In 2010, I joined Harry Winston Diamond. The global CEO also just arrived in Beijing from New York. He was all dressed and ready to meet the biggest client of the Beijing Store.
The Beijing store director briefed him again: this client just bought a US$20 million 6-carat yellow diamond from us.
A 17-year old girl.
This girl is now 26 years old. She is a perfect example of the biggest purchasing power in the world:
Chinese millennial shoppers
With their unique behavior and value, Chinese millennial is bringing brands new revenue opportunities that were not possible before.
Chinese millennial Shopper
1. Chinese millennial shoppers appreciate brands with personalities and stories.
They are curious to meet and greet with new brands. Compared to their parent generation, they appreciate the value of branding, they can read English better.
Traditionally, luxury brands focus on heritage and history. Yet Chinese millennials now want brands that are more relatable and have an entrepreneurial spirit.
A Chinese millennial will buy the handbag because she knows the designer, who became famous at the 2016 fall fashion show in Milan.
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2. Young Chinese shoppers do not need physical stores.
They prefer to buy online or via mobile payment. They find physical stores and the salespeople too intimidating.
“I don’t like to go to the brand flagship store, this is for my parents’ generation, but not for me. The salespeople and the store environment gives me too much pressure“. says one interviewee.
Can you imagine buying an $80,000 diamond necklace- using Apple Pay?
Chinese millennials can and are already doing it.
From Saks Fifth Avenue, Swiss watches to high-end jewelry boutiques, all boutiques are equipped with WeChat and Alipay Pay, the equivalent of Apple pay in China.
This also means you can easily accept payment from a client sitting in China. All you need to do is FaceTime with the client and show your WeChat payment code. The client will scan her screen and money will hit your US account in a second.
In sales, there is only one answer:
“However you would like to pay, Mam”
3. The Overseas Chinese Shoppers
There is a large group of Chinese living in Canada, UK, and the US. They are the Fuerdai, literally rich second generation. These “Fuerdai” have a higher average purchasing power than their counterparts in China. They contributed a huge amount of sales to luxury stores outside China.
Via social media, Chinese overseas stay in touch with their counterparts back home. With Chinese WeChat, Youtube, etc they have a huge influence on what to buy on Chinese millennials. The overseas Chinese are more powerful marketing channels than any luxury magazine in China.
Under the traditional retail store approach, it is too expensive and slow for new brands to enter the China market. Brands need to have large upfront cash investment, open the stores and do large marketing campaigns, then pray for customers to walk in.
Young designers and new brands can enter a China market without opening stores in China. The key is to tap into Chinese millennial shoppers, who grow up in the digital era of China.
Grow China business without opening stores in China
In 2016, I got a request from a friend in China, she asked if I can help her purchase a Canada goose jacket.
With some research, I realized that this brand is already on fire amongst Chinese outside China. When I went to Toronto and Vancouver, the entire mall is full of overseas Chinese millennials shoppers wearing Canada goose.
Yet a Canada goose didn’t have any store in China until 2018. When they finally opened the first store in Beijing, the line has reached as long as 120 people, from 10 am till store closing at 9 PM. The store had to limit traffic with average waiting time 40 minutes.
By 4 PM, all sizes except for S and XS were out of stock. 80% claimed they didn’t get to buy yet.
How to make that happen?
Canada goose has an unconventional China strategy and invested in it for years.
With a good brand story, smart China strategy, use of social media and e-commerce, Canada goose have a harvest from Chinese consumers without investing in any stores in China.
It’s very first physical store is actually in Toronto, Canada, the biggest city for rich second-generation Chinese.
With solid brand awareness amongst overseas Chinese students, Chinese tourists, and overseas Chinese residents, the goose flew to China with a full waiting list of Chinese customers.
To develop the new competencies that China requires, CEOs and brand owners should become adept at choosing whether to make, to buy, or to partner with others.
High Net Worth Academy helps luxury brands grow high net worth clients, and succeed in China and Asia.
Tess Zhao, CEO & Founder. Formerly Head of Global Business Development at Harry Winston Diamonds, Tess is an expert on selling to HNW clients. She was also Head of Jewelry at Amazon Fashion, Media Spokesperson at Jaguar Cars, and a Financial TV reporter.