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
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.
Posted in Automobile, Business, China, Culture, Investment, Luxury
Tagged branding, China, chinese luxury, chinese luxury brands, foreign investment, Investment, Luxury, luxury brands, NPR
Five-Bedroom Luxury Duplex In City’s Mid-Levels Area Sells for US $57 Million
The world's most expensive apartment was recently sold in this building for 57 million US dollars
We’ve written before about the Hong Kong real estate market’s relatively fast rebound in the face of the global economic downturn, with exclusive properties like The Masterpiece attracting the attention of well-heeled mainlanders and Hong Kong residents alike. This week, an apartment in Hong Kong’s Mid-Levels area sold for a record-breaking HK$439 million, or around US$57 million, and analysts expect a continued flow of money into the city’s luxury real estate markets as cash-rich individuals look to take advantage of the Hong Kong government’s recently lowered interest rates and the city’s appeal as an investment haven.
Today, the AFP writes on the recently sold duplex, noting that the massive flood of mainland money coming into the market is exciting developers but worrying some economists who think this year’s 40% leap in the luxury property sector portends that a property bubble could be forming:
“You may see some more record-breaking prices in the luxury segment,” said Buggle Lau, chief analyst for Midland Realty.
“We have all the ingredients for a bubble coming up… With low interest rates and ample liquidity people are inclined to put their money into real estate.”
Demand from mainland Chinese investors looking to diversify their new-found wealth and snap up trophy property assets was also likely to buoy the market, said Savills’ head of research Simon Smith.
“There is quite a lot of momentum out there. If you look ahead there’s a chronic undersupply of residential units for luxury and the mass market,” he added.
Posted in Business, China, Investment, Luxury
Tagged China, hong kong, Investment, Luxury, mainland, mid-levels, property, real estate, SAR, the masterpiece
Luxury Carmaker Builds Showroom On Jinbao Street In Response To Growing Chinese Demand
Bugatti's choice to open a showroom in Beijing shows the company's intention to expand in the China market
China’s growing automotive demand has been great for automakers of all stripes, from up-and-coming budget domestic brands to the world’s most expensive and exclusive marks. Already this year, companies like Japan’s Mitsuoka Motor Co have announced their intentions to build showrooms in China, Porsche debuted its Panamera Turbo at the Shanghai Auto Show, Ferrari created a China-only version of its 599 GTB Fiorano, and Rolls Royce received 20 orders for its $250,000 Ghost after presenting the automobile in Hong Kong.
Now Bugatti, the high performance French automaker, has opened its first-ever showroom outside of France, located on Beijing’s swanky Jinbao Street. From Alibaba News:
“The opening of the show room, the first one in the world, shows Bugatti’s confidence in China‘s luxury carmarket, “said Mr Kuo-chung, President of Bugatti China.
Kuo-chung said backed by sustained economic boom, China now has a significant number of billionaires, pointing to the annual Hurun Report which said China now has more known dollar billionaires than any other country bar the United States.
Posted in Automobile, Business, China, Investment, Luxury
Tagged auto, Automobile, beijing, bugatti, China, ferrari, france, Investment, Luxury, luxury automobile, mitsuoka, porsche, rolls-royce, showroom
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
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.
Posted in Business, China, Culture, Luxury
Tagged affluence, China, chinese, jewelry, Luxury, luxury market, pao principle, study, survey, tiffany, tiffany & co, wealth
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
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.”
Posted in Uncategorized
Tagged asia, China, Fashion, hugo boss, japan, Luxury, marlboro, pierre cardin, singapore, valentino, valentino group
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?
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.
Posted in Automobile, Business, China, Investment, Luxury
Tagged Audi, auto, bmw, car, China, growth, Investment, joint venture, Luxury, luxury car, luxury vehicles, mercedes-benz