China’s luxury market has experienced an astonishing boom in recent years, with spending by Chinese consumers accounting for one-quarter of the global total. The growth is driven by a number of factors: an increase in the number of Chinese travelers and their household disposable income to name a few. The flourishing Chinese market has presented many opportunities for global luxury players to establish their presence across the country, however localizing luxury products has proven to be complicated. If the appeal of luxury goods lies in their foreign provenance, does it make sense for them to undergo the process of localization?
Localization of luxury products in China can be tricky due to the complexity of the market. The geographical distinctions of the country must be taken into account, as the appeal of goods may resonate differently between consumers in first-tier and second-tier cities. Unlike consumers in Western markets, Chinese shoppers are not emotionally tied to many big name brands, especially with the growing availability of local luxury brands. Foreign brands therefore must fight to remain attractive by offering a distinct experience. Louis Vuitton, for example, has noticed that Chinese consumers in lower-tier cities enjoy being treated as VIP’s. In response, it has created the “VIP experience package,” closing selected stores for half a day and arranging private shows for consumers who spend over 200,000 RMB. Similarly, Hermes has created the ShangXia brand specifically for Chinese customers, with the product line claiming to “nurture Asian craftsmanship and creative talent” in clothing and home accessories.
Due to the cultural and linguistic differences, brand communication is a foremost challenge in China. It is important to establish a brand name that not only performs well phonetically, but is also consistent with the brand message. Luxury brands that fail to create and trademark their Chinese name in time are often surprised to find that a widely accepted brand name has already been created for them by Chinese consumers, distributors, and even counterfeiters. This makes it extremely hard for companies to establish a new identity. French fashion brand Lanvin neglected to properly communicate its official Chinese name, 浪凡 [làng fán], and can now be found listed online under a number of nicknames, including 朗雯 [lǎng wén], 朗文 [lǎng wén], 朗万 [lǎng wàn] and 兰文 [lán wén]. This causes unnecessary confusion amongst shoppers and in turn lowers brand awareness.
In conclusion, it is important to remember two things: too much localization can hurt a brand just as badly as not having enough localization. Localizing a luxury good too much can lead to it being perceived as an overpriced product similar to what Chinese companies already offer. On the other hand, brands that do not localize their goods risk being misunderstood by their intended audience and neglecting their needs. In short, international companies should acknowledge the importance of altering their products for the Chinese market. This does not mean they should completely recreate their brand, but rather introduce small adjustments to better suit local culture and preferences.
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