Power of internet can't be ignored

PUBLISHED : Tuesday, 17 May, 2011, 12:00am
UPDATED : Tuesday, 17 May, 2011, 12:00am


No luxury brand can afford to dismiss the power of the internet when doing business on the mainland, the second-largest luxury goods market in the world.

A recent study found that nearly 70 per cent of luxury consumers on the mainland search online for information on luxury brands every month, although only a small fraction actually make purchases through the web.

KPMG, a global audit and advisory services firm, issued the report yesterday, saying the internet has become an increasingly popular and effective tool for mainland consumers to find promotions and special offers.

KPMG surveyed 1,200 middle-class consumers in first and second-tier mainland cities. Thirty per cent said they searched for information on luxury goods online every week, while 39 per cent did so once every two weeks or once a month.

One reason for the high percentage was the emergence of a younger generation of big-brand shoppers on the mainland.

Despite the fast-growing number of online viewers, only 5 per cent of respondents showed a serious interest in making purchases over the internet, the report said.

Discounts and the convenience of being able to compare products were the major benefits that attracted people to online shopping. But concerns about authenticity, after-sale service and payment security remain the big deterrents for many.

'China continues its march towards becoming the largest luxury market in the world,' said Nick Debnam, partner and Asia-Pacific chairman of consumer markets with KPMG. 'Year on year, as this market becomes more crowded, it is harder for luxury brands to enter this space.'

The report also found that French, Italian and Hong Kong brands were the top choices. Mainland consumers have a stronger interest in fashion and cosmetics products from France, footwear made in Italy and some jewellery brands in Hong Kong.

The most important reasons they consume expensive brands are to reward themselves, which was followed by 'for important occasions' and 'to pamper themselves', it said.

Meanwhile, mainland consumers also showed more awareness of luxury brands, with respondents recognising 57 compared with 34 brands three years ago.

An earlier CLSA study said customers from the Greater China region, which includes Hong Kong, Macau and Taiwan, would account for 44 per cent of global luxury-goods sales by 2020.

The amount the 1.3 billion population on the mainland spent, in US dollars, on luxury goods last year: $6b