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
TNT Theater’s Tour Will Visit Tianjin, Shenzhen, Guangzhou, Beijing, Ningbo, Hangzhou And Xi’an
TNT's past staging of "Oliver Twist" was a big hit in Beijing
It seems that cultural exchanges between China and the rest of the world are becoming increasingly commonplace, with large-scale events like Carnegie Hall’s “Ancient Paths, Modern Voices” festivals in New York and Orange County, the “Experience China in Israel” event in Tel Aviv giving foreign audiences a chance to see a cultural cross-section. Over the past few years in China, foreign cultural organizations and groups have made regular trips to the country to give Chinese audiences a chance to do the same. The most recent of these cultural exchanges, a staging of Shakespeare’s “Romeo and Juliet” performed by Britain’s TNT Theater, began its seven-city tour of China this week, and is set to perform the play throughout the country until November 29. From Xinhua:
Cui Yang, general manager of the Beijing-based Milky Way Arts and Communications Co., Ltd, the play’s importer, said the new version featured a cappella (singing without instrumental accompaniment) and live score which was specially commissioned for the play.
According to Cui, all the sound effects in the drama were created by human voices instead of being pre-recorded.
The TNT Theater, founded in 1980, has been distinguished for its simple stage decoration, strong British style and cross-gender performances. It has previously won the acclaim of Chinese audience with dramas such as Charles Dickens’ “Oliver Twist” and Shakespeare’s “Hamlet”.
In the run-up to next year’s Shanghai’s World Expo, and certainly in its aftermath, we should see a great deal more cultural exchange going on both inside and outside China, as more foreign audiences look to learn about China’s ancient and modern cultures, and Chinese audiences look to learn more about important global and historical trends.
Posted in Art, China, Chinese Art, Culture
Tagged Art, arts, beijing, carnegie hall, China, chinese, Culture, guangzhou, hangzhou, israel, New York, ningbo, oliver twist, performance, production, romeo and juliet, shakespeare, shenzhen, theater, theatre, tianjin, xi'an
Rapid Growth Of Still-Nascent Middle Class Signals Opportunity For Investors And Family Offices In China
Many investors are banking on the prospects for Chinese middle class consumption
We’ve kept a close eye on China’s burgeoning middle class, which — despite its recent appearance on the world stage — already numbers in the hundreds of millions, presenting a vast and unique potential consumer base for companies selling everything from cars to jewelry, household goods to fashion. While the Chinese middle class is expected by many to play a major role in the global economic recovery, their buying (and saving) habits, investment strategies, and long-term financial goals by and large remain poorly understood. Today, the Wall Street Journal looks into emerging market investors who eschew the popular financial planning target customer — the wealthy or ultra-rich — to serve the Chinese middle class, and investors in the West who are banking on the continued growth of this consumer class.
In coming years, it seems inevitable that the increased consumption of China’s hundreds of millions of middle class investors will affect, in some way, investors and money managers in other countries. If that is indeed the case, it pays to read up on this subject now, when the market is just starting to be defined and more fully understood:
Encouraged by the steps the Chinese government has taken to boost consumption, some equity-fund managers are putting money into sectors related to domestic demand, such as retail, automobiles and financials.
Chinese industrialization in recent years has lifted the average income of millions, propelling them into the ranks of a swelling middle class some say could grow to be the largest in the world.
Posted in Business, China, Economics, Economy, Investment, Luxury
Tagged China, consumption, Economy, family office, finance, financial, financial trends, Investment, middle class, trend, wall street journal
Interest Of New Collectors, Government Support Growing As More Museums Mount Large-Scale Exhibitions Of Work By Top Artists
Wang Guangyi's work seems to be (finally) accepted and promoted by the Chinese government's cultural elites
Recently, we translated a speech presented at the first-ever conference of Chinese collectors of contemporary Chinese art delivered in Beijing by influential art critic Li Xianting. In this speech, Li called on Chinese collectors to get busy buying, preserving and presenting top-quality works of contemporary Chinese art in order to ensure younger generations in the country will be able to view and understand their artistic heritage. Li called art collecting “a form of cultural creation,” the responsibility for which lies in the hands of the country’s new generation of art collectors. From Li’s speech:
We can’t expect the government to establish, from top to bottom, an art museum system in such a short amount of time, not least because the construction of the “hardware” is so difficult, but what’s harder is [assembling] the artwork itself, because up until now the collection in the government’s museum of contemporary art has been really poor, and not only because in the past three decades the important works of Chinese contemporary art have flowed overseas. Can the government spend the money to collect contemporary art? Aside from lack of funds, the hardest thing is that within a considerable amount of time, could the government possibly recognize the value of a contemporary art value system?
Whether by coincidence or by design, a news item in China’s Global Times today announced a spate of high-profile museum exhibitions of two of China’s top contemporary artists, Zhang Xiaogang and Wang Guangyi. Although as recently as last month Li Xianting decried the Chinese government’s slow movement on arts education and investment in cultural capital, these two exhibitions seem to indicate that development is beginning in earnest. From the article:
While the recent inclusion of a selection of contemporary Chinese artworks in exhibitions held at state-run museums across the country has been considered by many as a sign that Chinese contemporary art has been officially embraced by the government, others in the art world are calling for more to be done to recognize the genre.
Posted in Art, auction, China, Chinese Art, Culture, Investment, Museums
Tagged Art, art collection, beijing, CCP, China, contemporary art, contemporary chinese art, CPC, government, guangdong, guangdong art museum, li xianting, national art museum, political pop, wang guangyi, zhang xiaogang
Growth Among Chinese Luxury Customers Pushes Them Beyond Japanese, Americans To Become Top Consumers Of LVMH Brands
Chinese drinkers have made the country Hennessy's top market, surpassing the United States
LVMH Moët Hennessy • Louis Vuitton S.A., the mighty global juggernaut, has had a bit of a rough year in the traditionally reliable markets of North America, Japan and Europe. Despite cutbacks in spending in these established markets, however, there have been bright areas for LVMH, namely in emerging markets like China and the other BRIC nations and pockets of Southeast Asia. In regions where LVMH has only operated for a few years, or a few decades at the most, newly rich consumers are opening their wallets and flaunting their wealth in a way never seen before — and all of this translates to high hopes for luxury’s standard bearer.
In the wake of the global economic crisis, China has leapfrogged its developed-world counterparts in many high-end segments, driven mainly by the country’s second-tier urban growth, which — fueled mostly by commodity industries like coal which have not been as badly affected by the downturn — continue to grow and attract foreign investment. Second- and third-tier cities, which have seen high-end foreign boutiques opening up only in the last few years, have been a boon to major foreign brands because customers in these smaller cities present virtually no signs of “luxury fatigue” and feel that expensive luxury brands are an excellent way of conveying their newly found status — the flashier the better.
Earlier this year, China surpassed the United States as the world’s second-largest luxury market, and the country has Japan, #1, firmly in its sights. Many analysts believe that China, given current growth figures, should overtake Japan as the world’s top luxury market within five years. So what does this all mean for luxury brands? Today, the Wall Street Journal’s Matthew Curtin looks into LVMH’s “China Syndrome,” and make the case that where LVMH goes, so goes the luxury industry:
Chinese customers, both at home and on holiday in the shopping malls around the world, have become the biggest buyers of Louis Vuitton clothes and handbags and Hennessy cognac ahead of the Japanese and overtaking Americans.
Posted in Business, China, Economics, Economy, Investment, Luxury
Tagged China, chinese, consumption, global economic crisis, japan, louis vuitton, Luxury, LVMH, LVMH moet hennessy, north america, southeast asia, united states, wall street journal
Spending On Everything From Luxury Cars To Private Jets Shows Ultrarich Chinese Are Unleashing Their Inner Conspicuous Consumer
The exclusive club of "ultra-rich" in China are splurging amid the ongoing global economic doldrums
An interesting blog post today at the Wall Street Journal, where Robert Frank points out that the global economic downturn has turned a new spotlight onto a once-unlikely savior — the Chinese [ultrarich] consumer. While this group is exclusive to say the least, particularly in terms of the miniscule percentage of the Chinese population that can live up to this title, the staggering dropoff of the once mighty American, Japanese and even Russian luxury showoff has pushed the Chinese super-spender into the leading role.
Though Frank’s potential nicknames for this ultrarich group of big spenders — “Deng Xiaoblings,” for one — are a humorous take on the subject, the repercussions of an Eastward shift of conspicuous consumption and luxury shopping sprees could mean a great deal for established western luxury brands. Just as the increased buying power — and desire for diversification — seen among Chinese buyers of everything from gold to real estate to luxury cars to Chinese antiquities and contemporary arts has affected those markets and caused everyone from Bugatti to Sotheby’s to focus far more strongly on the China market than ever before, this China-bound luxury shift could very well change the nature and corporate strategies of the global luxury industry.
From the WSJ:
Purveyors of posh have a new mandate: Go East!
An updated forecast from Bain & Co. out this morning shows a stronger-than-expected rise in luxury sales for Asia–especially China. It said it expects luxury-goods sales in mainland China to jump 12% this year.
Posted in Art, auction, Automobile, Business, China, Chinese Art, Economics, Economy, Luxury
Tagged Art, auction, bugatti, China, chinese contemporary art, contemporary art, Economy, industry, Luxury, LVMH, robert frank, sotheby's, spending, ultrarich, wall street journal, wealth
Event Follows Other Recent Cultural Events And Partnerships In Germany And Belgium, And Upcoming Events In The United States
Following China’s National Day celebrations earlier this month, a wave of cultural events have taken place — or are slated to take place — around the world. From China’s position as guest of honor at the Frankfurt Book Fair to the many included works of Chinese contemporary art at the Europalia-China art festival in Brussels (co-curated by premier Chinese artist Ai Weiwei), the last few weeks have given Western audiences a good opportunity to get up close and personal with several aspects of contemporary Chinese artistic culture.
This week, Chinese culture heads to the Middle East, where the “Experience China in Israel” cultural exchange event kicked off this weekend at the Tel Aviv Opera House. The event will feature performances, film screenings and photo exhibitions, and follows similar “Experience” events held in the past in Russia, South Korea, Germany and the U.S. From Xinhua:
The event, jointly held by the State Council Information Office of China and Israeli Foreign Ministry, is dedicated to the 60th anniversary of the founding of the People’s Republic of China and the 17th anniversary of the establishment of diplomatic relations between the two countries.
Composed of a series of activities including performances, photo exhibitions, a film week and a symposium on China, Israel and the world economy, the event, which began earlier this week and will conclude at the end of this month, is expected to allow the Israelis to see Chinese culture and China’s development and achievements over the past 60 years and promote Sino-Israeli friendship.
Posted in Art, China, Chinese Art, Culture
Tagged ai weiwei, art exhibition, China, chinese, chinese contemporary art, chinese culture, contemporary art, Culture, europalia, europalia-china art festival, exhibition, film, frankfurt, frankfurt book fair, israel, tel aviv