Dissertation on the Chinese Market

Georgina Mannell How has the developing Chinese consumer landscape affected marketing for Western luxury brands in China?

BA (Hons) Fashion Media and Marketing 2018 - 19

How has the developing Chinese consumer landscape affected marketing for Western luxury brands in China?

Submitted by ​Georgina Mannell​ ​to Plymouth College of Art in partnership with Open University as a dissertation towards the degree of BA (Hons)​ Fashion Media and Marketing 2 ​ 018-19.​ ​I certify that all material in this dissertation which is not my own work has been identified and that the final word count from introduction through to conclusion is ​5899​ words.​

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Abstract China is becoming a big market in regards to global luxury fashion. But with younger generations coming into their prime consumerist years Western luxury brands seem to be struggling to market to this new consumer group. Therefore, throughout this research project, the aims consist of exploring and analysing the post 80’s/ 90’s generations to understand their needs. As well as outlining what Western luxury brands should do to keep a growing Chinese consumer base.

Throughout this dissertation, key theories will be introduced such as Westernisation, Hedonism, and globalisation to draw valid conclusions on this growing market.

Alongside examining key theories, data is gathered and analysed from key practitioners including Ying. J author of Cyber Nationalism in China as well as industry sites such as Business of Fashion and Mckinsey. So that most up to date information about the Chinese market is gathered to understand where it is heading.

When conducting the research key findings were drawn regarding consumerist habits in China. By reviewing data its notable that the post 80s/ 90s generations in China have grown up with a more open culture. Therefore, this group has developed a more noticeable pride in their nation compared to generations before. Because of this mindset combined with the expansion of digitization in the country, its comparable that both aspects have allowed them to develop individual identities and more consumerist needs.

Drawing on these findings it's evident that for brands to survive they need to be observant of this generation. Moreover, due to the rise in digital platforms its fundamental brands to start to develop online marketing strategies for the Chinese market, as the landscape of consumerism is rapidly changing.

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List of Contents Abstract

​Page 2 ​ ​

List of Contents

​Page 4

List of Illustrations ​ ​

List of key terms

Acknowledgements

​Page 7

​Page 10

Chapter One​

​Page 17 ​

Chapter Two Chapter Three Conclusion

​Page 6

​Page 8 ​

Introduction

​Page 3

​

Bibliography ​

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​Page 26 ​Page 35 ​Page 37

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List of Illustrations Fig 1. Xiaobin, L., (2009). ‘A group of curious Chinese observe a foreign blond in jeans and permed hair in 1980 in the Forbidden City.’. ​Chinese fashion from Mao to now.

New York: Berg Publishers. P.165

Fig 2. He.Y., (2009). ‘The opening of Cartier’s flagship store in December 2004 at Shanghai’s luxury property, Bund 18, attended by Chinese celebrities and prestigious luxury patrons.’. ​Chinese fashion Mao to now. N ​ ew York: Berg Publishers. p172 Fig 3. Zhang,T., (2017). ​‘Margaret Zeng, 18, Richard Hao, 15, and Kevin Xu, 14, Chinese students in the 30-person queue outside Supreme’. ​[Online]. Available at https://www.businessoffashion.com/articles/intelligence/decoding-the-travelling-chi nese-consumer​ Accessed on [22nd January 2019 at 18.30pm.]

Fig 4. Scrivener, E., (2014). ​‘Louis Vuitton, Singapore’. ​[Online]. Available at http://www.globalblue.com/destinations/uk/london/7-of-the-world-s-best-flagship-s tores#slide1​ Accessed on [22nd January 2019 at 18.15pm.]

Fig 5. Jing daily., (2014). ​‘Topshop and ShangPin’s pop-up event at the Place mall in Beijing’. [​ Online]. Available at https://jingdaily.com/topshops-mainland-shangpin-launch-all-about-mobile/ Accessed on [22nd January 2019 at 18.39pm.]

Fig 6. Business of Fashion., (2017). ​‘Tommy Hilfiger's WeChat store’.​ [Online].

Available at https://www.businessoffashion.com/articles/global-currents/wechat-stores-are-chin as-latest-luxury-craze​ Accessed on [22nd January 2019 at 20.00pm.]

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Fig 7.Dolce and Gabbana., (2018). ​‘Screenshot from Dolce and Gabbana Instagram’.

[Online] Available at ​https://www.instagram.com/p/BqXYtsZl6D5/​ Accessed on [22nd January 2019 at 18.44pm.]

Fig 8.Dolce and Gabbana., (2018). ‘​Screenshot from Dolce and Gabbana Instagram’.

[Online] Available at ​https://www.instagram.com/p/BqXYtsZl6D5/​ Accessed on [22nd January 2019 at 18.44pm.]

Fig 9.Tranova, M., (2018). ‘​Screenshot of Gabbana's offensive DM’s’. ​[Online].

Available at ​https://www.instagram.com/p/BqbTkY_FB7X/​ Accessed on [22nd January 2019 at 18.51pm.]

Fig 10.Dolce and Gabbana., (2018). ‘​Dolce and Gabbana post’. [​ Online]. Available at https://www.instagram.com/p/BqbjuT3nYa4/​ Accessed on [22nd January 2019 at 18.55pm.]

Fig 11. Fashion China., (2018). ​‘#boycottdolcagabbana’. ​[Online]. Available at https://www.instagram.com/p/BqcBLvggQXT/​ Accessed on [22nd January 2019 at 19.00pm.]

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List of key terms Netizens: Someone who uses the internet regularly

Key Opinion leaders (KOL): In reference to Chinese digital marketing Key Opinion Leaders are the people that have an influence on netizens. They are comparable to what marketing teams in the West refer to as ‘influencers’.

Tier 2 / 3 cities: Cities which until the growth of urbanisation were known to have less affluent citizens, different consumer behaviour, and lower population percentages.

Immersive experiences: An environment that generates sensory experiences that enables the person in that environment to be a part of it not just experiencing it.

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Acknowledgements To start with I would like to acknowledge all my lectures on Fashion media and marketing. As without their continued support and guidance, I wouldn’t be doing what I love.

I would also like to thank my entire family but especially my Mum and Dad. By encouraging me throughout my time at university and supporting any choice I’ve made, I wouldn't be who I am today. Thank you for always being there whenever I have needed you. I can't express how much I appreciate everything you’ve done for me.

Finally, I would like to thank my friends for joining me on the walks for chips during my moments of stress and making my uni experience the best it possibly could be.

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Introduction Today the Chinese economy is no longer playing catch up and is a global leader in luxury fashion. Therefore, it has become a key market for Western luxury brands.

According to Boston Consulting Group, “The $121 billion that Chinese consumers spent on luxury purchases last year [2017] accounted for 32 percent of the global luxury spend, a share that’s likely to hit 40 percent by 2024,” (Hall and Suen,2018)

Since the first appearance of luxury in China in the 70s the landscape of consumption has come a long way. Today the rise in digitization and social platforms such as WeChat and Weibo have allowed brands to reach their consumers in more advanced ways, as well as build loyalties and experiences online.

Alongside the development of digitization. The new generation of luxury consumers is changing the way Western luxury brands market products in China. As a modern generation that has grown up in a reformed China. These consumers aren’t passive anymore and hold great patriotic values. With this new freedom of speech and identity. Brands are having to navigate on and offline to create experiences that tailor towards them.

This dissertation will be exploring the Chinese luxury market that has developed over the last few decades. As well as investigating how the rise of digitization has had a significant impact on marketing strategies.

In Chapter one, the discussion begins with the westernization of China during the reform era and the role luxury fashion played in the change. The different

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characteristics of luxury consumers today is also explored. From anti-western sentiments being voiced, to how hedonism has developed within China’s consumerist society.

In Chapter Two the consumerist landscape in China today will take focus as the impact digitization becomes the central theme. With the rise of dematerialization and disintermediation in China's new digital landscape. Western luxury brands are having to develop their marketing strategies to create experiences on and offline.

How Western luxury brands tackle this change and develop online strategies will be analysed throughout chapter two as well as identifying what impact this can have on luxury brands selling in China.

To summarise in Chapter Three a case study demonstrating the impact the digital landscape can have on brands is presented. The case study features Dolce and Gabbana’s incident on the 19​th​ of November 2018. This case study highlights the importance of understanding your market. As all the information from the event is reflected upon and conclusions are drawn about the impact the video campaign has had on China’s consumerist generation.

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Chapter One: An exploration of Chinese Luxury consumerism The Chinese luxury market has become one of the biggest global markets over the last 3 decades. But through recent observations made by luxury brands, it has become apparent that Chinese consumer habits are shifting drastically.

Exploring luxury consumers in China under the premise of understanding of the societal ideologies of the past and that is challenged today, can help enlighten brands about luxury consumption in 21st century China. Through investigating how influential the country's past is on upcoming Chinese generations and how it has led to new digital behaviour. Subsequently allows a for more in-depth perspective into a nation where luxury fashion has flourished.

During the succession of Paramount Leader Deng Xiaoping in 1978, an era of reformation started within The People's Republic of China. This development and change within the Chinese economy is most prominent when looking at luxury consumerism. As part of the era of opening up, Deng announced an open- door policy which allowed foreigners into China and with that Western tourist in fluxed to explore a country that had been shut off to the world. As a result of the policy, these were the first ‘outsiders’ citizens of China saw which “provided a convenient means for ordinary Chinese who could not travel abroad to examine foreigners and their style of dress”. (Wu, 2009 p.164). Ultimately this led to a fascination of Western citizens amongst the Chinese nation and initiated the start of westernization in China.

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When they arrived, Western citizens would mostly be wearing luxury fashion as only the wealthiest could afford to travel so far afield. So, luxury soon became linked to foreignness and a world of consumerism and capitalism. This concept seemed

extra-terrestrial to most Chinese, not only because of their exotic appearance but also because they represent the were representatives of the ‘far west’ an ‘immoral’ land of wealthy and plenty. [...]The very concept of “foreignness” was itself sensational to a people who have been isolated for decades (Wu, 2009 p.165) Cohen and Cohen noted:

“The Chinese do not hide their immense curiosity about the nonChinese. They stare with forthright intensity and at as close as a range as possible, up to three inches, even in the urban centres that are standard sight-seeing stops.” (Cohen and Cohen cited in Wu, 2009 p.164)

Fig 1: Chinese citizens observing a Western woman in the Forbidden City, 1980

Furthermore, due to the economic development in the new era, an escalation of migration between rural and urban living expanded. With a new sense of freedom citizens “were able to move around the country, choose their own jobs, earn more

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money and purchase commodities that could not have been imagined before” (Hamrin & Zhao cited in Ying, 2012) Combined with a new fascination of Western capitalist culture, getting rich became a life goal amongst the nation and luxury fashion became a way of showing this affluence. The consumption of Western luxury became popular as other commodities such as cars were still out of reach but with an increase in the economy “disposable incomes of families and individuals in urban and even some rural areas have enabled more and more Chinese to embrace consumerism” (Ying,2012 p.24 ).

Luxury Western fashion quickly became a representation of a new way of living, one that was freer and a symbol of higher status. During an era “when most people in the country had limited means to display wealth and communicate identity, dress seemed an easily accessible choice for everyone” (Wu, 2009 p. 175). A Westernized culture soon spread amongst the nation as Chinese consumers began to reject elements of their own culture and indulge in more capitalist ideologies. Chinese citizens rapidly became a consumer group influenced by global ideologies. And with a nation now influenced by other ideals, the effect of globalisation can be noted as reformed ideologies of a freer nation were expressed through the purchase and wearing of Western luxury fashion.

Fig 2: The opening of Cartier’s flagship store, Shanghai, December 2004

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Today’s consumer, however, is a lot more sophisticated. The generation that experienced the frugality of the reform era has now produced a new generation (known as the post 80’s and 90’s generations) that are now at an age where consumerism is prominent in their life. According to Boston Consulting Group “this demographic already dominates the consumer market in China, and [...] millennial consumption is projected to reach 69 percent by 2021”(Boston Consulting Group cited in Shen,2017). Unlike their parents, this generation has grown up with China as a more prominent market in the world, partnered with the rise of digitization within the nation “both the speed and the extent of the spread of consumerism in China are unprecedented”(Ying,2012 p.24). Therefore with the economy still growing they now have the most disposable income than any previous generation. And “By 2021 China is expected to have the most affluent households in the world” (Bu, et al, 2017). So, keeping this consumer interested in Western fashion is vital to the luxury market.

Figure 3: Chinese millennials shopping

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This generation is one that has more trust in their nation and is steering away from the Western aesthetics their parents opted for due to resentment of how the west criticises their country. “Anti-Western sentiments are embedded in Generation Y’s consciousness even though this generation is regularly exposed to Western culture” (Ying, 2012 p.112). These sentiments have endorsed a change in the consumer identity of the younger generation of Chinese citizens. Claudia D’Arpizio a key partner at Bain & company has observed this change in consumer identity and has stated.

“The youngest consumers have very strong Chinese pride, they are very willing to buy luxury products, even if they are made in China.

This is very different from even the generation before, which values western brands and made in Europe,” (D’Arpizio cited in Hall and Suen, 2018)

This consumption can be linked back to the status luxury still holds in the Chinese consumer landscape. Connotations have been passed down through generations as we still see the Chinese millennial consumer buy luxury fashion as a symbol of status.

This consumer group has created “a complex paradox of the patriotism of China’s Generation Y angered at Western criticisms of anti-democratic practices as well as that generation’s adoption adopts western consumerism” (Ying,2012 p.113) Expanding on the ever-growing Chinese economy, an increase of urbanisation and connectivity in rural areas has led to a wider consumer base for luxury brands to sell to. Alongside an increase in data connectivity, social media is also expanding to tier 2 and 3 cities which is enabling new consumerist paths through online channels instead of purchasing in store. As China continues to develop their economy it facilitates consumers and the increase of social media is empowering the millennial Chinese luxury consumer to create more personalised identities and experience more freedom than their parents. Therefore, social media and digital platforms are

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now informing their shopping habits and this having an impact on Western luxury trying to keep a key consumer group.

Digital disruption is likely to affect the luxury market as disintermediation can allow brands in China to blend on and offline platforms together and make it less fragmented for the consumer. “In China, 85% of consumers now choose a digital channel as the first step for product research”(Found, 2015) so digital upgrades are a key way to reach the expanding luxury consumer in China. It’s a clear observation that this new consumer has more hedonistic views than before as they self-indulge more through digital platforms. Which is influencing the new consumer identities they are constructing.

The changing habits Chinese luxury consumers could also be put down to government impact and laws. The government is playing a big part in the reformation of Chinese luxury consumers. Tax on luxury goods brought in China has now been reduced, so for instance “a handbag two years ago could have cost 60 percent more in Shanghai store than a Parisian store, might now cost only 10 percent more, encouraging consumers to buy locally” (Hall and Suen,2018) Alongside this change in tax “Chinese law [now] prohibits people from carrying more than $700 in goods purchased abroad back into the country without paying duties” (Hall and Suen, 2018).

Previously luxury consumers would purchase abroad and bring it back. But by changing the tax and laws combined with consumers having more trust in the government. The millennial generation isn’t apprehensive about shopping inland anymore. This also allows the government to gain profit through this tax which was once lost to luxury stores abroad.

With the change in laws and the digitization of the nation, it has allowed online consumption of Western luxury brands to grow in China. Consumerism is now

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playing a huge part in Chinese society as “The Chinese state allows and empowers its people as consumers on the one hand while on the other it constructs sophisticated managing strategies,[...] in Chinese cyberspace.� (Ying,2012 p.115) Consumerist citizens are feeling more self-regulated but are however being regulated by the government still who are profiting from their consumerist habits but also new-found nationalist ideologies. Furthermore, with the impact of social media, consumers are able to build their own identities online and can use fashion to do so as style allows them to stand out in a nation where individualism once wasn't embraced.

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Chapter Two: The Chinese luxury landscape today “Chinese consumers account for one- third of all global luxury spending” (Long, 2017). And due to the recent change in laws, Chinese luxury consumers are now mostly shopping inland instead of abroad. With the market now shifting into mainland China its key for Western brands to follow, as sales in the Western stores will soon decrease with a noticeable difference. “Today 70 percent [of consumers] would choose to purchase luxury goods in China if offered similar prices to overseas outlets (Bu, et al. 2017”) Therefore, with Chinese consumers in this mindset and with the recent tax change on luxury products. There's a clear appeal to why they would now consider purchasing in China instead of abroad.

However, this shift in market place means luxury Western brands will have to reconsider their strategies in China. When luxury fashion was predominantly purchased in the West the Chinese consumers would receive an in-store experience with a typically high level of treatment. As it would be known to staff that they would be likely to purchase during their visit. With staff at luxury stores abroad continuously giving them exceptional customer service it has lead to positive store experiences and has resulted in brand loyalty. But now these consumers are now purchasing in store in China they expect the same experience they had in other stores previously.

However because a lot of energy was put into their experiences abroad, mainland stores in China were put aside. Today these stores need to become a focus as there is an expectation from Chinese Luxury consumers and since “customers don’t make decisions based on all of the experiences they have. They make decisions based on the memories of a select few” (Sanchez, 2017). It is becoming increasingly important for luxury brands to recognise these in-store experiences, as most experiences aren’t

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memorable but with a few significant memories it can trigger positive or negative emotions that can shape their future behaviour with a brand (Sanchez, 2017) So, if mainland stores continue to disappoint brands they could risk losing a big consumer group. And with the millennial generation considered “the next luxury goldmine” ( Hall and Suen, 2018) retaining brand loyalty with this new consumer group with positive in-store experiences will allow Western luxury brands to stay competitive in the market.

To keep strong brand loyalties creating relationships between the products and the consumer could be a successful marketing tool. Immersive experiences within a store environment have been engaging Chinese luxury consumers and have been creating memorable experiences. For Luxury brands, in particular, is it becoming popular amongst the consumer as it allows them to connect with their favourite brand on a whole new level. Therefore, with this new personal touch, it is turning negative dissatisfaction into positive satisfaction.

Louis Vuitton was one of the first Western luxury brands to embrace this consumer need and established its own ‘Island’ in Singapore. Intended to be an art gallery/ exhibition space “the building was claimed and dubbed Louis Vuitton Island Maison

by Bernard Arnault, CEO of LVMH” (Connor,2016) Visitors to the island were able to immerse themselves into the brand and develop a deeper relationship with the brand without necessarily purchasing any goods during that experience.

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Figure 4: The Louis Vuitton Island in Singapore

Experiences in the store environment are becoming favoured by luxury brands to retaining this consumer group.

A Group “Known in China as the "Post-'00s," the generation this year starting to celebrate their 18th birthday are going to be key in driving continued growth in the Chinese luxury market in coming years”, according to Bain & Company’s latest luxury report (Hall and Suen, 2018)

However, it’s not just in-store experiences brands need to develop to appeal to this new consumer. The rise in digital technology and digitization of the economy has seen an increase of Chinese internet users, know as netizens. For brands trying to keep customer retention with a new consumer group, they need to be ready to shift onto digital platforms.

As netizen consumers now expect online experiences of a similar standard to their in-store ones. Lines between real experiences and online ones are becoming blurred

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(Connor,2016) as luxury consumers are demanding more from brands to interact with them on digital platforms such as WeChat.

Moreover, Chinese consumers by 2025 will account for 44% of the global market (Bu, et al. 2017) So, for Western brands trying to expand in China, building digital marketing into their strategies is becoming a vital process to customer retention.

Offline to Online (O2O) strategies will help create seamless brand experiences from in-store purchase to the continued experience online in their homes.

In 2014 Topshop launched one of the first O2O strategies in China.

To launch into the Chinese market Topshop created a series of pop up stores in collaboration with ShangPin. In each store, there were iPhones loaded with looks via ShangPin that viewers could share online and also order themselves. ( Harca,2016) The result was rewarding for Topshop as they generated sales and built an online following simultaneously as shoppers could share looks. Which overall created a successful O2O strategy. Services like these can have a significant and similar impact to immersive in-store experiences as consumers can build relationships through online platforms while experiencing the physical store as well.

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Figure 5: Topshop, ShangPin Pop-Up in Place Mall Beijing

Even though customer retention through digital platforms is becoming crucial in luxury brands. An increase in urbanisation and new social platforms has opened up opportunities for customer recruitment in more rural areas of China. “With 75 percent of potential consumers living outside of the top 15 cities in China” (Bu, et al.2017). Creating online touchpoints with tier 2/ 3 cities can generate more online sales as these cities don’t currently house physical stores, and often citizens in these cities can’t travel to more developed cities to visit a store. Thus, by catering content to build relationships online with these potential luxury consumers means brands can expand in an already vast market. And now with social media platforms such as WeChat offering in-app purchasing, it is encouraging these ‘newer’ consumers to purchase online.

The impact of social media: Chinese consumers, especially the millennial generation, are avid users of social media and with the post 80’s/90 ’s generations coming into their prime in terms of

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Luxury consumerism. Understanding the impact of social media will help brands with customer retention and recruitment.

“One major driver of the continued strength of luxury spending from China will be the acquisition of new luxury consumers” (Hall and Suen,2018)​ ​These consumers are seeking instant gratification and information that social media now provides them.

Furthermore, with Luxury fashion once being an exclusive and ‘off limits’ to the general public social media is now allowing everyone to interact with these luxury brands. Which for brands enables more customer recruitment.

In the current landscape, “only 7 percent of Chinese sales occur in official online channels” (Bu, et al. 2017) As many consumers are still cautious about purchasing online and need reassurance about authenticity. But “as Luxury brands further develop “O2O” initiatives that bridge the online and offline worlds [...], it is likely that more luxury sales will be conducted online”(Bu, et al.2017)

In 2018 it changed as China no longer playing catch up and “China’s internet economy has now raced ahead of the West’​s” ​(Rajeck, 2018) However for brands to engage with the Chinese luxury consumer digitally they need to understand the diverse platforms such as WeChat that have the ability to shape luxury digital marketing and purchase in China. WeChat has 650M + users in China (Rose,2016) and with consumers being able to do a number of things from social messaging to ordering food the luxury market has great potential on these platforms. On top of that instead of dozens of competing for purchasing platforms, they have two. “Alipay and WeChat pay, with 77% market penetration” (Rajeck,2018). So online purchase can be made seamless if time is invested into the marketing on social platforms.

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Figure 6: Tommy Hilfiger’s WeChat store

“Katie Jansen, CMO of AppLovin believes WeChat is the most important platform for Western companies to use when targeting Chinese consumers” (Rogers,2017).

WeChat is a prime example of disintermediation (Cutting out the middlemen) which is becoming a major trend in China. Tencent, a key online leader, who owns WeChat.

Also has a partnership with giant e-commerce site JD.com. Therefore, links between the two platforms have been created, demonstrating the process of disintermediation by “cutting out a middle layer and linking suppliers and consumers directly through digital platforms” (Chui, et al. 2017).

Directly linking consumers to stores through digital platforms without them having to switch sites has created a seamless purchase journey for Chinese consumers who use platforms such as WeChat. Brands looking to stay in the market should be considering making their way onto these platforms as “Digital disruption is accelerating, and businesses need to be agile to respond rapidly” (Chui, et al .2017) or they could risk losing consumers if they don't respond.

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Chinese consumers are currently in the stage of developing relationships with brands online but as the market rapidly develops and innovates the consumer landscape will become more demanding. Although currently in the Chinese consumer landscape luxury fashion is still purchased in store. Disintermediation is allowing the more rural consumer to purchase online. And as it continues to develop instore consumers are likely to start purchasing online as the experience becomes easier and more trustworthy.

With the rise in social media platforms, it’s giving Chinese consumers an opportunity to develop their online behaviour and interact with these luxury brands. It’s inevitable that soon “dematerialization” (Chui, et al. 2017) will come into the landscape.

As stronger relationships develop its likely there will less consumer anxiety about purchasing online. Partnered with a growing social platform that offers in-app purchasing, consumers won’t feel the need to purchase in store. Products will dematerialize from “physical to virtual” (Chui, et al.2017) as e-commerce stores that stock luxury brands will become the final step of the consumer's journey instead of physical brand stores.

With “e-commerce sales in China topped $1trillion in 2017” (BOF, 2018) dematerialization of physical stores is looking possible. However “International luxury brands still remained underrepresented on the country’s big digital platforms” (BOF, 2018) So, for Western luxury brands to remain relevant in the market, developing digital marketing strategies to engage the luxury consumer online is fundamental. It's also equally important for brands to be putting attention into the rural consumer as they will be at the forefront of online purchasing. Relationships

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need to be created with them as well to ensure luxury brands keep a wide consumer base as the country continues to develop into a digital era.

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Chapter Three: Dolce and Gabbana case study As Western luxury brands continue to fight for their place in the new landscape of Chinese fashion. Understanding consumers ideologies and habits is vital for Western brands so they can effectively market in China. With digital habits being a crucial element to understand.

As for instance 73 percent of the post-80s and post-90s generations use media apps such as WeChat every 15 minutes, according to the Chinese Academy of Social Science and Tencent Research Institute. (Shen, 2019) This generation has grown up with China as a global market and is a generation that has more established confidence and pride in their nation. A pride that has been associated with the emergence of digitization and social media as it has allowed these Chinese netizens to voice their opinions and share their views through online connections.

As a generation that is shopping more in China and is more open to other luxury brands that aren’t ‘Western’. Keeping the relationships ‘happy’ by respecting the Chinese consumer and understanding the respect they have for their country is also an important factor for Western luxury brands to consider when marketing online.

Dolce and Gabbana is one luxury brand who recently has misunderstood their Chinese market and sparked a nationwide outrage with a culturally insensitive campaign for their ‘DG the Great Show’ catwalk, that was supposed to be presented in Shanghai.

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The campaign video was released on Instagram on the 19​th​ of November 2018 featuring a Chinese model attempting to eat Italian food with chopsticks with a narrator offering ‘lessons’ in an offensive tone. As Instagram account @diet_prada states in the caption of a post, they put out on the 19th November of the video translated.

“Pandering at it's finest, but taken up a notch by painting their target demographic as a tired and false stereotype of a people lacking refinement/culture to understand how to eat foreign foods and an over-the-top embellishment of cliché ambient music, comical pronunciations of foreign names/words, and Chinese subtitles” (diet_prada, 2018)

Figure 7 and 8: Screenshots from Dolce and Gabbana's ‘The Great Show’ video

After the video was released it was clear Dolce and Gabbana had misunderstood their demographic as angry Chinese netizens took platforms such as Weibo to share their anger about the video with the brand.

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The China’s Communist Youth League even joined the boycott, posting on Weibo that “foreign companies operating in China should respect China and respect Chinese people” ( Ferrier,2018)

Moreover, the anger of Chinese citizens was also intensified when screenshots of racist DMs sent ‘supposedly’ by Stefano Gabbana surfaced. The emergence of these messages, first released by Instagram blog @diet_prada exposed DM’s between Gabbana and angry consumer @michealatranova. In which we see Gabbana refer to China as ‘ignorant Dirty Smelling Mafia’ and using the smiling poo emoji to describe the country.

Figure 9: Screenshot of Michaela's conversation with Stefano Gabbana

Its observable that these screenshots released as well as more leaked from the official Dolce and Gabbana account by @diet_prada, angered Chinese citizens more than the video itself. As the citizens of China rallied to defend their nation it is

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notable that these messages became the catalyst for the nationwide boycott against Dolce and Gabbana.

Soon after these screenshots were released both accounts reported that they were hacked with Dolce & Gabbana reposted Gabbana's 'Not Me' screenshot on its Weibo account, accompanied by the following statement.

Our Instagram account has been hacked. So, has the account of Stefano Gabbana. Our legal office is urgently investigating. We are very sorry for any distress caused by these unauthorised posts, comments and direct messages. We have nothing but respect for China and the people of China. (Hall and Suen,2018)

Figure 10: Instagram post by Dolce and Gabbana

But following on from the released statement. A detrimental effect on the brand had already occurred as social media allowed to story to spread rapidly and the scandal quickly became an uncontainable story amongst Chinese citizens.

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Though the video was taken down 24 hours later. It’s apparent that a generation with strong national pride and access to social media is now a prominent factor that can affect a brands place in the market. As once again Instagram blog @diet_prada (who became a No 1 source of the scandal updates) released a picture statement on the 21st of November stating the show that was meant to take place that day had been canceled by the Cultural affairs bureau of Shanghai (diet_prada,2018). All as a result of a nation calling Dolce and Gabbana out for their cultural insensitivity in the campaign video.

However, the show being canceled was only the first implication after the release of the video. During the first 3 days since the video release on the 19th November the Weibo hashtag #DGTheGreatShowCancelled was read 540 million times and mentioned in 74,000 discussions as well as #boycottDolce also trending (Hall and Suen, 2018). These Hashtags were often accompanied by images and videos of previous Dolce and Gabbana consumers showing their annoyance by burning their products, using them to clean the toilet with amongst many more destructive methods to destroy D&G products.

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Figure 11: Dolce and Gabbana shoes being burnt by Angry Chinese Consumer

Alongside previous consumers of the brand Key Opinion Leaders (KOLs) in China also took to the boycott. “Actress Zhang Ziyi posted on her Weibo account that she would no longer be buying [nor] use any Dolce and Gabbana products” in the future (Hall and Suen, 2018). With KOLs also supporting the boycott it could have huge implications on the brands in place the Chinese luxury market. In China, KOLs have a significant impact on the views of Chinese consumers. It's been noted that brands with links to popular KOLs can reap rewards of expanded audiences. Which is a marketing tool we also see in the west, with the influencers and brands using them to endorse products. However, for Dolce and Gabbana this opportunity is now unachievable as with more Key Opinion Leaders joining the boycott and voicing their views, it’s likely their fans are going to following and trust their KOLs opinion about Dolce and Gabbana as a brand.

Shanghai based influencer Wang Yuan is a popular KOL that has noticed the effect that the video and leaked screenshots have had on the public and has stated.

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“From what I can see, 80 percent of potential Dolce & Gabbana consumers around me won’t be able to forgive them,”. “The other 20 percent don’t care or only associate the comments with the designer and not the brand” (Yuan cited in Hall and Suen, 2018) Due to the online boycott by Chinese netizens e-commerce platforms and stores have also listened to their consumer and major platforms have removed D&G products to show their nation support. Platforms including Tmall, Suning Tesco, JD.com, Vipshop, Netease Koala and even Sephora stores have removed D&G products from their shelves (Hall and Suen,2018)

“E-commerce company Yangmatou said in a social media post on Wednesday [21​st November] that it had removed 58,000 D&G products, declaring that "the motherland is more important than anything else.” (Wilkinson, 2018). This is a common message implied from e-commerce platforms and physical stores alike.

Lane Crawford (an influential department store) in a statement has said.

"We believe that brands need to be aware of the cultural implications of their actions and understand the potential backlash when customers feel their values have been disrespected” (Wilkinson, 2018)

Dolce and Gabbana’s future in the Chinese fashion market is looking uncertain after the events of their campaign. Although they released an apology video claiming they have reflected on their cultural insensitivity. The impact social media and a socially aware generation can now have on brand is apparent.

The mistakes of Dolce and Gabbana can be an example to other brands to show how this new consumer can have a significant effect on brands in the Chinese market.

Strong national pride alongside the rise of social media has opened up these netizens to a call out culture regarding brand behaviour. So for any brand operating in China,

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especially ones outside of Chinese culture must be extra careful to respect the culture and represent them in a respectable way. Vogue China editor Angelica Cheung has expressed this view by stating

“As I have voiced time and again publicly and privately, Western brands seeking to enter and expand in China should be aware of Chinese cultural sensibilities,”( BOF,2018) As previously mentioned, “Chinese consumers account for one-third of total luxury goods spend in the world, a share that is likely to hit 46% by 2025” (BOF, 2018).

Which makes it a market luxury brands can’t afford to lose. In the case of Dolce and Gabbana at the end of the financial year in March 2017 they had $1.296 billion in revenue. If the Chinese consumer only accounted for 20% of their sales and half were to leave due to a long-lasting boycott that’s $129 million loss in revenue. All because of one poorly thought out campaign. (BOF, 2018)

As the aftermath still continues its hard to tell if Dolce and Gabbana will recover as Boycotts don’t typically last long. But in the wake of a digital generation and with this campaign being the first prominent digital boycott it could potentially not recover.

The permanence of the internet will become an issue as this misstep will always exist somewhere online. As consumers of luxury continue to use the internet to build relationships with brands there's potential for the incident to keep circulating reminding users of Dolce and Gabbana’s cultural insensitivity and why they don't shop with them.

In terms of recovery for Dolce and Gabbana, winning back the digital generation is essential. If Dolce and Gabbana manage to gain the forgiveness of the Chinese public there's an opportunity to gain back this market group as they continue in their prime consumerist years. However, this is difficult to foresee as there are many other Western luxury brands as well as emerging Chinese brands who know their

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consumer's cultural ideologies. So as a developing market with a multitude of options now available to them only time will tell if the consumers will forget the mistake or forget Dolce and Gabbana all together and consumer elsewhere.

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Conclusion To conclude from exploring the Chinese consumer landscape today in reference to Western Luxury fashion. There have been some clear elements that have and will continue to have an impact on brands marketing and selling in China.

As a new generation with strong nationalist pride continues to come into its prime consumerist years. It means brands need to be more aware of the market and understand what luxury means to them today. For brands trying to gain loyalty with Chinese consumers, it's evident that spending the time to understand the complexities of the nation and get to know key consumer generations can help brands market effectively and successfully

Moreover, it is notable that the rise in digital platforms has provided more tools for brands to market on. So, for brands to survive they need to be developing digital marketing strategies to retain the luxury consumer that is now shopping in mainland stores. By engaging them online now through experiential content, when their confidence to purchase online grows it's more likely the consumers will remain brand loyal. But also, brands need to be putting attention into the rural consumer as they will be leading the path online purchasing and will become examples to more urban consumers by showing them purchasing online is authentic. Therefore, relationships need to be created with them as well to ensure luxury brands can keep an important consumer base as the country continues to develop into a more digital economy.

As experience led marketing online and off continues to have the greatest impact with consumers. Brands should continue to develop their understanding of China's

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cyberspace to stay competitive in the market. From observation through this research project its clear users can use digital platforms to represent their identity and its apparent this digital generation is crucial to any Western brands success in China's luxury market today.

It’s hard to determine how quickly consumers will use these platforms to purchase solidly online, as most online marketing is currently experience based to keep loyalties. But as the landscape continues to develop in luxury fashion there’s a clear insight into the digital market expanding rapidly. With an inherent online hub of luxury fashion experiences created by brands looking possible in the future as digital platforms continue to develop.

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