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Gen Z may be the perfect market for luxury in China

What is Gen Z?

Generation Z, or Gen Z, is the generation from mid 1990s to early 2010s. This generation, of which a good portion is just getting into adulthood, is very different from the previous one (millennials). This is due to their much more frequent connection with digital applications.
The digitalization is an event that gen Z experienced as a protagonist instead of looking at it from a distance. For this reason, their points of view differ a lot from other generations.Usage of computer, smartphone, tablet and videogames since a young age, combined with a different political and social landscape shape this generation, making its objectives and way to look at life harder to tell for older adults.
There is not a global standard about which years should be included by gen Z.
In our article, for the sake of clarity, we will use those born between 1995 and 2010.

How is China’s Gen Z different?

China’s gen Z has different characteristics that are interesting for business. First, those young adults often grew as single children. Second, they have a much more international background than their elders. Third, their mentality is much less influenced by Chinese tradition. Fourth, their sphere of values and objectives tend to differ from the previous generations.
Now we can only see the spending habits of a portion of generation Z. Retail brands, such as Alibaba’s Tmall, already give them a lot of importance, because the data are outstanding, although still partial.

Gen Z’s appetite for luxury

The interest of Gen Z in luxury products is immense. Their market share is currently 4%, an incredible amount since we are talking about 18-25 years old.
gen z's interest for luxury products, including expensive wines, is deemed to be increasing more and more with time.
Their appetite for luxury should increase as they get older, marry and earn more money. Currently, 80% of the share of luxury retail on Tmall is coming from 35 years old or younger, which confirms the general statistics. Younger generations are normally more accustomed to purchase anything online. This, combined with Gen Z’s own traits, make it possible to think that in future Gen Z will be the biggest luxury goods purchasing group. As a consequence, preparing marketing and products for the requirements of these young adults is a must.

Choosing a product for the experience it provides

Livestreaming, augmented reality, virtual stores, VIP experiences and services are being more and more used to approach younger buyers. Gen Z have a strong interest into the experience and feeling that a product can bring. This is very interesting for the luxury market, but even less pricey suppliers are trying to give a “premium” feeling to their more common products. Furthermore, the internationalization of Gen Z in China, combined with China’s rise to power, is making them more careful when choosing between a Chinese and a foreign supplier.
Older generations used to favor international brands.
Gen Z may be more objective, which lets Chinese brands have more opportunities in the segment of luxury.

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