Shenzhen: Why this Strategic Tier-1 City is Now the Luxury Market Favorite?

Local programs plan to turn Shenzhen into an international consumption center city by 2025. With the development of luxury malls such as The Mixc and K11 Ecoast, and the runway fashion shows of Dior and Chanel, Shenzhen has become the firm favorite of the luxury market. With HNWI with high education and strong purchasing power, the core consumer segment is living here. Luxury brands are turning their back to Hong Kong to cross the bridge to Shenzhen.

Let’s go over our complete analysis of the luxury market in Shenzhen.

All Eyes on Shenzhen for Luxury Brands

Besides the topical waves given by the LVMH Group tour led by Bernard Arnault and his family in China, Dior’s Shenzhen show “Valkyrie Miss Dior”, under the direction of Delphine Arnault, has driven 52 million views on runway livestream within 12 hours and 180 million reads on the hashtag “Dior Fall 2023 Ready-to-wear Shenzhen Show” on Weibo.

Dior fashion show in Shenzhen

In late July, the “Gucci Summer Stories” pop-up store, offering personalized couture made directly from Italy, was launched exclusively nationwide in The Mixc Shenzhen Bay, surrounded by mega tech headquarters such as WeChat parent Tencent. Currently, Gucci Kids starts to attract the attention of high-net-worth parents in Shenzhen as well.

Gucci Summer Stories Popup in Shenzhen The Mixc

Galeries Lafayette recently unveiled its newest store in Shenzhen on July 8, as its first in Southern China, with unique labels such as its unique “EDIT by Galeries Lafayette”  features products by Jacquemus, Maison Margiela, Jil Sander as well as renowned Chloé, Marni, J.W. Anderson, and others. Over 200,000 visitors and more than 1 million RMB (equivalent to 139,165 USD) on its inaugural day, as reported by Winshang.com.

Galeries Lafayette opening in Shenzhen

Why is Shenzhen so Popular?

Shenzhen is the most popular city in China for tech companies and headquarters. Next to Hong Kong and Canton, the city is a concentration of HNWI and rich consumers, ideal for luxury consumers. Here are the main reasons why Shenzhen is so popular.

1. A Tech-oriented Economy and Underserved Market

During the early 1990s Chinese Economic Reform, Shenzhen, a fishing village, was chosen as 1 of 4 special economic zones due to its proximity to Hong Kong.

One of the 1st Tier cities in China, China’s Silicon Valley, Shenzhen, is one of the most entrepreneurial cities in China. The headquarters of WeChat parent company Tencent, Huawei, the world’s biggest electric vehicle maker BYD, drone giant DJI and semiconductor factories are located there.

Last year, despite Covid lockdowns Shenzhen managed to grow its economy by 3.3 percent to 3.24 trillion yuan ($462 billion USD).

As an underserved market for global luxury brands, Shenzhen is home to more billionaires. It has 94, more than the 87  billionaires of London, according to Hurun Rich List 2023.

2. A Migrant Population Culture with Self Made Men and Women

Developed as a frontier port city, with a roughly 13 million population, Shenzhen embraces its city slogan “Everyone that comes is automatically a Shenzhen-er” to absorb the innovative technology industry, dream-chasing migrants, and international ideas, transforming this city into a futuristic metropolis and innovation hub. 

Shenzhen is in contrast to cities like Beijing or Shanghai that maintain their local identities. Shenzhen’s migrant population and tech-oriented economy encourage its citizens to embrace avant-garde, inventive, and stimulating ideas.

3. Youngest Highly Educated Consumer Who Loves Fashion

Shenzhen boasts the youngest population with an average age of 32.5 and a per capita disposable income of $10,230 USD (72,718 RMB) in 2022. Thanks to its migrant culture and techy spirit, Shenzhen attracts highly educated and net-worth, ambitious, and optimistic millennials, Gen Z, and emerging tech professionals, making it a prime market for brands investing in the future.

As we discover that middle management level from giant tech companies in Shenzhen is expected to dress up and appreciate niche designer luxury brands. Deliberately dressing plainly isn’t a way to show intellectual superiority in Shenzhen, as most technology cities do.

Why do Luxury Brands Start to Invest In Shenzhen?

From the reasons above, it’s clear that the luxury core consumer target is located in Shenzhen. While the market remains underserved with few luxury boutiques but a strong local demand. This year, luxury brands start to invest in Shenzhen and organize their marketing and advertising strategy around the city.

Let’s discover why.

A Less Saturated Market Compared with Hong Kong

Compared with Beijing and Shanghai, Shenzhen has not yet reached saturation levels for the luxury market. This makes it an attractive location for brands to establish their presence and grow their consumer base with less competition. 

Demand from Shenzhen used to be fulfilled by stores in nearby Hong Kong – nearly 14 minutes with the express. But it declined due to pandemic lockdowns, leading to new shopping habits in Shenzhen and the expansion of luxury brands like Chanel, Hermès, and Louis Vuitton.

Furthermore,  Shenzhen, as part of the Greater Bay Area, has received significant investment from the government, including the establishment of Houbai Bay. This commercial center is surrounded by giant Chinese tech and financial companies and features a three-floor Chanel store – where Chanel opens its first store in Shenzhen.

Despite the reopening of the border with Hong Kong and financial incentives such as lower taxes and prices, highly educated and wealthy individuals in Shenzhen prefer shopping locally for the convenience and experience of luxury brands’ offline services, as per our interview with a local high net-worth citizen.

More information on our consumer interviews here.

From Cultural Desert to Art Incubator

The local Shenzhen population is highly impacted by International culture thanks to the close border with Hong Kong. The Gen Z and Millennials who have abroad studying and working experience, as well as highly educated tech professionals, are different from the last generations who have built this city from scratch since 1980 – who are now established high net-worth consumer class. They pursue the art of living, luxury, and fashion

However, when it comes to art and culture, Shenzhen still has some catching up to do compared to cities like Beijing, Shanghai, and Hangzhou, which is strategically important for leading luxury brands to make benchmarking arts and culture projects in Shenzhen.

That’s why Dior spared no expense in bringing back “Valkyrie Miss Dior” to Shenzhen and invited Joanna Vasconcelos to the event. The space will remain open to the public until July 17th, providing an immersive experience. 

Even during the pandemic, in 2022, Dutch avant-garde fashion designer Viktor&Rolf launched its exhibition “MetaFashion!” in Shenzhen as the first stop in Asia.

Viktor&Rolf “MetaFashion!” Exhibition in Shenzhen

Furthermore, Chanel is expected to replicate its Cruise 2024 runway show in Shenzhen in November 2023.

Strengthened Governmental Investment

The 2021 Shenzhen Business Development Plan aims to establish Shenzhen as an international consumption center city by 2025, attracting a succession of business giants to the area. 

Houhai Bay, as part of the Greater Bay Area, surrounded by giant Chinese tech and financial companies, has been invested by luxury brands such as Chanel, Cartier, Graff, Chaumet, Harry Winston, Messika, Devialet, Celine, Fendi, Gucci, Loro Piana, and many others.

Celebrities Endorsement for Loro Piana and Burberry Kids in Shenzhen The Mixc Houhai Bay

In 2024, K11 ECOAST, K11’s first flagship coastal project in Mainland China, will launch. Jointly built by K11, a high-end department store under the company New World Development, and China Merchants Shekou. The K11 flagship will have a gross floor area of over 220,000 square meters. The project includes the K11 Shopping and Art Center and the K11 HACC Multi-purpose Art and Exhibition Space.

K11 ECOAST Enriching the Art Scene of Shenzhen

Shenzhen is expected to establish duty-free zones in Luohu, Yantian, and Qianhai districts to compete with Hong Kong’s lower taxes and shopping prices for luxury goods.

Perfect Match – When Luxury Brands Meet Shenzhen Growth

“As China’s capital of design, innovation, and high technology, this destination, open to the world, creation, and the future, is the latest of many stopovers made by the Chanel cruise collection”, a statement from Chanel announced that on November 2, Shenzhen will host the Cruise 2024 runway show debuted in Los Angeles, underlining the French label’s commitment to connecting with local young and well-off residents.

Chanel 2024 Cruise Runway in Los Angeles and Decorative Exhibition in The Mixc

Shenzhen, a tech-oriented economy with a highly educated and affluent consumer class who embrace avant-garde art and stimulating ideas by nature, has received government investment to become an international consumption center city by 2025. Luxury brands have chosen to invest in the underserved market of Shenzhen at the perfect time.

Reverse Group’s office is located in Shenzhen and Paris. Contact us to get further insightful prospection to help your brand enter the Chinese market.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top