On February 12, China will enter the Year of the Metal Ox. It will be a good year for determination and hard work to pursue the projects we care about. Now is a good time to remind ourselves how strongly China is exerting its pull on the luxury market, and how important it is to understand Chinese culture.

In 2020, a third of Chinese people considered luxury to be part of their daily lives. While they also accounted for one third of the world market for luxury products in 2019, their share is expected to reach 70% in purchases and 50% in value by 2025.

Chinese buyers are well-connected and younger on average than their European, Japanese, and American counterparts. Travel bans during the pandemic drove online sales of luxury items to soaring heights last year.

For example, L’Oréal had record numbers of transactions on the T-Mall platform during Alibaba’s sales event last November 11.

Online alcohol sales rose sharply during the lockdown of early 2020 and have remained very high. French spirits brands are openly optimistic about sales for the Chinese New Year, which is the best time of year for business.

This means packaging’s iconic role is even more important, since digital, animated, or even gamified images are becoming the main point of contact with consumers.

That’s what luxury really is: an icon factory. While the word “luxury” is associated first with social status and belonging to the upper class, for 20% of consumers it instantly evokes the icons of luxury that represent belonging: the It bag, the right watch, the must-have decanter, and other milestones of success and personal empowerment.

Gift-giving, and highly ritualized social practice in Asia, is a context where packaging is even more important. It has to give the recipient maximum mianzi (面子)or “face”; it has to bestow even more value than the gift itself.

Awareness of environmental issues is rising in China, and packaging volume and materials are becoming a major challenge. How can mianzi and ecological responsibility coexist?

One idea is to take the storytelling and dramatic elements traditionally borne by secondary packaging or merchandising and include them the design of the product itself. This could involve reusable packaging, beauty application rituals, consumption habits for spirits, refillable products, artistic limited editions, and so on.

In these challenging times, when luxury is yet again showing just how resilient it is—even though the “lipstick effect” is not as pronounced because of mask-wearing—it’s more important than ever for brands and their advertising agencies to be creative, stimulated by a young generation of Chinese people who love great objects, surprises, and fun!

 *Since the Great Depression, periods of economic recession have seen abnormally high levels of inexpensive luxury items. Journalists call this phenomenon the “lipstick effect.”

Sources:
McKinsey China Luxury Report 2019.
Bain&Company
Ipsos World Luxury Tracking 2020