Tag Archives: coach

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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Macau: A Complex (And Exciting) Destination in the PRC

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"

Macau has quickly established itself as the "Vegas of the East"

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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.

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Coach Appoints New China President, Eyes Rapid Mainland Expansion

Andre Cohen (LVMH, Swatch, Timberland) Responsible For Leadership & Results Of Coach China — Including Mainland, Hong Kong And Macau

Coach opened one of its largest Asian locations in Hong Kong last summer: The company is looking to expand quickly in the lucrative Mainland market as well

Coach opened one of its largest Asian locations in Hong Kong last summer: The company is looking to expand quickly in the lucrative Mainland market as well. Photo © Hong Kong Hustle

It is no secret that American luxury brand Coach has its sights set on the rapidly-growing Chinese luxury market — we have written before on the company’s long-term growth strategy in the Greater China region. As other luxury brands enter the Chinese market, many of them focusing on the country’s burgeoning second- and third-tier cities (where middle-class growth is expected to grow the fastest), Coach is retooling its marketing and brand positioning platform to become even more competitive.

The company’s newly-appointed China Region President, Andre Cohen, who is due to begin his job next month, has a great deal of experience building western brands in the Asia-Pacific region — having spent time in Singapore, Malaysia, and Japan working for Timberland, Swatch, and LVMH — and Mr. Cohen’s plans for the China market are shaped by his successes with these brands in other Asian markets.

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Luxury Brands Look To Shoppers In China For Cushion In Crisis

Gucci and Ferragamo Join Burberry In Opening New China Locations In ’09

Ferragamo in Shanghai: The Luxury brand hopes to add 7-8 locations in China this year

Ferragamo in Shanghai: The Luxury brand hopes to add 7-8 locations in China this year. Photo © Time

The Mercury News reports today on hopes by luxury retailers that well-heeled Chinese shoppers, who have cut back less than their Western and Japanese counterparts, can buoy the luxury goods market enough to get them through the economic downturn. While China itself has been hit hard by the global economic downturn — particularly in its manufacturing and export sectors — a series of domestic stimulus packages and efforts to bolster consumer confidence have begun in earnest to take effect (as we have written before). Although a broader recovery, especially in the more rural or far-flung areas, will take some time, in China’s metropolitan centers like Beijing and Shanghai, the wealthy and upper-middle-class have continued to shop. And for that, luxury brands from around the world are looking at this consumer class as one of their few bright spots in the global economy.

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Coach Confident of Gaining Market Share in China

American Luxury Brand Bullish On Chinese Consumer Demand For Luxury Goods

FT has a brief story today on comments made by Lew Frankfort, Chief Executive of Coach, about the potential for competition between foreign and home-grown luxury brands in the growing Chinese market:

Lew Frankfort said the worldwide economic slowdown was set to raise further China’s importance to the luxury goods sector, not just as a manufacturing centre but, more significantly, as a growing consumer market.

While Coach announced in January that it would halve its rate of expansion in North America, reducing the number of annual store openings there from 40 to 20, Mr Frankfort said he was likely to accelerate development plans in China.

Speaking at the end of a visit to China, he said: “I am leaving this trip with a view that our numbers might be conservative . . . We see sophisticated [Chinese] consumers shopping and international brands thriving.”

Coach estimates that China will represent 10 per cent of the $25bn global luxury handbag and accessories market by 2010. The US group currently has 17 shops in mainland China, in addition to eight stores in Hong Kong and two in Macao.

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