His claim to fame was starring in the movies Beijing Love Story (2014) and Detective Chinatown. He did a livestreaming session with China’s “King of Lipstick,” Austin Li, in August, celebrating the launch of a new store in Shanghai.
How to further engage Chinese millennials?
How can a brand effectively reach Chinese millennials? One option is to work with millennial-aged social media influencers and focus on China’s newer video platforms, such as TikTok, Kuaishou and Bilibili.
While historically, brands have engaged millennials with influencer marketing on China’s wildly popular social media platforms, WeChat, Weibo and Little Red Book, more user attention is shifting to video platforms. Globally-renowned short video platform TikTok has more than 400 million daily active users in China, while video-sharing mobile app Kuaishou has 200 million.
On TikTok, international brands can launch their own video ads or work with different types of influencers to take advantage of their existing fan bases.
TikTok and its 15-second videos are better for highly visual items such as fashion, apparel and sportswear. Such videos do a good job at capturing attention and inducing impulse luxury purchases. For example, former boy band star Jackson Yee launched a TikTok video for Tiffany, in which he danced on New York’s Brooklyn Bridge and restaged a scene from the movie West Side Story.
Bilibili, on the other hand, is a mid-form video platform that started out posting anime-related videos and gradually expanded to include other hobbies such as beauty and sports.
Think of it as a YouTube for China, but organized by interests. As of the fourth quarter 2019, Bilibili had 130 million monthly active users, 80% of whom were Generation Z, or under the age of 25. Brands such as Perfect Diary, Shiseido and Louis Vuitton all have channels on the platform.
Last year, Chinese skincare brand Chando launched a co-branded product line with Bilibili, just ahead of the Double 12 (Dec. 12) e-commerce festival hosted by Alibaba’s Tmall. The product line features imprints of Bilibili’s cartoon-TV logo on lipstick and foundation items, among others.
- Chinese millennials are powering luxury sales in China. This is partly because many of their wealthy parents continue to support them even after they graduate from college. Chinese millennials also tend to have a more positive outlook on life and are more willing to splurge in anticipation of increasing incomes.
- In China, the hottest celebrities tend to be young, Justin Bieber-looking pop stars in their early 20s. Asians tend to prefer more feminine-looking celebrities, and luxury brands are selecting them as brand ambassadors.
- A popular way to reach Chinese millennials is to launch video ads or work with influencers on short-video platforms such as TikTok or Bilibili. Such videos are attention-grabbing and suitable for more visual product categories such as fashion apparel or beauty.