Founded in 1946 by French designer Christian Dior, Dior is one of most famous fashion luxury brands in the world. Since its founding at Avenue Montaigne in Paris, Dior has always been synonymous with magnificence and elegance. The first womenswear collection by Christian Dior in 1947 caused a global sensation while leading the “New look” revolution. Until now, whether in fashion, cosmetics or other, Christian Dior has always been at the top of the fashion luxury industry. As China makes up 40% of the global luxury market, Dior also considers China as a major market. At the same time, Dior in China approaches Chinese luxury customers from both product side and creative side.

Source: Dior.com – The new look of Christian Dior

The fragrance, makeup and skincare products are under Parfums Christian Dior division has more than 300 points of sales at the moment in China.

Parfums Christian Dior

From year 1973 on, Dior has had its own R&D center. Over 200 specialists, biologists, pharmacologists and researchers cooperate with over 20 R&D centers in the world’s top universities and science institutes to develop the best products. Dior has always put tactile impression of products as an important factor. All its products bring a perfect combination of technology and joy.

The beauty division (Parfums Christian Dior division) of Christian Dior maintained strong growth, driven by the success of its classic perfume, makeup and high-end skincare lines. Perfume such as J ‘Adore, Miss Dior and Sauvage are big success in the market. Cosmetics, including Rouge Dior and Ultra Lipstick collection lead a trend among customers. Also, the high-end skincare products are growing well, especially in the Asian market. Dior is the #2 luxury brand in China’s perfume market.

Dior Pink City: Dior in China plays with pop-up stores

Source: Sohu.com – Dior Pink City is coming to Shanghai. A beautiful Pop-Up store in a fashion-savvy Chinese city.

After launching the Dior Pink City pop-up store in Macau, the pop-up store came to Shanghai in July 2019. As the first station in Mainland China, Dior made five themed rooms in the pink city, including Dior pink flower shop, Dior pink library, Dior pink urban spa, Dior pink music hall and Dior pink café.

In the Dior Pink City pop-up store, consumers had the chance to experience personalized fragrance trial services, get bouquets of elegant flowers, and relax and get massages in the spa area, experience High-end skincare Dior Prestige, print exclusive photos and finally get small surprises crafted by Dior.

Dior in China entered E-commerce on Tmall

Tmall, owned by Alibaba group, now offers more than 3,000 beauty brands and the proportion of well-known brands the platform to launch their online stores. The big name brands which have official stores on Tmall rose from 555 in 2015 to 84% in 2018. According to Alibaba, Over 3 million women buy at least five tubes of lipstick on Tmall each year. Additionally, affected by the COVID-19 epidemic, COVID-19 pandemic, luxury and fashion brands are paying more attention to Chinese e-commerce platforms.  Just after launching the brand-new Bobby handbag collection, Dior in China had new, strategic moves.

On June 2020, Dior launched its own official Tmall store, right before the Chinese online shopping carnival 6.18. However, only products of skincare, cosmetics and perfumes were available on the Tmall store. So far, Dior has already gained 335k fans within one month.

Dior collaborated with Liu Yuxin

Source: qianlong.com -celebrity live broadcast on Ju Huasuan came to next level

During the Covid-19 quarantine, the Chinese TV show ‘Youth with you II’ has been extremely popular among Chinese, especially among young Chinese consumers. The TV show aimed to select 9 girls to form a girl music band. Liu Yuxin won the first prize for her impressive performance and high popularity. Dior announced collaboration with Liu Yuxin on skincare collection ‘Capture Totale’. The live broadcast on Ju Huasuan (a group buying website) with Jing Tian (Chinese actress, also official ambassador of Capture Totale) helped Dior in China received more than 3k orders and over 2.5 million RMB revenue.

THE9, the girl music group that Liu Yuxin belongs to, was invited to collaborate with Dior for its Bobby bag.

Source: twoeggz.com – Dior invited the new group THE9 to promote BOBBY

Christian Dior Couture

Besides maintaining the brand’s unique style and elegant brand image, Dior fashion division (Christian Dior Couture division) also has launched its official account on popular Chinese social media platforms.

Dior has introduced limited edition Lady Dior bag for Chinese valentine’s day

Luxury brands, such as Burberry, started to use WeChat Mini programs to plug into digital China. For Chinese Valentine’s Day in 2016 (Qixi Festival), Dior launched a WeChat mini program for selling its limited edition Lady Dior China valentine bag. For this bag, Chinese luxury customers choose the decorative embroidery pattern on the strap. The bag was sold out within a few hours on the first day of the WeChat Mini program marketing campaign.

Dior in China made a great effort on doing local Chinese social media campaign and marketing campaign to reach a wider range of customers.

Source: luxexpose.com – Lady Dior Small China Valentine Bag Sold Out Within Few Hours Via WeChat

Dior became the first luxury brand to enter Tiktok and Bilibili

In the past few years, Dior launched its official accounts on popular Chinese social media, such as Weibo, Wechat and Red. On August 2018, Dior launched its official account on Tiktok (known as Douyin in China), making it the first luxury brand to use the platform. So far, Dior has more than 491.1k fans and 3.6m likes with 628 posted videos.

For luxury brands, Bilibili represents a chance to capture young Chinese customers, Gen Z consumers in China and familiarize them with their products and brand ethos. Generation Z accounts for 81% of the platform’s user base according to QuestMobile. The advantages are clear: although they may not have significant buying power now, this generation is expected to account for 55% of total luxury spending by 2025. Dior launched official account on Bilibili on June 2020 with totally more than 7k fans, 22 videos and 132k plays within a month. At the same time, Dior is also the first luxury brand to use Bilibili.

Dior will launch an exhibition in Shanghai

Chanel’s Mademoiselle Privé exhibition in Shanghai in 2019 attracted a large number of Chinese visitors. Dior launched its Miss Dior exhibition after, and invited many of Chinese celebrities. This year, Dior will launch its exhibition in Shanghai ‘Christian Dior Designer of dreams’. Different from Chanel, the exhibition of Dior will showcase more than 70 years of the brand’s artistic creation to Chinese luxury consumers from an unprecedented Chinese perspective.

Source: Dior official WeChat account – The exhibition “Christian Dior, Designer of Dreams”

The exhibition will last about three months. Together with 8 well-known Chinese artists, this exhibition will open a new chapter in the history of Dior in China. A host of masterpieces, including 275 couture gowns, manuscripts and works by artists, are ready in the museum. Next the brand is inviting Chinese luxury consumers to explore Dior’s elegant world and spirit of the pursuit of dreams.

At the same time, the opening ceremony of the exhibition will be broadcast simultaneously on several Chinese social media, including Dior’s official Weibo account, official WeChat mini program and official Tmall flagship store. Additionally, Tencent video and Huawei video will also broadcast the activity.

Author: Qing Zheng

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This article Dior in China: A prime case of luxury fitting into a Digital China is the first one to appear on Daxue Consulting - Market Research China.

History of Chanel

Extraordinary founder

Decades separate the creation of the brand from the beginning of Chanel China. This brand is linked with one person: its founder Coco Chanel born in 1883. She is no ordinary woman. Gabrielle Coco Chanel’s life story is famous throughout in the fashion industry. She grew up as an orphan and she has been able to work her way up to become a fashion legend who designed clothes for Jacqueline Kennedy or created the “Numéro 5” perfume. Coco Chanel also had close relationships with artistic masters such as Pablo Picasso and Igor Stravinsky. Her designs were groundbreaking and inspiring in the fashion industry.

Creating classics instead of trends

The founder created the Chanel DNA, has she stated “Fashion goes out of fashion, style never.”. Chanel is not too trendy because fashion could change and become out of date quickly. The brand’s concept is to be simple and elegant. Its main colors are black and white.

[Source Behance.net – Chanel N°5 perfume by CHEUKLUN LO]

When Coco Chanel passed away in 1971, the brand faced a decade of uncertainty. Then in 1983 the other famous Chanel artistic director arrived: Karl Lagerfeld. He created a new inspiration for the brand and make it prestigious again. He passed away in 2019. Now Viriginie Viard is the artistic Director of the company.

[Source: Karl Lagerfeld Copyright Daniel Biskup]

Nowadays the brand is creating on four main fields: haute-couture, perfumes, jewelry and make-up. They have 3000 employees in France. Chanel is one of the few remaining independent luxury company, meaning it is not on the stock market. It still belongs to the Wertheimer family one century after since 1924. In 2019, Chanel made a profit of 9.88 billion euros, an increasing of 12.5% compared to 2018. The company still progress, they must adapt their strategies to be competitive against Hermès or Gucci. Decades separates the creation of the brand from the implantation of Chanel in China, on the Chinese luxury market

Chanel’s China market entry

The China market entry of Chanel started in the end of the 1990s. “香奈儿” is the Chinese brand name of the company. In 1999, the brand opened their first shop in Beijing. In 2013, Chanel possessed 10 stores in China, this number is increasing as the demand of Chinese luxury consumers. The brand also has a flagship store in Shanghai, 430 square meters inside the Peninsula hotel, opened in December 2009

Chanel seized the opportunity of a China market entry in the 1990s when the Chinese economy was booming. If there is an important economic growth, Some of the Chinese will benefit from it and start to want more high-end products, a proportion of them will become luxury consumers. Since this era, the Chinese luxury market is increasing every year. Olivier Abtan, Associate Director of the Boston Consulting Group, notes that this is due to changing demands from Chinese consumers.

Indeed, Abtan states that: “The sophistication of demand in luxury goods is rapidly increasing in emerging countries.” Chanel benefits from: its Chinese brand image: “In the eyes of Chinese luxury consumers, Prada, Chanel or Hermès are much more desirable, they are brands that don’t lose their character,” says Alexis Karklins-Marchay, a partner at Ernst & Young.

How Chanel China developed on the Chinese luxury goods market

Traditional strategies

Chanel now has vital interest in China and still needs to continue developing. In 2019, Pacific Asia was the first selling region with an annual benefit of 4.2 billion euros. An increasing of 19.9% compared with 2018. Chinese luxury demands continue to grow and luxury brands in China are competing to be the leader. What is the strategy of Chanel in China?

Chanel China hosts events

First, Chanel China hosts events to continue to gain admiration on the Chinese luxury  market. In 2011, There was an exposition of the brand in the National Art Museum of China of Beijing. The exposition of Chanel in China was a good strategy to improve their Chinese brand image because not only Chinese luxury consumers went there to visit the exposition but also arts students. It highlights the history of the brand and their spirit. It is more like an historic exposition than just a fashion one. In 2013, There was the “The little black jacket” exposure in Shanghai. Only for few important people. For this event the main purpose was to gather hype people to increase the exclusive aspect of the brand.

[Source: Behance.net – Exposure by Lost In China]

Unique pricing strategy

Second, Chanel decreased the price of their products in China. Consumers reacted positively to  this unique China pricing strategy. This is a questionable strategy because it is abnormal for luxury brands to decrease prices in China. Most brands  tend to increase prices to make luxury goods more exclusive. Chanel China’s obscure pricing worked according to their high volume of sales in 2015.

Prepare for the booming middle class

Third, Chanel in China must continue fulfilling the increasing demand on the luxury goods market. Mr. Abtan, of the BCG, is convinced that the Chinese luxury market will continue to grow due to the “tsunami of the new middle class” that is booming in China. Chanel will benefit of this phenomenon. Even if the Chinese luxury demand continues to progress, it is today evolving as he also stated: “There is now a generation of Chinese women who buy brands for themselves, not to be seen.” Now not only consumers are seeking Chanel goods for its positive brand image in China, but also for the quality and the style of its pieces. A proportion of them wants more exclusive products without big branding on it.

Chanel China features traditional strategies to fulfill the Chinese luxury consumers demand. Some of them are also more innovative. Brands have to adapt to the importance of Chinese ecommerce. For example, Nike or Tommy Hilfiger are also improving their digital strategy in China.

Chanel China’s digital strategies

Chanel is developing on the Chinese digital market; it is an important segment of the Chinese luxury  market. They now have their official Chinese website. In 2019, The brand also made a deal with T-mall to sell on their website. In both cases, you can only buy some cosmetics and make-up on webstores. Most of the time, Chinese luxury consumers go through the luxury brand website to see what they want to buy and then go to real stores to purchase.

Bruno Pavlovsky says that even if the brand gains benefits from e-commerce especially in China, it is not the strategy to be able to buy clothes without being in a store. He stated: “You have to be able to touch the creations, it’s part of the experience.”. Nevertheless, he knows the impact of the web for Chanel in China. Thanks to the digital strategy, a transition occurs: Chinese luxury consumers were buying make-up and perfume of the brand and now they begin to buy haute-couture clothing in majority.          

In 2018, the online division of the brand increases of 50% compared with 2017. An important growth considering only perfumes and make-up are sold online. Chanel does not want to sell its other type of products other than in store. This also due to the Fact that the company started to work with influencers. These “KOLs” (See our podcast on the Key opinion leaders) have a huge importance in China and contribute to sells company products on the Chinese luxury market.

[Source: Chanel.cn – the official website of Chanel in China]

Chanel in China has many strategies to develop on the Chinese luxury goods market and is forced to rethink its communication to fit Chinese luxury demand needs.

Issues that concern Chanel in China

Fakes, a plague of the Chinese luxury goods market

In 2019, more than 73% of the global counterfeit industry came from China. Every brand is facing this,  Chanel included. Lots of effort are put from the brand to wipe out this phenomenon.

In 2015, Chanel won a trial against the mall Golden World Glasses City of Shenzhen. The brand sued the mall because some counterfeit clothes inspired by Chanel were sold there. The Shenzhen court forced the mall to stop this activity and to pay 250,000 RMB to the company. Even if Chinese authorities ban counterfeit, it is still possible to find Chinese counterfeit products online and offline. Fakes from Chanel impact the Chinese luxury goods market but are also a worldwide issue.

According to Unifab statistics, Every year, French brands lose 6 billion euros due to counterfeits. 27% of the French companies spend more than a million euros to stop it. These counterfeits are sold across the world. Chanel still must face this issue which has consequences on the Chinese brand image. Two recent events also impede the development of the brand.

The Hong-Kong crisis and the Coronavirus: Their impacts on the Chinese luxury goods market.

These two historic events impact Chanel in China. First, is the Hong-Kong crisis. issues. The brand announced in September 2019 the cancellation of their fashion show in Hong Kong scheduled for November 6^th. The brand could not continue to develop its Chinese brand image because of this political crisis.

Second, the Coronavirus had an impact on the entire Chinese luxury goods market. After clothing many stores, the brand announced the postponement of their Beijing fashion show in May. Even if the Coronavirus raises some problems in the country it also has indirect consequences. In March 2020, the company announced that the brand is closing its main factories in France, Italy and Swiss.

Not only the virus had an impact on the Chinese luxury demand but also on the offer of Chanel in China. These two major crises will have a short and a long-term impact on the Chinese luxury goods market.

What will Chanel China accomplish next?

Thus, 21 years after it’s China market entry, the middle kingdom is vital for Chanel. The luxury brand continues to invest in China to conserve its prestigious brand image as to be close with its Chinese luxury consumers. Chanel China continues to develop with both traditional and digital strategies. The brand is still leveraging KOL marketing to increase brand awareness.

If you have any questions or would like to discuss your e-commerce strategy in China, feel free to contact our project team at dx@daxueconsulting.com.

You can also view  our analysis of the luxury brand Coach in China.

Author: Enzio Cacciotto

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This article Chanel in China: Digital strategy and standing up to counterfeiters is the first one to appear on Daxue Consulting - Market Research China.

Duty Free shops are retail outlet stores that are exempt from paying all local or national taxes. This tax exemption is on the basis that the goods sold in these stores will be sold to travelers who will carry them outside of the country. Inside of duty free shops, products ranging from high-end luxury brands to skin care to specialty food and beverages are sold, at drastically cheaper prices. The products, which would otherwise be highly taxed in stores inside a country’s regular territory, are cheaper because there are no added taxes to them. Duty free shops are generally located inside airports as they target tourists and travelers. Although they are located in airports, not everyone can shop at them.

Using Zhihu, Chinese consumers have expressed that in order to be able to shop inside duty free shops you must:

• Be a traveler. More specifically, a tourist passport holder;
• Have a departing international flight or arriving by an international flight. If you are a passenger on a domestic flight, you cannot enter duty free shops. You have to be going abroad;
• For foreigners, you must register your passport.

You should also:

• Sign up for a duty free membership provided by the operator.

Chinese consumers attitudes towards Duty Free shopping

As China’s economy was developing, the living standard of its individuals improved as well. Chinese people are now choosing to enjoy life more through traveling, choosing to travel as a way to “enrich their knowledge.” When traveling to foreign countries, Chinese tourists purchase a lot of products. This action is the reason behind individuals believing that Chinese tourists are wealthy. However, the majority of them may not be rich and purchases a lot of products because they frequent duty free shops. Chinese consumers specifically look for duty free shops when traveling because they are perceived to provide high-end quality products for cheaper prices than their home countries. The products sold are also perceived to be genuine since countries, including China, strictly control the goods.

 Taking to Zhihu, Chinese consumers have inquired about which duty free shops are the best to shop at and what kind of products are worth buying.

Travel destination such as South Korea, Japan, and Sanya seem to be the three most popular destinations for Chinese tourists and duty free shopping. These are the top destinations because of the quality of the skin care and makeup products and the number of high-end brands provided.

Another reason behind Chinese consumers liking duty free shops concerns the term Daigou. Daigou are known as shoppers who make money by buying products outside of the mainland and then selling them when they return. They mainly specialize in luxury goods but also in everyday items such as groceries, because they cost less and are of higher quality.

Digital platform promotions of Duty Free shops in China

On Weibo, Duty free operators promote their shops and products in numerous ways. Lotte Duty Free and Shilla Duty Free, both Korean duty free shops, have Weibo accounts that have acquired over 8000000 and 5000000 followers, respectively.

Along with the promotion of their products, the accounts also feature services such as giveaways and activities to obtain free products.

These two big Korean duty free shop operators have their websites in Chinese that caters to Chinese tourists.

For Shilla’s website traffic, a percentage of 1.93% comes from social media. Among this 1.93%, Weibo accounts for 1.51%. This means that inside of China, Chinese consumers who visit the website are mainly coming from Weibo.

For Lotte Duty Free Chinese website’s traffic, 1.58% of traffic is drawn from social media. Among this 1.58%, 2.22% is from Weibo.

Thus, Chinese consumers mainly access the site from Weibo, among all the Chinese social media sites.

Online searches for both of these brands of duty free shops in China have displayed constant cycles of highs and lows. Lotte Duty free started to see a decline in searches in early 2018 and continued to decline until early 2019, while Shilla Duty Free witnessed constant growth until early 2018 before seeing a decline. By 2019, it’s searches started to increase again.

The search frequency of Lotte Duty Free Shop on Baidu from 2016 to the present, the highest peak was in at the end of February 2017.

The search frequency of Shilla Duty Free Shop on Baidu from 2016 to the present, the highest peak was at the end of February 2018.

On the official websites, both operators use Korean celebrities to endorse their products, assuming the role of a KOL. They feature the celebrities holding the product, on the promotional materials for the product, and other activities. Lotte Duty Free even utilizes Chinese video platform Youku, to promote their products and to do some KOL marketing. The videos are featured on their website.

Duty Free in China Case Study: China Duty Free Group

China Duty Free Group (CDF) is the only state-owned monopoly company that is authorized by the state-council to carry out duty free business nationwide. They are one of the top three duty free distributors in the world, the largest duty free retailer in China, and have established over 240 duty free shops in the airports of multiple cities. The group has nine duty free types. In the tourism retail business, China Duty Free set-up L’île du Luxe stores that offer top international brands of products such as perfume, cosmetics, clothes, jewelry, and watches, and high-end stores in airports. Currently, there are shops in airports in Guangzhou, Hangzhou, Nanjing, Xiamen, Shenzhen, Dalian, Xi’an, Chengdu, Guiyang, Shenyang, and Changsha, along with shops offshore. The group also established Chinese Specialty shops that are targeted at the market of high-end and high-valuable Chinese specialty souvenirs such as toys, stationery, clothing, bags, food, and household supplies.

In 2016, China Free Group Sanya International Duty Free City won the CTF Travelers Conference “2016 Chinese Tourists Favorite Shopping Shop” Award. Sanya Duty Free City is the world’s largest tax-free commercial complex located in Haitang Bay, Sanya City in Hainan Province. The duty free city has the theme of tax exemption, integrating business, catering, entertainment, and leisure and shopping. It features around 300 internationally renowned brands, five major divisions of national specialty products, Hainan specialty products, outdoor sports, food, customer service, entertainment, and recreational areas. Providing a one-stop shop for customers and enjoyment for the family.

Sanya Duty Free City utilizes Weibo for promotion. The account has attention of 300 and over 270000 followers. KOLs are not frequently used in the promotional materials of the products and mainly include visuals of just the products.  The account also features articles on products and topics related to the shopping experience such as articles about things that customers/fans of the location are most concerned about. These kinds of articles function as a kind of “frequently asked questions” section where the business provides answers to the consumers’ concerns through the articles.

Duty free shopping has become a large part of Chinese tourists’ traveling. With duty free shops, they can obtain goods that are otherwise too expensive in their homeland. These shops offer a way to enjoy luxurious lifestyles within their financial means.

Author: Shyaiah Mitchell

Make the new economic China Paradigm positive leverage for your business

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This article What do Chinese consumers think of Duty Free shops? | Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.

Source: Forward-The Economist

The history of perfume in China

Many people believe that perfume is a new thing in China, however, this is far from the truth. As a matter of fact, the Chinese have a long history of using incense and fragrance herbs in China. Ancient Chinese not only burnt incense, but they also mastered the distillation skill to produce “perfume”. Yet it had mainly be used by imperial and noble families. In the 20s and 30s, perfume was also very present in China, especially in the city like Shanghai, many perfumes are even produced locally. Perfume had always been a symbol of elegance, wealth and mystery in China. However, the arrival of communism stopped the trend. Products like fancy clothes, cosmetics and perfume were a symbol of capitalism and illegal in China at that time. After the Chinese economic reform and open-up (starting in 1978), Chinese consumers are holding increasingly stronger disposable income and an opener attitude towards global lifestyle trends. Using perfume in China has become popular once again, even a part of the daily life for many young Chinese consumers.

Foreign perfume brands should approach Chinese consumers differently

P&G notices a real potential concerning the perfume market of young Chinese consumers. Back 2014, less than 1% of the Chinese population used perfumes while 60% in Occidental Europe or in the US were doing so. Compare to their parents, Chinese millennials (born from the early 1980s to early 2000s) get to know about perfume in their early stage of life. On the other hand, the Chinese young generation is more appearance conscious and have a stronger desire to show their personal taste in comparison with their more conservative parents. Hence, they have become the main force of consuming perfume in China.

For a very long time, China had no culture of using perfume until recent years. In other countries, consumers might choose one particular perfume because of its name, shape of bottle or scent that may trigger fond memories from their life experiences. Yet Chinese millennials have grown up with parents and grandparents wearing no perfume. As a result, the attachment factor will not have an impact on the consumers’ perfume purchasing behavior. For the younger generation who starts to explore the world of perfume, they tend to make a safer choice by picking those from well-known brands and products with higher reputation. Moreover, since wearing perfume shows a high social status in China, Chinese consumers want their friends and acquaintances to recognize the one they are wearing.

On the biggest Chinese question-answer platform Zhihu (知乎), the top 2 posts regarding perfume/cologne are: How to Enter the World of Perfume (with 26K agreed and 643 comments till December 20^th 2018) and The Complete Guide to Perfume (with 14K agreed and 232 comments till December 20^th 2018), in which the author explains the basic knowledge about perfume, for example: What is top notes, heart notes and base notes; as well as the basic types of fragrances. The author also offers perfume novices suggestions about how to pick the first perfume and recommends certain perfumes for them to try out. The 4^th hottest answer on Zhihu regarding perfume is to answer the question: How to Wear Perfume and Where to Spray On? (with 13K agreed and 322 comments till December 20^th2018).

As mentioned before, Chinese perfume market is still in the initial phase. International perfume brands should approach Chinese consumers differently as consumers from other countries. Besides the role of a seller, western companies should also play the role of an introducer of perfume in the Chinese market. Brands should help Chinese consumers developing the knowledge of how to choose the right perfume, as well as how to use it. As a result, it could be very advantageous for foreign brands by the time they successfully transmit the habit and tradition of using perfume. Once more and more young consumers in China obtain knowledge and culture, wearing perfume will become a part of many Chinese consumers’ daily life.

Perfume and cologne market in China: Sephora Beauty Class

Sephora provides an online page where they sell perfume a so-called “Sephora Beauty Class”, which shows the perfume or cologne classification according to the percentage of perfume, and from which category is the current product on that page. This helps Chinese consumers learn the right description of the product and how long they can expect the scent to last.

Male consumers are becoming more interested in cologne

Young Chinese men are becoming more beauty conscious and confident to take care of their appearance. In VIP.com’s (唯品会Chinese e-commerce platform, focus on cosmetics and clothing) report, from 2015 to 2017, post 95s increased year by year, from 16.7% of the 2016 men’s beauty purchase rate in 2016 to 42.9% in 2017. Although according to Forward-the Economist, over 70% of Chinese perfume market share came from women in 2017, young male consumers nowadays are getting rid of the traditional image of a Chinese man and becoming more and more interested in cologne. International brands should approach Chinese male consumers in the early phase of their cologne exploration journey.

How to pick colognes? One of the top ten answers on Zhihu regarding to perfume/cologne, which gained 3.1K agreed and 252 comments (December 20th2018).

The best period for selling perfume and cologne in Mainland China

Good timing to engage with the Chinese male consumers is a holiday. From Daxue Consulting observation, Chinese consumers like to purchase perfume as a present for their significant others, since perfume as a gift is considered personalized and intimate. As we can see from the search frequency of the term “perfume or cologne” (香水) in the last 12 months, peaks have been reached in the week before Valentine’s day and the week before Chinese Valentine’s day (七夕 Qixi, mostly in August, depending on the lunar calendar). Many Chinese male consumers might not purchase their first bottle of perfume on their own but receive it from their girlfriend or wife. As a matter of fact, consumers in China almost only choose perfume from international brands as gifts, since these are considered more decent. Chinese not only gift perfumes on Valentine’s day but also on other occasions like birthday, Christmas and anniversaries. Compared to other luxury goods, perfume from a high-end brand is more affordable, yet still wins the gift-giver a good “face” because of the brand reputation and the favorable design.

Screenshot: Baidu index, search frequency for the term “Perfume” from Dec. 2017 to Nov. 2018

Design and brand reputation might be more important than perfume itself in the Chinese market

Social status is very important in China, the average Chinese consumer prefers using perfume from luxury brands to show their status. Compare to a Chanel handbag or a pair of Gucci shoes, perfume from luxury brands is much more affordable. It is a good starting point for many Chinese consumers to get in touch with an international premium brand. On the other hand, due to the concern of Chinese consumers about food and cosmetic scandals, they have more trust in perfume from international brands. Although there are plenty of Chinese local perfume brands, they mainly appear on the low-end market. According to data from Euromonitor International report on the Perfume Market in China, sales of international premium fragrance brand in the Chinese market grew by 2.2% during 2016 while the market of domestic fragrance brands dropped by 3.6%. In general, international brands have a good reputation in China, it is even so when it comes to products like perfume. It endows the bottle of fragrance with an exclusive and elegant ambient, especially when it is coming from counties like France or Italy.

Source: chyxx.com (left) o-odata.cn (right)

70% of the Chinese perfume market share comes from world known brands. Since Chinese consumers consider perfume as a luxury product, they tend to purchase perfume from high-end brands, which are exclusive from overseas. The top 5 brands by retail sales in the Chinese perfume market are Chanel (FRA.), Dior (FRA.), Gucci (IT), Jo Malone (ENG) and Versace (IT).

This is a post from a Weibo KOL 孙尚香Scent specialized on content about scents, lifestyle and art, who has 843K followers:

I just got interviewed by a European market research institute, they asked me: “In the Chinese perfume market, what matters the most for a brand-new perfume to Chinese female consumers? I answered: as a matter of fact, the appearance of it… Am I being too honest?” The top comments under this post mentioned what also matters a lot is the cooperated celebrities for the product and name of the product. This post might not completely right, however, it implies that the design and celebrities’ endorsement can strongly impact the Chinese consumers’ perfume purchasing decisions.

The penetration of the Chinese perfume market: Diverse distribution channels

The offline store is still a significant distribution channel for selling perfumes in China. In the offline stores, consumers have the chance to smell different kinds of scents and obtain professional consultation. The most relevant channels are shopping malls as well as personal care and beauty stores like Sephora. Although shopping malls normally have a better presentation of the products and offer more exclusive service, young Chinese beauty consumers increasingly tend to purchase beauty products including perfumes from stores like Sephora, in which perfumes are placed on open shelves and organized by different brands. Products are better accessible and the shopping experience more relaxed.

Perfume presentation in a shopping mall in Shanghai

Perfumes on open shelves in one of the Sephora in Shanghai

Due to the high internet and smartphone penetration in China and the convenience of online shopping, Chinese online retailing has been booming since many years and it is still on an upward climb. A few international brands (e.g. Chanel) have their Chinese official website selling diverse products incl. perfume. Besides that, several foreign brands have built their official flagship stores selling cosmetics and beauty products incl. perfume on Tmall (Chinese B2C e-commerce platform from Alibaba Group), e.g. Estee Lauder, Lancôme, Givenchy, Jo Malone, Guerlain. Another option for brands to distribute perfume in China is via Tmall Global (天猫国际官方直营), as CK, Gucci, ANNA SUI, Burberry, Versace and Davidoff are doing. Tmall Global offers discounts very frequently and has a strong price advantage. On Dec. 20^th2018, the best sellers on Tmall Global are from the following international brands: CK, Burberry, Versace and Ferragamo. These products have relatively low prices, for every 50 ml, the average price is approximately 175 RMB (25 USD).

Screenshot: Bestsellers on Tmall Global on Dec. 20th2018, products and prices may change quite frequently from day to day.

The second option for international perfume brand on Tmall is to distribute through the Tmall Sephora flagship Store, which is used by e.g. Gucci, Kenzo, LOEWE, GIVENCHY, Bvlgari, Chloe, miu miu etc. As we can see from the prices of over-all best sellers, the average price is much higher than which on Tmall Global – 805 RMB (117 USD) for every 50 ml. The over-all best sellers on Tmall Sephora flagship Store are from the following international brands: LOEWE, Tiffany and miu miu.

Screenshot: over-all best sellers on Tmall Sephora flagship Store by Dec. 20th2018, LOEWE 001 had a total sale of 5001 pcs.

There are no official flagship stores from international brands on Jingdong (京东, China’s second-biggest B2C e-commerce platform). However, brands can distribute perfumes on the Jingdong Ziying Store (京东自营店, direct sales of Jingdong). Moreover, same as on Tmall, international perfumes can be sold on Jingdong Sephora flagship store.

Last but not least, the emerging social media and e-commerce platform Xiaohongshu (小红书, also known as RED) is providing the opportunity for Chinese consumers to purchase perfume online. What makes Xiaohongshu special is its social and life-sharing character, the platform works closely with Chinese KOLs and celebrities. The following example is KOL’s article recommending nine different kinds of perfumes from international brands and shared her experience. At the bottom, readers can purchase directly the buyable products mentioned in the post, which in this case, all nine perfumes mentioned. This post got 12K likes and 988 comments. It also has been saved as a favorite for 53,8K times, which means many readers would view this post again in the future and take this KOL’s recommendation and user experience as a reference.

Screenshot: One KOL’s post recommending perfumes on Xiaohongshu

What kind of perfume do Chinese people prefer: Be aware of the different preference for the scent of Chinese consumers

Chinese consumers prefer more delicate and floral scents. Chinese people do not feel a strong need to cover the body smell with perfume. Secondly, China has a very introverted culture and social environment, as a result, Chinese people don’t want to “stand out” from the crowd. Wearing too strong perfume might be considered indecent in China. Finally, China has a long history of using herbs and another kind of plants for pharmaceutical usage. Chinese consumers believe in the medical effect of ingredients making of perfume. Some consumers like perfume carrying an earthy or herby note rather than a heavy fragrant which could be considered as “smelly chemical”.

Takeaways for international perfume and cologne brands from Daxue Consulting

Unlike other counties, for the last decades, Mainland China had no tradition and culture of using perfume. Yet as the Chinese young generation holding stronger disposable income and more open attitudes towards global lifestyle trends, the perfume market size in China is increasingly growing.

How can international companies approach Chinese consumers and get a piece of the pie before it is too late?

One thing is sure, Chinese consumers are different. For example, the attachment factor of perfume won’t work in China since a young generation has grown up with their parents and grandparents wearing no perfume. International brands should not only play the role of seller, but also the role of an introducer of perfume culture. As we can see from the behavior on Chinese social media, Chinese consumers are very interested in Perfume, yet lack enough knowledge about it.

Chinese male consumers are becoming more active in the beauty product market including the cologne market as the traditional image of perfect Chinese male changes; they are now more appearance conscious and more confident to purchase goods like perfume.

Moreover, Chinese consumers have a different preference for scent, fresh and floral fragrances are more acceptable than strong ones. Also, woody and herby scents are liked by many Chinese consumers.

Personal care and beauty products stores like Sephora are the first choice for Chinese millennials to purchase perfume offline, as the shopping experience is more relaxed and the products more easily accessible. For online-retail, the two massive Chinese e-commerce platforms, Tmall and Jingdong, are good choices for international brands. The social media app Xiaohongshu is also becoming an unneglectable platform to leverage, not only by working with KOLs and celebrities to promote but also as a distribution channel.

Author: Chencen Zhu

Daxue Consulting considers each project as a unique and new challenge. With our services including store checks, Focus groups, Mystery shopping, Market analysis, In-depth and quantitative interviews, Daxue will provide you will the cutting-edge market analysis of the industry and product in China. Based on the data and report, we will offer you the Chinese market tailor-made business plan and go to market strategy with a ‘think out of the box’ Blue Ocean Strategy for your perfume brand.

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