Read the following article from the Wall Street Journal:
“Chinese Shoppers Splurge,” The Wall Street Journal, January 27, 2018, by Matthew
b) Answer the questions below in detail. Be sure to reference specific marketing
concepts you have learned so far.
1. Why did Chinese consumer purchases of luxury-goods decline a few years ago?
2. What measuresand metricsprovide an indication of the resurgence in luxury-goods
purchases among Chinese consumers?
3. Describe at least two reasonswhy Chinese consumer purchases of luxury-goods has
4. What are some of the key ingredients that a luxury-goods brand needs to deliver,
both in terms of its products and its retail strategy, to attract Chinese consumers?
PARIS -- A new wave of big-spending Chinese shoppers is driving torrid sales growth
for the global luxury-goods industry after two years of cautious buying.
Buoyed by a surging stock market, Chinese consumers are splurging at home, during
trips to Europe and increasingly online. Their pursuit of luxury items -- including
fancy watches, designer clothes, handbags and high-price liquor -- has revved up as
the damping effect of an anticorruption crackdown by Chinese authorities and
terrorist attacks in Europe has faded over the past year.
Luxury-goods purchases by Chinese shoppers jumped 12% last year to 84 billion euros
($104 billion), according to consulting firm Bain & Co., with their share of the global
total rising to 32% from 30% in 2016. Analysts said the pickup in spending could even
accelerate this year.
"China has become extremely dynamic," said Bernard Arnault, the French billionaire
who is chief executive and controlling shareholder of LVMH Moet Hennessy Louis
On Thursday, the luxury conglomerate and industry bellwether reported record
annual revenue and profits, led by a surge in Chinese sales. Revenue for 2017 was 42.6
billion euros, up 13%, while profits rose 29%.
While megabrands such as Louis Vuitton and Gucci remain among their favorites,
Chinese shoppers are also exploring more niche labels such as Celine or Derek Lam.
On a recent morning in the Parisian department store Galeries Lafayette, Meng Xin, a
pharmaceutical company employee from Beijing, was at the Celine boutique to buy a
1,250 euro handbag. The brand, owned by LVMH, has a reputation for understated
designs that draw from its Parisian roots, and until recently had little traction with
Chinese consumers. But Ms. Meng said she liked the brand's simple style.
The search for new brands reflects the changing profile of Chinese luxury shoppers,
analysts and retailers said. Compared with a few years ago, they are now younger,
more likely to be women and more attuned to fashion trends.
"The Chinese used to buy brands mainly for the logo," said Alix Morabito, fashion
editor at Galeries Lafayette, one of the premier destinations for Chinese shoppers.
"Now, they are buying logos that are in style."
With demand reviving, Galeries Lafayette has opened a store across the street from its
main location in central Paris to serve tour buses filled with Chinese shoppers. All
signs are in Chinese and French. The new outlet is meant to free up Galeries
Lafayette's main store for more discerning Chinese customers, who usually travel in
small groups of friends and family and want the time to browse before buying, Ms.
Changing demographics in China have helped drive the surge in spending. People
born after the introduction of China's one-child policy in 1979 account for an ever
bigger share of consumers. They now have their own jobs and can draw on the
resources of two parents, giving them more disposable income than their
Credit: By Matthew Dalton
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