Tag Archives: branding

Interview: Can China’s Luxury Brands Compete At Home And Abroad?

NPR Interview With Nicholas Lardy Of The Peterson Institute for International Economics Discusses How To Make “‘Made In China’ Mean Luxury”

High-end fashion brands like Shanghai Tang are part of the first wave of Chinese luxury brands from the mainland and Hong Kong

High-end fashion brands like Shanghai Tang are part of the first wave of Chinese luxury brands from the mainland and Hong Kong

We’ve written before about domestic Chinese luxury brands, and the way these brands are working to appeal to luxury consumers in that country by resonating on a cultural level rather than simply promoting their exclusive price-points. In the next few years, as Western luxury brands lose a little of their initial luster in top-tier markets, although they’ll probably maintain their draw in second- or third-tier markets, many analysts think there will be a great opportunity for Chinese luxury brands to squeeze into the luxury market.

In an interview with NPR today, Nicholas Lardy, “a senior fellow at the Peterson Institute for International Economics, a non-profit, non-partisan group based in Washington, D.C,” discusses how China’s burgeoning middle class (which, at more than 200 million potential customers and growing, has the potential to revolutionize buying trends) — rather than the small proportion of “ultra-rich” — will be the customers who will lead to the ascendance of Chinese luxury brands.

SIMON: Now, some of us remember when the term made in Japan was synonymous with inexpensive, dare I say, cheap goods. And of course in our lifetime that’s changed entirely. Made in Japan now means quality, particularly in the car industry. Is China trying to expand in the manufacture of high-quality items itself?

Mr. LARDY: It’s not only trying, I think it’s succeeding and it’s succeeding much earlier than Japan did for the simple reason that they’ve allowed foreign firms to play a much bigger role. We buy computers that say Dell or Toshiba and so forth – they’re all made in China. They’re made by foreign companies operating in China, assembling all the parts and components there.

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Spanish Ham Producers Hope To “Bring Home The Bacon” In China

Spanish Luxury Exporters Look To China As New Market For Rare And Expensive Ham, Jewelry

Spanish ham producers are hoping to get their products associated with wealth and sophistication in China

Spanish ham producers are hoping to get their products associated with wealth and sophistication in China

When people think of China — or the eating habits of urban Chinese — they probably don’t think of Spanish ham. But if Spanish ham producers have their way, China will be one of their top markets in coming years. Recently, after years of trade negotiations, Spanish ham was given the greenlight in China, after which they began a marketing blitz designed to get their products associated with wealth, luxury, and distinction among wealthy Chinese. To start off this marketing effort, a Spanish ham tasting event was held recently at Beijing’s LAN Club, one of the city’s most exclusive restuarant/nightclubs, along with a Spanish jewelry modeling show. Additionally, ham producers began a simultaneous effort to woo Japanese residents in China’s major cities, as these consumers — some of the world’s most seasoned luxury buyers — are already familiar with Spanish hams and require less dedicated marketing efforts.

As the Latin American Herald Tribune writes, as for every industry the Chinese market has great potential as a destination for ham producers, but it won’t be easy to convince Chinese buyers to spend top dollar on a culinary product with which they’re not that familiar — particularly in the age of swine flu:

The ham, produced in Extremadura by the Montesano company and distributed in China by the Olivarero Chinese Spanish Consortium, or COCE, was the star of a luxurious and glitzy evening at the distinguished club, although the jewelry of Madrid designer Paloma Sanchez, who has a store in Beijing, was also prominently featured.

“This is an event to launch the ham in Beijing, to see if there’s any demand and position (it) as an exclusive luxury product, for the upper class. Therefore, we’ve accompanied it with the jewelry show,” said Daniel Martin, COCE’s general director and the organizer of the event.

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Luxury Brands Refocus On China

Studies Indicate Sluggish Demand In Established Markets Will Continue As Buyers Remain Motivated In China

According to new studies, Chinese luxury enthusiasts may help buoy the global luxury market for the next few years, if not drive long-term growth

According to new studies, Chinese luxury enthusiasts may help buoy the global luxury market for the next few years, if not drive long-term growth

Luxury brands have had what can conservatively be called a tough year, with the global economic crisis putting a gaping wound in their profits in traditionally high-demand countries like the US and Japan, and recovery lagging behind expectations. These figures have been tempered somewhat by the potential of the Chinese market to soften the blow of falling demand elsewhere, if not counteract it completely. While it is still a bit quixotic to expect China to be the savior of luxury brands everywhere — since it is still very much a developing market — it does benefit luxury brands to plan ahead for the time when China is the world’s biggest luxury market, and start brainstorming on their long-term strategy for sustained growth as well as strong brand loyalty.

This week, Harvard Business looked into the Chinese luxury market, digging through statistics to discern whether this market truly is all it’s cracked up to be. While their findings suggest that hyperbolic enthusiasm about the Chinese consumer is unwarranted — as we’ve written before — they do remain bullish about the potential of this populous and fast-moving market:

New research from McKinsey & Co. indicates that, by 2015, China will be home to the world’s fourth-largest population of wealthy households, an estimated 4.4 million. McKinsey also reports that presently, about 80% of China’s wealthy are between the ages of 18 and 45 (versus 30% in the US). Jing Ulrich, the chairman of China equities at Morgan Stanley, was recently quoted in Forbes as saying of China, “With the global recovery unlikely to be smooth, domestic demand is likely to remain the primary engine of growth in the remainder of 2009.” In a Wall Street Journal op-ed last year, Zachary Karabell argued that “the rise of the Chinese consumer is the only thing standing between them [global companies] and a decline in their business.”

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Automotive Brand-Building In China: Opportunities And Challenges Abound

Western, Chinese Brands Vie For Customer Loyalty As Emerging Middle Class And “Nouveau Riche” Demand Continues To Grow

Buick has capitalized on its reputation for quality and luxury in the Chinese market, enjoying massive success and launching China-only models like the Excelle

Buick has capitalized on its reputation for quality and luxury in the Chinese market, enjoying massive success and launching China-only models like the Excelle

As demand for new vehicles has remained sluggish in developed markets over the past two years, major automakers have rightly looked to retool their strategies to draw customers and build their brands in new markets. As we’ve written before, selling your brand in markets like China, where customers expect different things — and derive status from very specific brand attributes —  represents both a major opportunity and a new challenge. A good example of an automaker that has benefitted from the “blank slate” allowed it by entry into the young Chinese market is Buick, which has a reputation as a car for older, or middle-aged, drivers in its native market, the USA, yet has — through aggressive branding and advertising efforts — developed a reputation as a sleek, luxurious, youthful brand in the Chinese market.

So how can car brands optimize their brand equity in China? Depending on where they come from, their strategies differ greatly. While American car makers like Ford have had great success in overseas markets like Europe by pushing their reliability and value, in the Chinese market imported cars are, generally, chosen by buyers to be a status symbol, rather than “inexpensive.” Ford, then, cannot compete on price alone, as Chinese automakers like Chery and Geely — which have sizeable lineups of entry-level models — will always be able to undercut them. As a result, it is important for foreign car makers to not just build their brand in China, but to build a strong brand in China, one that speaks to Chinese consumers in a way that domestically-produced autos cannot. To break it down further, foreign automakers need to build a strong, distinctive brand — a German car must fit Chinese conceptions of German cars, Japanese cars Japanese attributes and so on.

In practice, how are foreign automakers faring in their Chinese branding strategies? Today, Reuters looks into the “uphill road” these brands are traveling in China, and how they have refocused their branding strategies to varying degrees of success. Using the example of a “nouveau riche” car buyers who has traded his BMW in for an Audi  — since the Audi has developed a strong reputation in China as a car for bureaucrats or (comparatively) “old money” while BMW is considered a brand for the nouveau riche (a group into which the buyer in question is loath to be grouped) — the article provides valuable insight into the particularities of a market so new that even seasoned marketers and branding execs are often at a loss to develop long-term strategies.

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Pierre Cardin: From Popular Brand In China To Popular Chinese Brand?

Ongoing Negotiations Over Acquisition of French Brand Pierre Cardin Shows Chinese Luxury Brands Have Sights Set On Rapid Growth

Pierre Cardin has become one of the most recognizable and coveted foreign brands in China since entering the market in 1978. Photo (c) CRI English

Pierre Cardin has become one of the most recognizable and coveted foreign brands in China since entering the market in 1978. Photo (c) CRI English

Mixed signals surround the rumored takeover of the Pierre Cardin brand by two Chinese groups, which would — if true — illustrate the speed with which Chinese companies hope to attain global reach and influence. Early reports appeared to suggest that an acquisition of only Cardin’s China operations was imminent, but statements by the brand’s China director, Fang Fang, insinuated that the company was open to the idea of a wholesale takeover of its global assets. Although Pierre Cardin himself has denied these rumors, the story is making waves in the Chinese and global business press.

As one of the first western brands to enter the Chinese market after the government initiated its “opening and reform” policies in the late 1970s, Pierre Cardin carries significant brand equity in China, a point which gives this story extra importance in the grand scheme of Chinese luxury branding. As the AFP pointed out today, the acquisition of the Pierre Cardin brand by a Chinese company would be, in the mainland at least, considered a point of pride:

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Will Chinese Consumers Rescue The World Economy?

Multinationals Hope Domestic Consumption, Inland Movement Will Counterbalance Drop In Exports

The world's target market

The world's target market

CNN reports today on the hopes of many western investors and CEOs for the rise of the Chinese consumer to help lift up the sluggish global economy. With slowly-increasing consumption rates in a country still highly populated by savers rather than spenders, redoubled efforts by western and Japanese companies to retain and expand their customer base shows that they understand that the Chinese market — with its vast potential but cut-throat competition — is critical for their global strategy.

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Emerging Economies Still “Bitten By the Luxe Bug”: Financial Express

Asia Accounts For Largest Share Of World’s Luxury Market, Even As Global Financial Conditions Remain Grim

The Financial Express writes on the $80 billion global luxury market, which has fallen on hard times in the last year in most markets, yet continues to perform admirably in emerging economies and in East Asia. As the financial crisis wears on, and target markets in developed countries hold back, luxury brands have adapted quickly. Rather than courting reluctant customers, luxury brands have refocused their attention more to the world’s most populous nations, China and India, as consumers with the means to purchase luxury products in these countries continue to do so even as the rest of the world hunkers down for what could be a protracted recession.

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