Master’s Degree in Economia e Gestione delle aziende Final Thesis Union of Luxury and Technology: Opportunities and Risks in the Chinese Market Supervisor Ch. Prof. Andrea Pontiggia Assistant supervisor Ch. Prof. Alessandra Perri Graduand: Andrea Di Pietro Matricolation numBer: 854322 Academic Year 2018 / 2019 I TaBle of Contents List of Figures .................................................................................................................... IV List of Tables ..................................................................................................................... VI Introduction ....................................................................................................................... 1 CHAPTER I: Fashion’s Directions ......................................................................................... 7 1.1 Production ............................................................................................................................. 9 1.2 Products .............................................................................................................................. 14 1.4 Place and Geographic Opportunities .................................................................................... 20 CHAPTER II: Luxury ........................................................................................................... 23 2.1 Differences in Consumption ................................................................................................. 25 2.2.1 Chinese Millennials ............................................................................................................................ 32 CHAPTER III: Chinese luxury market .................................................................................. 37 3.1 Fashion and Luxury Development in China .......................................................................... 38 3.2 Chinese Digital Development ............................................................................................... 40 3.3 Main Digital Platforms in China ........................................................................................... 47 3.3.1 WeChat .............................................................................................................................................. 47 3.3.2 Weibo ................................................................................................................................................. 49 3.3.3 Youku ................................................................................................................................................. 50 CHAPTER IV: What Matters in Luxury Purchasing ............................................................. 51 4.1 Differences Between Luxury and Elegance ........................................................................... 53 4.2 Is there a Chance for Elegance in this New Social and Technologic Market? ......................... 55 CHAPTER V: Union of Fashion and Technology ................................................................. 57 5.1 Union of Luxury and Technology .......................................................................................... 59 5.2 The Paradox of “Social Luxury” ............................................................................................ 65 5.3 Where Social Media can Change the Perception of a Luxury Brand ...................................... 67 5.4 Why should Luxury Brands use Assiduously Social Media? ................................................... 69 5.5 Multichannel or Omnichannel? ............................................................................................ 72 CHAPTER VI: Research ...................................................................................................... 75 6.1 Quantitative Questionnaire ................................................................................................. 76 6.1.1 Purchasing Habits Correlations ......................................................................................................... 77 6.1.2 Craftsmanship Correlations ............................................................................................................... 80 6.1.3 Technology and Privacy Correlations ................................................................................................ 84 6.2 Qualitative Questionnaire .................................................................................................. 93 6.2.1 Evidences Derived from Qualitative Questionnaire ...................................................................... 94 6.3 Personas ............................................................................................................................. 95 Conclusions, Limitations and Future Research .............................................................. 103 Appendix ....................................................................................................................... 111 Quantitative Questionnaire in English and in Chinese .......................................................... 111 II Questions in Qualitative Questionnaire ................................................................................. 114 References ..................................................................................................................... 115 Sitography ..................................................................................................................... 122 III List of Figures Figure 1: Concern about a brand’s sustainability and ethical standards before products purchasing, 2017 (% of consumers) ......................................................................................... 13 Figure 2: Worldwide Wearables Forecast, 2018 ...................................................................... 16 Figure 3: Channel breakdown for Chinese luxury goods spending, 2018 (€ billions) ............. 21 Figure 4: Global personal goods market, 1996-2017 (€ billions) ............................................ 23 Figure 5: Influence of Culture on Behaviour, 1997 ................................................................. 26 Figure 6: Reference Group Influence on Individuals, 2001 ..................................................... 28 Figure 7: Share of global personal luxury goods market by region, 2017 ............................... 31 Figure 8: Global personal luxury goods market by consumer nationality, 2000-2017 ............ 31 Figure 9: Share of global personal luxury goods consumers and sales value, by generation, 2016-2017 ................................................................................................................................. 32 Figure 10: Millennials contribution in luxury goods purchasing, 2017 survey ....................... 33 Figure 11: Purchase forecasts for millennials, 2017 survey ..................................................... 34 Figure 12: Time spent by millennials on digital every week, 2017 survey .............................. 35 Figure 13: Global personal luxury goods market evolution in China, 2019 (RMB billions) ... 38 Figure 14: The fastest growing countries for fashion, 2016 ..................................................... 40 Figure 15: Global online market share in global online personal luxury goods market, 2003- 2017 (€ billions) ....................................................................................................................... 41 Figure 16: Places of purchase: comparison between china and global, 2017 .......................... 42 Figure 17: Frequency use of mobiles in shopping, 2017 ......................................................... 43 Figure 18: Gap between China and the rest of the world in online media usage, 2017 ........... 44 Figure 19: Luxury goods sales via online channels, 2011-2016 (USD billion) ....................... 46 Figure 20: Percentage of digital marketing and digital platforms use by top 40 luxury brands, 2015-2018 ................................................................................................................................. 48 Figure 21: Percentage of the top 40 luxury brands using WeChat official account functions, 2018 .......................................................................................................................................... 49 Figure 22: Brand is important, but relatively less among young consumers, 2019 ................. 51 Figure 23: Perceived country of origin vs actual country of origin, 2019 ............................... 52 Figure 24: Followers gap between KOLs and brands official accounts, 2018 ......................... 53 Figure 25: Biggest opportunities for the fashion industry in the opinion of fashion companies’ executives, 2017 ....................................................................................................................... 57 IV Figure 26: Priority areas for 2018, 2018 .................................................................................. 58 Figure 27: New influences on consumers’ purchase decisions, 2018 ...................................... 59 Figure 28: Percentage of channels for the purchase of luxury goods, 2017 ............................ 61 Figure 29: Prediction of the increase in the percentage of online purchases, 2018 ................. 61 Figure 30: Which platform do the Chinese prefer when they buy online, 2017 ...................... 62 Figure 31: Online influence