Monthly Archives: July 2009

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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Young Chinese Artists Reflect The Changing Urban Landscape

Exhibition Of Young Chinese Artists In Shanghai Gives Post-Reform Artists New Platform To Find New Audiences

The "Scattered Times" exhibition takes place at Shanghai Times Square

The "Scattered Times" exhibition takes place at Shanghai Times Square

As the art world begins to rebound from the global economic slowdown, this summer has brought plenty of great opportunities to see contemporary Chinese art around the world. With domestic demand growing rapidly, and as more Chinese middle- and upper-class individuals diversify their assets to include mainstays like gold and property but also portable assets like art and jewelry, the Chinese art market has been one of the more active art areas in 2009. As Chinese-American artist Jian Wang recently said after spending several months working in China, “The Chinese art market is very hot, and Chinese contemporary art is seen [by Chinese collectors] as a commodity and a good investment.”

Reflecting the speed at which contemporary art in China is gaining allure for the local market, young artists in China are finding an increasing number of venues at which to exhibit their art. This week, 20 young Chinese artists will present at the “Scattered Times” contemporary art exhibition at Shanghai Times Square on Huaihai Road. As this article from China Net points out, the exhibition gives artists in a wide number of mediums the opportunity to present their works to a more receptive domestic audience:

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Shanghai Reaches Out To Luxury Travelers

City Trying To Lure High-End Travelers With Urban Makeover, Customer Service, Amenities

Shanghai's luxury hoteliers are actively wooing luxury travelers

Shanghai's luxury hoteliers are actively wooing luxury travelers

Shanghai is gearing up for next year’s World Expo, smoothing over many of its more gritty areas and giving the city an all-over polish. But the city’s luxury hotels, many of them stung by a drop in visitors as a result of the global economic downturn, have started to take on their own outreach programs, wooing luxury visitors through efforts aimed at restoring the city’s pre-revolution reputation as an opulent, exciting “Paris of the East.”

As the Canadian Press writes, the strategies employed by these hotels are designed to appeal to high-end travelers who may find Beijing interesting but drab, and Hong Kong cosmopolitan but old-fashioned:

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Smooth Drive For Luxury Carmakers In China

Demand Continues To Grow In First- And Second-Tier Cities, As More Individuals Purchase First Automobile

China surpassed the United States as the world's biggest auto market for the first half of 2009 after June sales soared 36.5 percent from a year earlier (© Washington Post)

China surpassed the United States as the world's biggest auto market for the first half of 2009 after June sales soared 36.5 percent from a year earlier (© Washington Post)

Luxury automakers have been enthusiastic about the potential of the Chinese market for years, as the middle class began its rapid growth and more middle class individuals began to think about purchasing their first cars while wealthier individuals started “trading up” or buying their second or third vehicle. In recent months, as demand for higher-end automobiles shrank in developed markets, automakers have increasingly relied upon growth in the Chinese mainland to tide them over until higher profits started to show again in other areas. As growth there continues to lag, the Chinese market is increasingly looking like the true engine of sales for the short- to medium-term. Sensing this, the shift in automakers’ collective consciousness has turned distinctly eastward.

The Chinese market was, until recently, a blank slate for luxury carmakers. Until well into the 1990s, personal automobiles were still the domain of wealthy or powerful individuals, as China’s middle class was negligible in size. Through the post-WTO years, however, automobile segments from budget to luxury have seen strong growth, particularly in urban centers, where cars are both a luxury (as most megacities have relatively good, albeit crowded, public transportation) and a status symbol. Today, China Daily features an article about how steady growth of car ownership — especially higher-end cars — should buoy most luxury automakers for the time being, granted they retool their marketing and their product offerings for the mainland market:

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The Rise Of China’s Megacities: Good For Business?

Six Cities – Tianjin, Guangzhou, Shenzhen, Chongqing, Chengdu and Wuhan – Expected To Join The “Megacity” Ranks, With Real Urban Populations Exceeding 10 Million, In Next 15 Years

Six cities should join the ranks of "megacities" like Beijing and Shanghai in the next 15 years. Who will cash in on the new opportunities that will arise?

Six cities should join the ranks of "megacities" like Beijing and Shanghai in the next 15 years. Who will cash in on the new opportunities that will arise?

One of the greatest engines of China’s rapid economic growth has undoubtedly been the massive in-migration of the rural population into the wealthy coastal area. Although this influx has slowed, and even reversed somewhat, as a result of the global economic slowdown, for China’s major cities, its cosmopolitan centers, urban population growth is expected to continue growing for at least the next 10-15 years. As China’s top-tier cities, Beijing and Shanghai, become even more competitive and second- and third-tier cities present young professionals with better job options, the rank of Chinese “megacities” — cities with populations exceeding 10 million — are expected to be joined by six cities: Tianjin, Guangzhou, Shenzhen, Chongqing, Chengdu and Wuhan. According to a post today on FT’s Dragonbeat blog, the rise of the new Chinese megacity will present new challenges for urban planners. However, I think they will also present unique opportunities.

Tom Miller writes for the Financial Times:

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