Luxury Market In China A Mixed Bag For Foreign Brands, Who Fight To Get Customers To Buy Inside China Rather Than Traveling Overseas
Although Beijing and Shanghai are China's "crown jewels," second-tier cities like Chongqing may ultimately prove the engines for the creation of a more comprehensive Chinese consumer culture
We’ve discussed recent reports on the rebound of the Chinese luxury market (which didn’t drop that much to begin with, despite global economic woes), and this year’s findings in McKinsey & Company’s Insights China report that China is rocketing towards the top of the list of the world’s biggest luxury markets. Although China remains one of the only bright spots in the world of luxury retailing at the moment, foreign luxury brands — despite rapid growth in the mainland market — often have difficulties convincing many of the country’s highest-potential customers (the wealthy and super-rich urbanites in top-tier cities) to buy their products within the mainland, strangely enough, because of the large luxury tax China levies on high-priced imported goods.
Possibly to combat this problem, as we’ve seen this year, many companies are looking towards second- and third-tier cities as a source of future growth, and perhaps leaving the top-tier cities alone and letting their Beijing or Shanghai boutiques function only as “showrooms” for ultra-rich customers who’ll simply buy the products on their next overseas or Hong Kong/Macau trip. In these smaller urban areas, middle- and upper-middle class customers, who still want to differentiate themselves through conspicuous consumption but are most certainly not part of the economic elite, could be the key for luxury brands who want their China locations to actually sell things rather than simply show them off like a real-life catalog. Middle- and upper-middle class urban professionals in cities like Xi’an, Qingdao, Nanjing and Chongqing — who make a decent living but can’t afford to fly to Hong Kong or Macau (let alone Paris or Tokyo) for luxury shopping sprees — are likely going to buoy luxury brands’ losses in top coastal cities.
Posted in Business, China, Economy, Investment, Luxury
Tagged beijing, China, hong kong, import, London, Luxury, luxury society, macau, Paris, retail, ruder finn, second-tier, shanghai, spending, tokyo
IPO Follows Record Revenue In Macau Last Month And Indications That Beijing Will Loosen Visa Restrictions F0r Mainland Chinese
Macau, the "Vegas of the East," is bouncing back to life after a tough year
The Wall Street Journal reports today that Las Vegas-based casino operator Wynn Resorts is looking for as much as US$1.6 billion (HK$ 12.6 billion) “based on pricing set over the weekend for a Hong Kong listing of the company’s Macau assets next month.” This IPO could precede others by foreign casinos in Macau, as the article notes that Wynn competitor Sheldon Adelson may also be eyeing a Hong Kong listing for his company as it emerges from the global economic downturn — which put a sizeable dent in several construction projects that had been slated for the Venetian Macau last year.
The relatively quick rebound of the Chinese tourist (or, even more likely, Cantonese gambling enthusiasts from Hong Kong, Shenzhen and elsewhere in Guangdong province) has injected a much-needed dose of optimism among major companies in Macau, which depend greatly on the continued spending and investment of mainland Chinese visitors and companies as well as the capital and expertise of foreign casino operators like Wynn to keep the former Portuguese colony’s growing economy running smoothly.
Over the weekend, Wynn and its bankers set a price range of between HK$8.52 and HK$10.08 per share for the IPO, the person said. The company is offering 1.25 billion shares, equivalent to 25% of the equity of Wynn’s Macau operations, the person added. The company had earlier been expected to raise about US$1 billion in its offering.
Posted in Business, China, Economics, Economy, Investment, Luxury
Tagged Business, China, finance, Investment, IPO, macao, macau, sheldon adelson, steve wynn, wall street journal, wynn resorts
Influx Of Mainland Chinese Boosting The Island’s Tourism Figures, Benefitted By Relaxed Travel Rules
Mainland Chinese tourists have flocked to Taiwan since travel rules were relaxed in 2008
The global tourism industry has been hit hard by the global economic crisis, as formerly profligate travelers from Europe, Japan, and North America scale back their vacation plans this summer, and the tourism industries in the periphery of Greater China — Hong Kong, Macau, and Taiwan — have been no exception. Macau has responded to this drop in wider demand by reaching out more aggressively to Mainland tourists, who find traveling to China’s special administrative regions far easier than applying for foreign visas. We’ve written on Macau’s outreach strategies, but Taiwan is another market altogether. With the election of Taiwanese President Ma Ying-jeou last year, and ties between Taiwan and the Mainland gradually warming, China issued new travel rules that made the process far easier, and soon after began direct flights to Taiwan for the first time in nearly 60 years.
Since then, Taiwan’s travel industry has benefitted from the influx of visitors. According to this press release, the number of overseas visitors jumped 13.8 per cent in the first five months this year to 1.79 million, most of them being tourists. However, the real meat of the release is that the number of Mainland Chinese visitors has surged even as tourists from other major Taiwan tourism markets have plummeted:
Melco Entertainment Makes $2 Billion Bet That Macau’s Tourism, Gambling Industry Will Soon Recover From Global Slump
City of Dreams is one of the world's most high-tech, feature-heavy casino and entertainment complexes
We have written several times before on the efforts of Macau’s tourism department to draw in guests from neighboring Mainland China and Hong Kong, as well as foreign guests from the periphery of East Asia and elsewhere. But despite the department’s efforts, overall confidence levels have been spotty at best in the last year, with some entertainment companies, like the Las Vegas Sands Corp., dramatically cutting back in Macau. However, this month there has been good news coming out of Macau’s glitzy Cotai Strip (the city’s answer to the Vegas Strip), with the opening of Melco’s “City of Dreams” casino, a $2 billion project that features 516 gambling tables in a 420,000-square-foot casino, Hard Rock and Grand Hyatt hotels along with a multimedia theater and shops run by DFS.
According to the casino’s owners, City of Dreams is designed to be one of the world’s most advanced gaming complexes, offering a sort of all-inclusive departure from many of Macau’s more old-fashioned gaming centers, but still remaining close enough to the city’s traditional tourism draws to appeal to a wide tourist demographic. With the unusually large investment that Melco has made in this project, however, it is clear that the company is not simply trying to pull foreign tourists away from its rivals, it is also trying to crack a market that has frustrated other casinos for years — the Mainland or Hong Kong gambler. While this group obviously comes to Macau often and spends freely, the problem has traditionally been getting these individuals to stay in Macau for more than one or two days. With the huge array of amenities at “City of Dreams,” Melco is showing their ambition to get this demographic to respond.
Posted in Business, China, Economy, Investment, Luxury
Tagged asia, casino, China, city of dreams, cotai strip, grand hyatt, hard rock cafe, hong kong, james packer, las vegas, lawrence ho, macao, macau, melco, sands, sheldon adelson, venetian
Macau, Having Already Surpassed Las Vegas As A Gambling Destination, Sets Its Sights On Cultural, Culinary Offerings To Lure Tourists
Macau has quickly established itself as the "Vegas of the East"
Read more here.
Since its handover in 1999, Macau has rapidly become one of Asia’s top destinations for gambling, luring thousands of gamers from mainland China and Hong Kong. If Macau’s tourism department has its way, though, the city will soon be as renowned as a cultural destination as well — playing on its unique blend of Portuguese colonial and Chinese culture, architecture, and culinary traditions. Although construction of luxury apartments and casinos has slowed somewhat due to the global economic crisis, the city looks at the continuing growth of the Chinese tourist as a way to buoy a relatively sluggish tourism season.
Macau is unique in that it has, much like neighboring Hong Kong, combined two disparate cultures over the centuries to the point where they no longer seem distinct but instead form the one-of-a-kind Macanese culture. The city has also combined the entrepreneurial, fast-paced culture of China’s biggest cities with a fascinating mix of people, cultures, and languages, making this one of the world’s most exciting, truly global cities. The city has also become one of East Asia’s luxury hubs.
Posted in Business, China, Culture, Fashion, Luxury
Tagged afrikana, asian, China, cirque de soleil, coach, Culture, european, gambling, gucci, Luxury, LV, macao, macau, manolo, MGM, portuguese, prada, shopping, tiffany, tourneau, venetian, versace
Construction On A Number Of Stalled Projects To Start Up Again, As City Aims To Cement Its Reputation As The “Vegas Of The East”
One Central, set to be completed within the year, is to be one of Macao's top luxury residential complexes
Macao, the former Portuguese colony that rejoined China in 1999, has had its share of ups and downs over the past few years. In recent years, the city replaced Las Vegas as the world’s largest gambling market by total revenue, but not long after gaining this distinction, the city was hit hard by the global economic downturn — which bit into the city’s crucial tourism industry as well as its breakneck pace of construction. Now, as the recession eases somewhat in the region — China itself has not been hit as hard as many more developed economies — Macao aims to restart its vast construction efforts and attract more young professionals, luxury shoppers, and gamblers.
Today, the New York Times has a great article on the ongoing transformation of Macao — what was once a backwater trading hub has, like its neighbor Hong Kong, over the years become an important business and tourism center. As the city continues to carve its unique place in the Chinese and East Asian economies, developers continue to work hard to create in Macao a world-class real estate and travel destination. With large-scale luxury developments like One Central due to open within the year, it looks like Macao is, indeed, starting to get back on its feet:
Posted in Business, China, Economy, Investment
Tagged casino, China, construction, gambling, hong kong, Investment, macao, macau, mandarin oriental, one central, real estate, wanchai