Monthly Archives: July 2009

Dubai’s Jumeirah To Manage New Beach Resort In Hainan

Qing Shui Bay Resort In Sanya Follows Previous Jumeirah Agreements In Shanghai, Guangzhou and Macau

hainan

Hainan Island, the "Hawaii of China," has become a popular tourist destination for mainland Chinese and non-Chinese alike, attracting many major luxury hoteliers in recent years

Reuters reports today that Dubai’s Jumeirah Group has just signed an agreement with Hong Kong-based Agile Property Holdings to manage the new Jumeirah Qing Shui Bay Resort in Sanya, Hainan province — the southern island known by many as the “Hawaii of China.”
The new beach resort will join a number of other luxury hotels in the area, including the Ritz-Carlton, Banyan Tree, Le Méridien and Mandarin Oriental, and will be comprised of a 250-room hotel and 50 private villas. The resort is slated to open in 2013.

Although specifics on the cost of the project have not yet been released, AME Info sheds some additional light on the new project:

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China Becomes World’s Second-Largest Luxury Market

Country Overtakes US In Luxury Spending, Purchasing Nearly A Quarter Of The World’s Luxury Goods Sold In 2008

China is now second only to Japan in annual luxury spending, and is expected to overtake Japan within the next five years

China is now second only to Japan in annual luxury spending, and is expected to overtake Japan within the next five years

The World Luxury Association reports that spending on luxury products of all types in China has surpassed that of the United States, with wealthy Chinese spending $8.6 billion on luxury goods inside the country. Figures do not account for Chinese tourists buying luxury products overseas. These figures will no doubt please luxury retailers in China — both domestic and foreign — but there are signs that these companies need to work even harder to broaden their market and consolidate their brand position. This may sound strange, seeing as how China is second only to Japan, and rising fast, in luxury spending, but in order to maintain and grow these figures, companies are going to have to ensure “luxury fatigue” does not set in among some of their most active customers.

News by the state-run broadcaster CCTV put the figures published by the World Luxury Association into the context of luxury retailers trying to speed up their China efforts, as the country is seen in many ways to be on a similar consumer trajectory to that of Japan in the 1950s and 1960s:

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Hangzhou Hopes To Boost Tourism With New Raffles City “Mega-Hotel”

UNStudio-Designed Raffles City Mega Hotel To Be 60 Stories Tall, Incorporating Offices, Residences, Mall, 5-Star Hotel

Raffles City Hangzhou will reach a height of 60 stories, presenting views both to and from the Qiantang River and West Lake areas.

Raffles City Hangzhou will reach a height of 60 stories, presenting views both to and from the Qiantang River and West Lake areas.

The British website Holiday Hypermarket reports on the massive, mixed-use Raffles City “mega hotel,” currently under construction in the city of Hangzhou, which city planners hope will increase tourism and boost the local economy. Hangzhou, situated near Shanghai in China’s coastal southeast, is known more for its natural beauty and traditional architecture, but city officials hope that the “totally green” Raffles City mega hotel will make the city more attractive for companies that would otherwise be drawn to its more cosmopolitan neighbor.

This will be the sixth Raffles City project designed by UNStudio, following similar projects in Singapore, Shanghai, Beijing, Chengdu and Bahrain, according to the company’s website. As Holiday Hypermarket points out, Raffles City Hangzhou is expected to be completed by 2012, and will feature several unique aspects that should set it apart from other large-scale mixed-use construction projects currently in progress throughout the mainland:

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Reaching China’s Emerging Luxury Class: 2 Brands’ Strategies

Middle Class Estimated At Upwards of 150 Million And Growing; Consumers Hungry For Entry-Level Luxury Products That Offer Status As Well As Quality

China's middle class is expected grow exponentially in the next 20 years. Graphic © Foreign Policy magazine

Spending by China's middle class is expected to grow exponentially in the next 20 years. Graphic © Foreign Policy magazine

It has become a well-established fact that companies of all stripes are looking at the Chinese market as a source of sustainable revenue over the long term, as the country’s growing middle class increasingly becomes a consumer class on par with many more established markets. However, as many brand marketers — particularly from western countries — have found, reaching the Chinese consumer can be a complicated task, as the Chinese market differs greatly from other developing and developed markets…another well-established fact.

Today, Investopedia examines two strategies that have been adopted by western brands like Luxottica and Coach in their quest for market share in China’s huge, competitive entry-level luxury market. While it will be incredibly difficult for ambitious brands to unseat luxury powerhouses like Gucci, Louis Vuitton and Porsche in China, as this article notes, brands that adopt a specifically China-centric strategy when dealing with the middle class may create a strong foundation for future growth:

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Art, And Lots of It, In Collector’s Chinese Contemporary Art “Maosoleum”

Singaporean Collector Opens His Doors To Give China Society A Glimpse Of His Massive Collection

Dr. Woffles Wu has amassed one of Asia's most extensive collections of contemporary Chinese art

Dr. Woffles Wu has amassed one of Asia's most extensive collections of contemporary Chinese art

With signs that the global art market, particularly the Chinese and emerging art market, is beginning to turn around, following stronger-than-expected auction results and growing signs that the Chinese yuan’s increasing internationalization will pay off for collectors in the long term, more collectors of contemporary Chinese artwork are being profiled by art publications and newspapers around the world. Taiwan’s Straits Times recently profiled one such collector, a plastic surgeon in Singapore whose collection is among the region’s largest.

Dr. Woffles Wu, a renaissance man of sorts, who makes his living in plastic surgery but dabbles in film production and art collecting, has spent the last two years building his own personal Chinese contemporary art “Maosoleum,” comprising nearly 500 pieces. This week, he opened his doors to Singapore’s China Society, a private club of primarily English-educated professionals, to give Chinese art aficionados the opportunity to catch a glimpse of his impressive collection. With interest in Chinese art rising among collectors such as Dr. Wu in the Asia-Pacific region, it will be interesting to see if private museums like his, or larger publicly-funded additions to museums, will become commonplace for exhibiting contemporary Chinese art.

The Straits Times profiles Dr. Wu’s impressive, 12,000 sq.ft warehouse of Chinese art:

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German Designer Breathes Life Into Chinese Domestic Luxury Brand

Michael Michalsky Signs Development Deal With China’s Leading Sportswear Brand To Create China-Only Fashion Range

German designer Michael Michalsky sees China as a future fashion hub, rivaling Tokyo, Paris, and Milan

German designer Michael Michalsky sees China as a future fashion hub, rivaling Japan, France, and Italy

German designer Michael Michalsky, one of the country’s rising fashion stars, has recently signed a deal to produce a range of high-end sportswear, paving the way for other western designers to create China-only lines in partnership with China’s quickly-emerging domestic luxury brands. Michalsky has established himself as something of an iconoclast in European fashion, as he has set his sights primarily on the China market, rather than targeting traditional fashion centers like Milan or Paris.

As Michalsky told Deutsche Welle, his decision to focus on China’s fashion and luxury markets came naturally: “China is the most exciting market for fashion right now…The Chinese are really open to fashion, and let’s face it, the future of the world lies in this region.” Deutsche Welle’s profile of Michalsky shows a designer whose interest in the potential of the Chinese market is led as much by personal fascination as new business realities. As China’s position as one of the world’s top markets for luxury goods is heightened by falling consumption in developed countries, it seems likely that Michalsky is the first of many designers to work with Chinese luxury brands in coming years rather than an anomaly:

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Knowing Your Market: Entrepreneurs Creating “Affordable Luxury” In China

Companies Appeal To Wider Range Of Customers With Affordable Yet Upscale Offerings

Taiwanese bakery chain 85c has successfully blended global luxury with prices and products that Chinese consumers find most appealing

Taiwanese bakery chain 85c has successfully blended global luxury with prices and products that Chinese consumers find most appealing

Although we tend to focus on the higher-end luxury market, occasionally we notice an interesting news item coming out of the Greater China region that puts a distinctly Chinese spin on luxury. While Chinese luxury brands are still the underdog in their home market — particularly for fashion items or automobiles — coffee shops and bakeries often have a home-court advantage in China. Although Starbucks has had huge success in the Chinese market, opening over 350 stores and projecting that number to double in the next 10 years, home-grown entrepreneurs from Taiwan and the mainland are getting more creative in their approach to “luxury” foods and drinks. While it may be odd to think of a chain like Starbucks being considered “luxury,” in China, these foreign chains mainly draw well-to-do urban youth or professionals rather than high-school kids.

85c, a Taiwan-based coffee and bakery chain, has tried to bridge the gap between the cosmopolitan and the everyday through what it calls “Low Price Luxury” (平价奢华) or “Affordable Luxury,” a concept that has helped the chain expand throughout Taiwan and the mainland, and even into the Australian and US markets. In an interview with CHaINA magazine, 85c’s Assistant General Manager Peter Zhu explains the idea of “Low Price Luxury”:

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China’s Airline Industry Headed For Clearer Skies

More High-End Travelers, Increased Domestic Business Travel, Helping Industry Perform Better Than Many Other Markets

China Eastern has grown rapidly in the last 15 years, increasing its domestic and international flight destinations

China Eastern has grown rapidly in the last 15 years, increasing its domestic and international flight destinations

In the last several years, air travel in China has “taken off” among younger travelers, who traditionally take long-distance sleeper trains when traveling between provinces or far-flung destinations. While this has been great for domestic airlines such as China Southern or Air China, recent moves have indicated what many people find obvious — that Chinese airlines like the growing number of economy travelers, but love the growing number of luxury or business travelers, who have no qualms about plunking down top dollar for longer domestic or international flights.

The Financial Times recently wrote on the current state of the Chinese airline industry, which is performing very well despite concerns that a potential drop in travelers may dent their earnings. Despite this, the difference between the successes of Chinese airlines and the woes of American or European airlines are, in many ways, like night and day:

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Porsche, Prada, Hermes Rank Highest In Luxury Institute’s China Luxury Survey

Brands Spending Heavily On Advertising, Brand Messaging To Maintain Strong Growth In Competitive Developing Markets

The Luxury Institute's results seem to indicate that luxury brands with a strong foothold in China will need to work harder to maintain their dominance

The Luxury Institute's results seem to indicate that luxury brands with a strong foothold in China will need to work harder to maintain their dominance

This week, the Luxury Institute published its list of the top luxury brands in China, as ranked by Chinese high-net-worth consumers. While the results are not terribly surprising — as the “Best of the Best” probably don’t differ dramatically from any other major luxury market — it is still important to see that traditional favorites like Louis Vuitton (for women) and Dunhill (for men) have slipped a bit. This (to me, at least) gives an indication that brands which have developed strong footholds in the Chinese market throughout the late ’80s and ’90s are giving luxury shoppers in China a bit of “luxury fatigue.”

Possibly driven by younger luxury shoppers in the cosmopolitan east (where consumers are generally more trendy as well as picky), the split between brand lust in first- and second-tier cities must be growing nearly as fast as the advertising expenditures. Unfortunately, the Luxury Institute’s results do not break the survey down into regional variations, so I’m basing all of this on my own observations and opinions.

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Golf: Tapping Into China’s Vast Potential

Golf Course Developers, Tour Organizers Betting On Huge Potential Demand In The Chinese Market

China is rapidly becoming one of the world's fastest-growing markets for golf

China is rapidly becoming one of the world's fastest-growing markets for golf

We have written before on the vast potential that many golf course developers and organizers see in the Chinese market, where the number of golfers has risen exponentially over the last 10-15 years (and continues to rise rapidly). With world-class courses already existing near Shenzhen and Hong Kong, and more expected to be completed in the next few years, it looks like China is already well on its way to becoming one of the world’s great golf destinations.

Today, Golfweek looks into China’s potential as a world market for golf, pointing out excellently that although China may not have a long golf pedigree to push the sport forward, this is not necessarily a handicap, as, “a lack of golf history can be a disadvantage for an emerging market, but freedom from a past also can lead to innovation.”

It is this “innovation” that will make the Chinese market so attractive for world golf, I think, because like some sports without a long history in China — thinking of basketball here — golf has the potential to appeal to millions of enthusiastic and motivated players across the country. Although, granted, golf is more of an “elite” sport than basketball — and requires significantly more practice to develop proficiency — that hasn’t stopped it from taking off among the country’s wealthy and upper-middle-class individuals.

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