As Chinese consumers grow increasingly reliant on online retail, e-commerce has become a must for luxury brands operating in China. Both Kering Greater China President Cai Jinqing and Richemont China CEO Jenny Gu agreed that digital transformation is crucial for retailers in an interview with CGTN during the 3rd CIIE.

China's e-commerce has witnessed 35 years of speedy growth since Alibaba's founder Jack Ma established the country’s first business-to-consumer platform in 1995. The sector's transaction volume totaled about 35 trillion yuan (about $5.3 trillion) in 2019, growing at a compound annual growth rate of 25 percent during the decade from 2009. The trend is projected to continue into the coming years, as new technologies, such as big data, 5G and AI, inject new momentum, making consumers more addicted to online shopping habits.

"We see a lot of digital innovation happening in China," said Cai. "We want to build a center of excellence to support not only China business but eventually could be leveraged in our global network and practices."

Retail is among the first sectors disrupted by internet technology. For most of the past 35 years, the trend was one-way, offline brick-and-mortar stores shifting to online sales. In recent years, the wind has changed as China's dominant e-commerce players, Alibaba, JD.com and others, eyed offline stores in an attempt to build a modern retail industry that merged the online and offline shopping experience.

Swiss Luxury Group Richemont also capitalizes on this trend. "Our digital revenue in Q1 grew by three digits," said Gu. "What we've been doing is an overall omnichannel strategy that's to build a very unique, seamless and immersive online and offline experience."

Luxury brand's digital expansion in China is also an answer to the trend of consumption "repatriation." A study by commercial property services provider Savills found that Chinese consumers' overseas luxury spending once accounted for as much as 70 percent of their total luxury consumption. The percentage began to drop in 2018, and the pandemic accelerated this process. "The Hainan Free Trade Port also adds tremendous engine (for domestic luxury spending) to grow," noted Cai.

Luxury firms' confidence in the Chinese market is founded on their expectations of the country's expanding middle class, which has more disposable income. The pandemic inflicted short-term pain on luxury sales, but the growth came back after the pandemic was brought under control. 

"Our strong growth (in the first half of this year) in China definitely demonstrates China's economic resilience and Chinese consumers' resilience as well," said Gu. "I think Chinese are very positive about their future income for sure."