Tag Archives: Luxury

Chinese Acquisition Of Scottish Cashmere Producer Todd & Duncan “Sewn Up”

Ningxia Zhongyin Becomes First Chinese Firm To Take Over A UK Cashmere Company, Eyeing Growth Of Domestic Market In China

Ningxia Zhongyin is one of the world's top producers of cashmere fibers -- with its acquisition of Todd & Duncan, it has greatly increased its global footprint

Ningxia Zhongyin is one of the world's top producers of cashmere fibers -- with its acquisition of Todd & Duncan, it has greatly increased its global footprint

Cashmere, a major contributor to the economy in China’s mid-western Ningxia Hui Autonomous Region, has quickly become big business in China, as more companies in Ningxia attempt to move beyond producing raw cashmere and into the much higher profit-margin sector of finished product exports. Of the major cashmere producers in Ningxia, in the last few years the Ningxia Lingwu Zhongyin Cashmere Company has emerged as the most ambitious, with executives making it clear that the company wants to not only capture the lucrative Chinese domestic market but also the even more lucrative overseas market.

To secure both groups of customers, the company has set out to acquire marquee foreign brands, which have the brand history and pedigree to appeal to Chinese luxury consumers. Last year, Zhongyin made its first moves to try to acquire the Scottish firm Dawson International, a deal that ultimately fell through but showed Zhongyin’s intentions to break into the Scottish cashmere market. From China.org:

In 2008, the Ningxia-based Lingwu Zhongyin Cashmere Company entered into negotiations to take over 120-year old Dawson International, widely regarded as the world’s number one cashmere business. Although the takeover talks were called off on June 4, the bid was an indicator of the ambition of Ningxia’s emerging cashmere giants.

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New Figures On Mainland Chinese Spending Bode Well For Luxury Retailers

Pao Principle Study Shows That Luxury Market Has Less To Fear In The Next Year Than Expected

"Tiffany is King" in mainland China, according to Pao Principle. Tiffany opened boutiques in Beijing & Shanghai in 2006

"Tiffany is King" in mainland China, according to Pao Principle. Tiffany opened boutiques in Beijing & Shanghai in 2006

With luxury retailers looking for any good news in a still-tough market, studies by several organizations in recent months have shown that things are a little less ghastly than expected, particularly in Asian and other emerging markets. The newest of these studies, carried out by business consulting firm Pao Principle, indicates that recent spending trends in mainland China should please luxury handbag, watch, and jewelry producers.

From Travel Agent Central:

According to…Pao Principle, almost 90 percent of individuals surveyed had bought a designer handbag in the past 12 months. Unsurprisingly, men accounted for luxury watch purchases at a ratio of almost two to one over women.

Out of those surveyed who had purchased fine jewelry, Tiffany was king, with almost a third of Mainland Chinese who had purchased fine jewelry in the past 12 month turning to the store for their wares.  Necklaces were the accessories of choice, with “white gold” reigning supreme in overall jewelry purchases.

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Valentino Sees Surge In Demand In China

Luxury Retailer Notes That Stabilized Sales, Huge Growth In Greater China Have Fueled Asia Expansion

Italian fashion company Valentino is looking to expand quickly in Asia, with a focus on China & Hong Kong

Italian fashion company Valentino is looking to expand quickly in Asia, with a focus on China & Hong Kong

Most global fashion houses have, over the years, worked hard to make something of a foothold in the Chinese market. As we’ve written before, one of the first major Western fashion companies to enter China following the “reform and opening” policy of the late 1970s was Pierre Cardin, who began selling in China in 1979. Since then, major fashion boutiques from around the world can be found in China’s largest cities, and some have progressed into smaller (but still large by most standards) second- and third-tier cities throughout the country. Despite major setbacks for some retailers in formerly reliable markets like Japan — where companies like French Connection and Versace have recently closed down operations — and a drop in demand in the American market (although that has, according to reports today, stabilized for many luxury companies), the surge in demand for certain designers in the Chinese mainland should soften the blow in revenue that these companies are experiencing as a result of the global economic downturn.

The Valentino Fashion Group — which includes the Valentino, Hugo Boss, and Marlboro labels, today announced that the company has benefitted from the quick rise in consumer demand throughout China. From Bloomberg:

Revenue in China and Hong Kong jumped 40 percent in the past month, and the company expects that pace to continue, Sassi said backstage after the show…

Although sales in Japan were described today by Valentino’s CEO as “not that bad,” the company’s major focus is store expansion in mainland China, Hong Kong, and Southeast Asian markets like Singapore:

[Valentino CEO Stefano Sassi] said the group is opening Valentino stores in Asia — Singapore, China and Japan. “These are not great times to open shops, but we are going ahead with what needs to be done.”

Luxury Car Sector Continues To Thrive in China

New Models, Stimulus Package Continue To Drive Growth In World’s Top Automotive Market Despite Global Woes

China is one of Audi's most reliable and profitable markets; As Chinese luxury auto brands emerge, will they retain their dominance?

China is one of Audi's most reliable and profitable markets; As Chinese luxury auto brands emerge, will they retain their dominance?

The sustained growth seen in the Chinese automotive market over the last year has shown that the vast Chinese market — vast both in size and in potential customers — still has plenty of room to grow. For luxury carmakers, who’ve had a tough year in markets like North America and Europe, recent figures that show Chinese buyers are still motivated to part with their cash are welcome, to say the least, as formerly reliable customers in the US and other major economies think twice before signing on the dotted line.

According to this Wall Street Journal Asia article, growth in the Chinese market has been unprecedented in recent months for foreign luxury automakers, and with the stimulus package — aimed at infrastructure projects — taking effect, companies like Audi (a favorite of China’s government elite), BMW (the flashy entrepreneur’s choice) and Mercedes (the mark of a true “sophisticate” in China) expect to see their fortunes continue in the years ahead:

Audi’s sales in China rose 37% in September from a year earlier to more than 15,000 cars, marking a new record level in terms of monthly vehicle sales, the Ingolstadt, Germany-based auto maker said.

In the January-to-September period, Audi’s sales totaled 108,859 vehicles in China, up 20% from a year earlier.

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China’s “Old School Luxury Car” Gets International Attention

Hong Qi (Red Flag) Limousines Driven In National Day Parade Provoke Speculation Among China Car Watchers

The newest Hong Qi limo, used in the National Day parade, features traditional design elements that will appeal to many in China (Photo: Xinhua)

The newest Hong Qi limo, used in the National Day parade, features traditional design elements that will appeal to many in China (Photo: Xinhua)

This week, during China’s National Day parade, many viewers saw for the first time China’s first (and some would say only) luxury car brand — Hong Qi (Red Flag) — in action, carrying President Hu Jintao and Lieutenant General Fang Fenghui to Tian’anmen. For people unfamiliar with China’s exclusive home-grown luxury vehicle — generally reserved only for top leaders — what’s beneath the hood of Hong Qi’s newest model?

China Car Times takes a look:

Information on the cars used in this years National Day celebrations is thin on the ground, we have learned that they measure 6.4 meters long, 2.05 meters wide and are 1.72 meters high, and with power being delivered by a V12 engine. The cars were considered state secrets during their development and were all hand made by First Automobile Workers in Changchun.

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Future For Luxury Goods Looks A Little Brighter

Growing Demand In China’s Interior, Other Asian Countries Should Counterbalance Tepid Consumption Elsewhere

Although Chinese consumers have shown a taste for foreign luxury brands, domestic labels will present stiff competition in coming years

Although Chinese consumers have shown a taste for foreign luxury brands, domestic labels will present stiff competition in coming years

As a result of the fast-paced development of China’s eastern coastline and special administrative regions, only recently have major luxury brands made it to the country’s vast interior region, where a number of second- and third-tier cities remain relative blank slates. Since so many companies are only reaching these areas now, the spread of luxury brands in China has become a regular news story. This has only intensified over the last year, as formerly free-spending Japanese and American customers have thought twice about luxury goods while emerging customers in places like the BRIC countries and relatively fast-growing economies like Vietnam become more regular (and brand-loyal) buyers. Nonetheless, the luxury sector is still experiencing only modest growth one year on from the onset of the global economic slowdown despite their best efforts at wooing new customers.

If many recent articles are correct, though, what we’ve seen over the last year — severe as it has been — should only prove to be a blip in the grand scheme of luxury revenues. From Financier Worldwide:

Sales of designer shoes, handbags, and beauty products have weathered the financial storm particularly well. At the end of August, French cosmetics company L’Oréal reported higher than expected profits of €1.37bn for H1 2009. In June, Hermès revealed it was farming crocodiles in Australia to feed demand for its coveted £4000 Birkin bag. Around the same time, Mulberry announced that its handbag sales had recovered, climbing 21 percent in the first 10 weeks of the new financial year. Shoe supplier Kurt Geiger, which operates in upmarket department stores across the UK, also reported double-digit growth in profits for the first five months of the year.

Bain & Company predicts that trading in the developed markets will remain tough for the rest of the year, with growth of around 1 percent in 2010 before a slow recovery. However, despite the recession slowing the pace of development in emerging markets, Bain believes that, as a consequence of increasing personal wealth, growth in global GDP, and rising tourism in Russia, China, India and Brazil, spending will surge between 20 percent and 35 percent over the next five years. This is expected to aid the recovery of the luxury goods sector.

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Art Market Confidence Index Shows 75% Of HK Auction Respondents In The Mood To Buy

As Hong Kong “Stirs From Slumber” And Buyer Confidence Remains High In China, What Can We Expect To See Next Week?

Zeng Fanzhi is one of the historical Chinese contemporary artists up for auction in Hong Kong next week

Zeng Fanzhi is one of the historical Chinese contemporary artists up for auction in Hong Kong next week

We’ve been interested in the upcoming Hong Kong Sotheby’s auctions of Contemporary Chinese, Southeast Asian and other Asian art, with a particularly obvious fixation on the Chinese side, for some time. After the surprising turnout of mainland Chinese, and their willingness to go far above and beyond lot estimates to take home something they’ve set their hearts on, Sotheby’s is likely expecting a good proportion of bidders both from the mainland and other areas of Greater China — definitely Hong Kong, since buyers from that market have been something of a fixture at Chinese art auctions for ages. And while the unpredictable nature of art auctions makes it difficult to forecast how next week’s auctions turn out (although total revenue estimates for all of the Hong Kong auctions are close to US$100 million), many people are excited and motivated to buy some high-quality, historical art.

One thing that makes the auction of contemporary Chinese art even more interesting to me on a personal level is the way it will coincide with “Golden Week,” a week of celebrations coinciding with both Chinese National Day and the Mid-Autumn Festival. If last year’s turnout was any indication, Golden Week could draw well over a million mainlanders to Hong Kong this year, most of whom are coming to the city either to shop for expensive objects or eat and drink for days. While Golden Week, on its own, really shouldn’t affect the Sotheby’s sale too much, it is within the realm of possibility that some of the shopping-mad mainlanders might be shipping a Yue Minjun or Liu Ye painting home along with their boxes of luxury goods.

Another reason I’m excited about the Hong Kong sales next week is because of this article, published today by Art Market Insight, which is bullish on the article because of the comparatively fast re-emergence of Hong Kong following the global economic crisis:

Once again, Sotheby’s is weighting its sale in favour of the Contemporary segment (Contemporary Asian Art) which carries the richest of the three catalogues with 190 lots and a total revenue estimate of $12.5m. In order to re-kindle interest amongst its biggest clients, the auctioneer has built a catalogue of very attractive signatures. Among the star lots: a powder drawing by CAI Guoqiang , Money net NO.2, estimated at HKD 4.7m – 5.5m, ($606,000 – $710,000), several paintings by YUE Minjun , including Hats series – The lovers expected to generate around $400,000 (estimated HKD 2.8m – 3.5m), three paintings from the famous Chinese Portrait series by FENG Zhengjie including a superb contemporary Amazon (4 x 3 metres) estimated at $100,000 – $130,000 (HKD 800,000 – 1m). A very similar monumental portrait fetched $133,000 in June 2009 (Phillips de Pury & Company, London, £81,000).

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Shanghai Developer Plans Luxury Home Furnishing Store “With A Twist”

Ausen Real Estate Development Set To Invest US$22 Million In Luxury Home Furnishing Retail Complex, Due To Open Next Year

Ausen World will bring a Western-style furniture shopping experience to Shanghai

Ausen World will bring a Western-style furniture shopping experience to Shanghai

While announcements of new large-scale real estate projects in China are nothing new, nor are they particularly exciting on the whole, Ausen Real Estate Development Co.’s recently-announced plans to open a massive home furnishing retail complex near Shanghai next year stand out. Set to be located in Xinbang, in Shanghai’s Songjiang District (less than an hour’s drive southwest of downtown), the austerely named Ausen World Brand Home Furnishings Center will include features not often seen at furniture stores, including a hotel and restaurant for shoppers who prefer to make a weekend out of their shopping trips. Although slapping a hotel onto a massive furniture store isn’t exactly unheard of, it most certainly is unusual.

According to company spokespeople, Ausen World‘s main focus will be on American and European furniture, popular but often poorly understood by Shanghai-area residents. The center will also include Premium home furnishing areas designed to emulate “DIY” stores like the Home Depot. From Furniture Today:

Another unusual feature for a Chinese retail center will be the presence of on-site interior designers, who can help consumers with home design and product choices.

In a statement, Ausen said it intends to be a door to the Chinese market for Western brands. It will offer help with operating in the country, including support of import entry, logistics and storage.

Zhang said he believes the center will offer a “family feel” that is missing from most Chinese retail spaces, with a rewarding consumer experience for shoppers and their children. An Australian company will design the “eco-garden” look of the complex, including outdoor leisure areas.

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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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Japan’s Mitsuoka Motor Co. To Enter Chinese Market

Japanese Luxury Automaker Plans To Open Beijing Showroom By Q1 2010

The Mitsuoka Orochi will retail for around 800,000 RMB (US $117,177) in China when it arrives next year

The Mitsuoka Orochi will retail for around 800,000 RMB (US $117,177) in China when it arrives next year

The growing Chinese luxury market is a prime target for many Asian companies that have found demand in their home countries — mainly South Korea and Japan — either growing at a snail’s pace or simply remaining stagnant. As formerly luxury-mad consumers in traditional markets like Japan cut back on their spending, high-end Japanese companies have started to look abroad for more opportunities, with China remaining the natural choice as a result of its proximity and massive population.

Recently, Japan’s Mitsuoka Motor Co., one of the country’s major luxury automakers, announced their plans to enter the Chinese market next year, starting with a showroom in Beijing that is slated to open in April. To lead their China efforts, the company will display their Orochi model at next year’s Beijing Auto Show and follow up their Beijing strategy with new dealerships in other top-tier cities:

The Orochi will spearhead Mitsuoka’s debut into China. The company plans to display the car at next year’s Beijing Auto Show, and to open dealerships in Beijing, Shanghai and Guangzhou.

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