The Chinese market – both a chance and a challenge for Italian luxury furniture

Nowadays, with governmental macroeconomic regulation and control, housing price in China has already been on its way back to be reasonable which will ease the burden of housing for middle class Chinese. The ease of financial pressure will lead people to “put his eggs in different baskets”, as we say in Chinese. Also with the continuous increase of national income, the purchasing power of the people of the country has increased significantly. This is particularly evident in the coastal economically developed regions. The data shows that in 2017, the top five regions for furniture imports in China were: Shanghai, Guangdong, Beijing, Jiangsu, and Tianjin. Among them, Shanghai’s furniture imports accounted for 34.81% of the country’s total, and Guangdong accounted for 16.7%. Half of the country. More and more people spend their money on enjoyment-centric consumption or improvement-centric consumption. The China Furniture Association released the “2018 China Furniture Industry Information Report.” Data show that China’s furniture imports totaled US$3.052 billion in 2017, a year-on-year increase of 15.65%, and furniture imports hit a new high in nearly a decade. So under this background, it is highly positive that imported-furniture consumption will keep a positive development.

The furniture industry has a highly separated structure, according to survey, industry giant such as IKEA has only 3% market share globally, not to mention the situation in China where a major part of market share belongs to Chinese native brand. So in face of Chinese market where the market margin is still very high for high-end imported furniture, how should Italian furniture brand take its first step to the Chinese market?

1.  Consumer-oriented

French furniture brand Ligne Roset has reduced 25% and 15% of its price in Chinese market both in 2015 and 2016. Norwegian brand Stressless has already set its price in Chinese market the same as it in Europe. Some imported brands have even set their price in Chinese market lower than those in Japanese and Singapore market to attract Chinese consumers.

“A high-end brand but not necessarily luxury”, director of the foreign market of Ligne Roset asserted the strategy for their brand position. Indeed, Chinese consumers, with their increasing horizons, are more and more reasonable. Imported goods are no longer something untouchable. Consumers pay more and more attention to the design and quality instead of the price tag. It is true that in the first period, when imported furniture was still something new and was being worshiped like an idol in the shrine, consumers with limited knowledge of connaisseur only pursue high price and a distorted imported-furniture market was born under this consuming behavior— the purchase raised the price and the raised price impel continuously the consumer.

But this has changed dramatically these years. With the development of the native brand and more connaissance of quality, Chinese consumer needs no more to “worship” imported brand blindly. So Italian brand need to consider their consumer first and set the strategy of its pricing more carefully.

2.   A good retailer with a good brand.

It is always difficult for a new imported brand to open its own store in China, not only because of the operational cost but also because of the limited brand awareness. A good retailer is a solution for all. By joining a furniture hypermarket, a newly-entered brand can take advantage of agglomeration effect, thus appealing more potential consumers and with a lower operational cost compared to manage it solo. A good reputation for retailers part will do nothing but good for an imported brand. In China, retailers such as Kukahome and Red Star Macalline Group are known for their strict regulation of cooperation and this is a guarantee of quality for Chinese consumers.

3. True made-in-Italy.

In 2011, a scandal of a so-called-made-in-Italy furniture brand Davinci shocked whole China. This brand was famous for its luxury-like price and its declared Italian blood. But it then turned out to be a native Chinese brand with its own factory set in China. Their high price comes like this: they first manufactured their furniture in China and then ship them to Italy and then imported again to China.

We can actually see this scandal from a positive point of view. That is, made-in-Italy is something truly appreciated by Chinese consumers, Indeed, the little tag “made in Italy” is the symbol of the spirit of craftsmanship and good taste. This is a good news for our Italian furniture manufacturer in that they already have a good reputation and enough recognition. The rest of them to do if to keep their“made in Italy”authentic.

4. Take a shot at Chinese E-commerce and social media

In the last 10 years, China has made its way to have the most developed e-commerce industry in the world. Main e-commerce platform such as Tmall and JD.COM is no doubt an efficient and economical portal for a foreign furniture brand to expand its brand influence, improve its brand awareness, accumulate its customer base hence develop its business in Chinese market. According to sales report from Alibaba, only in “11.11” one day, the most influential shopping festival in China, the sale from top 5 furniture brand account for 10% of total sale of all brands that participated the event. With these general e-commerce platform such as Tmall and JD.com, one can definitely approach Chinese market with a limited risk now.

Not only limited to big shopping platform, foreign brands who want to have a share in Chinese market can also cooperate with specialized online furniture selling platform such as ITALYCLASSICO that has a good reputation with real estate developers. A cooperation with real estate developers means a chance to be the furniture supplier for luxury real estate project. Most developers also believe that using imported furniture is more attractive to consumers. For example, in a 150,000-square-meter house, at least the furniture in the master bedroom must be imported, according to a market research conducted by China Furniture Association.

Approaching Chinese market using these platforms can be a “hard bone” for the communication barrier and the ever-changing commercial policies in China. It is hard for our Italian brand also in that the digital marketing tools are totally different from those in Western world. The disappearance of Google, Facebook and Instagram can make brand communication an impossible mission for Italian company who has definitely no idea what’s going on in China. So finding a good business partner that knows digital approach to Chinese can be fundamental for the business strategy you may choose.

5. Expose as much as possible

In November 2016, the Milan International Furniture exhibition first landed in China. The total number of visitors in three days exceeded 20,000. The popularity and feedback from exhibitors far surpassed the expectations of the organizers. In November 2017, the second Milan International Furniture (Shanghai) Exhibition joined hands with 109 Italian top furniture brands to land again in Shanghai. This year will continue to hold the third one.

The Milan International furniture exhibition in China has become one of the main channels Chinese consumers and main supplier get their information. The event can be a good chance for brands to show themselves to the Chinese market.

Apart from being “truly” Italian, that we give for granted for all the participant to the Salone del Mobile, to be successful in Chinese furniture market (but it is non so different for other markets) you need to be consistent and coherent in all the messages you deliver to Chinese clientele trough stores experience and even more trough digital experience that is proven to be the most important way for Chinese people to discover new brands.

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For more info on digital marketing for Chinese customer, please visit the website of Digital to Asia to contact us, or follow Digital to Asia on LinkedIn and Facebook.

Digital to Asia is a digital marketing and e-commerce agency focused on Chinese market and based in Milan, Italy, delivering “end to end” digital solutions of high quality to Italian and European brands willing to tap into the Chinese market.

Digital to Asia – Your digital gateway to China

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