beyondbrics

Trying to promote your brand in China, the world’s second largest luxury market? Most labels instinctively turn to ads – print, outdoor, TV, online, mobile or radio. But a new study points to a more powerful tool: promoting corporate social responsibility. More than two-thirds of Chinese consumers said a luxury brand’s CSR would affect their decision to purchase decision, according to a new report. Asian market research company Albatross Global Solutions, and Ruder Finn Asia  surveyed 1,100 luxury consumers earlier this year in China, Hong Kong and Taiwan to produce their China Luxury forecast 2010. CSR was found to be particularly important among the more educated shoppers with higher incomes.

Jean-Michel Dumont, chairman of Ruder Finn Asia, says the earthquake in Sichuan two years ago “was a turning point for CSR in China, whichever sector you are in.”

Local companies donated millions of dollars immediately after the quake. But some multinationals were criticised for not doing enough. Bloggers labelled companies like Louis Vuitton, Nokia, Coca Cola, McDonald’s and KFC as tie gong ji, which literally translates to “iron-roosters”, meaning scrooge. Foreign companies were quick to respond. Now consumers expect more, says Dumont.

“Consumers are looking at what companies do beyond donations. They want to know how companies are getting the society involved,” he says, adding that “when you talk about luxury in China, you are talking about European brands.”

The study found that among the 15 most popular brands in China, Hong Kong and Taiwan, 14 are from Europe, with the most sought-after being Louis Vuitton, Chanel and Gucci. The only American label that made it to the list is Estee Lauder, the cosmetics company.

A notable exception from the list is Japanese brands, says Christophe Cais, executive director of Albatross.

There are two main reasons for the prejudice. Firstly, the Japanese are big in cosmetics, which is a small segment of the luxury market in China. The other, more sensitive reason is a long and bitter history between China and Japan. The two countries were war enemies and “some consumers are still resentful of Japanese products in China,” says Cais.

Foreign iron-roosters take note, Chinese luxury consumers now expect more than just a great brand.

Related reading:
Hermès creates bespoke brand for China, FT