China’s Transformation of Society: Luxury Brands Are at Risk

China’s new policy of transforming society toward greater common good is leading Western suppliers of luxury brands to think strategically. Could it be that foreign luxury brands will be considered too individualistic, capitalistic and decadent by the political leadership in the future and therefore controlled or even thwarted? The government’s crackdown on celebrity culture and the fan economy points in this direction. 

This is countered by the argument that the new policy of strengthening the common good will lead to an increase in the size of the Chinese middle class with purchasing power, which will ultimately benefit foreign luxury brands. Upper middle class and affluent consumers have become even more focused on luxury consumption after the pandemic. Affluent consumers want authentic luxury icons, not trendy premium brands.

That’s not all – luxury brands in China also have to adapt to the rapidly advancing digitalization. The mostly younger and affluent Chinese consumers of luxury brands are digitally on the go; the so-called Generation Z is now shaping all marketing in the consumer goods business. They live digital first and are thus challenging Western companies. Luxury brands are thus being disruptively transported into the digital age and must strategically reposition themselves. They must adapt their values, behaviors, and messages to meet the new politics.

To catch up quickly, luxury brands are experimenting in the digital space and partnering with digital pioneers. Louis Vuitton is successfully marketing futuristic and digital collections, and Balenciaga cooperated extremely successfully with Cyberpunk 2022, a popular video game in China. Exclusivity alone is no longer enough to score points with the politically reoriented and digitally active Chinese consumers. In China, it is now about repositioning the luxury brand as collective and social, first and foremost in the digital space.

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