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How to price luxury brands in China – Retail in Asia

Retail in Asia

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How to price luxury brands in China

As China’s upper-middle class continues to expand, finding the right price strategy is key for many global marketers to stay ahead of the competition in China. Red Luxury looks at some emerging factors that international luxury brands will have to consider when pricing their products in China.

“Foreign companies generally sell to a higher level of the economic pyramid in developing countries such as China. So essentially their customers can afford the higher price,” explains George Yip, professor and co-director of the Center on China Innovation at the China Europe International Business School. “This is also a typical foreign market penetration pricing policy: Start high and move down later to expand the customer base.”

Gau Xudong, senior research fellow and vice-director of the Tsinghua University Research Center for Technological Innovation seems to echo Yip. “It is a rational choice for high-end brands to price higher in China,” Gao says. “China is still a hierarchical society where people need brands to label their social status, and there is demand for every social class.”