Why Chinese social media apps are increasingly vital for luxury goods makers

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Chinese women dance as part of an exercise routine in front of a luxury store in a shopping district on October 9, 2019 in Beijing, China.

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The US government may have


Tencent Holding

WeChat in its sights, but for luxury goods makers, the Chinese social media app and others like it have never been more important.

That’s according to a team of analysts led by Luca Solca at AB Bernstein, who estimate that China’s 35% share of the luxury goods market in 2019 will rise to 45% or 50% by 2025.

“China is the most digitally advanced country in the world, when we look at e-commerce penetration, digital payment penetration, ‘new economy’ concentration. Younger Chinese consumers are even more ‘hip’, and even more important to the current and future fortunes of global luxury brands,” Solca said.

Due to the deep economic damage of the pandemic, the luxury goods market will need all the help it can get. Even before the coronavirus flooded the world, a February report of the Italian luxury brands committee Altagamma, BCG and Bernstein predicted a drop in sales in 2020 in China alone of 30 to 40 billion euros (or 35 to 47 billion dollars).

Solca said it was “impossible to overstate” the importance of the WeChat app and its more than 1.2 billion monthly active users. It all started as a combination of WhatsApp, Instagram,


Facebook
,

and


Apple

Pay, but now users can purchase directly from the app with more functions through other “mini-programs,” he notes.

China’s response to


Twitter
,

Weibo is a “distant second” among apps important to luxury goods companies, with 0.5 billion monthly active users. The brands are also present on many other platforms such as Douyin, Toutiao, Little Red Book, QQ and


Owned by Baidu

Baidu Teiba.

Bernstein analyzed the presence of luxury goods brands on WeChat and Weibo in April and May, when the peak of the Covid-19 emergency had passed in China.


Louis Vuitton

and


Owned by Kering

Gucci leads the ranking in terms of followers, likes and plays on WeChat. close behind


Belonging to Swatch

Omega,


Tiffany and company.,
and Richemont Cartier of Cie Financière.


Prada

was less important, which also means it may have potential, while


Burberry

was an increase in terms of followers and average plays, Solca said.

For Weibo, Cartier ranks first in average reposts and second in comments, while Prada is number one in comments and third in reposts, indicating that “Prada brand momentum has legs.” Burberry appears less on the Weibo app, while


Dior

was the most active brand on WeChat and the second on Weibo.

Write to Barbara Kollmeyer at [email protected]

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