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
High-End Buyers Unfazed By Government’s Tax Increase, Pushing Luxury Brand To Higher Sales Figures
Porsche debuted its new Panamera at the Shanghai Auto Show this year, indicating its commitment to the Chinese auto market
If Porsche’s top executives were concerned last year when the Chinese government imposed a higher tax on high-end imported European vehicles, they can now breathe a sigh of relief, as sales figures indicate that the tax hike did nothing to slow Porsche’s growth in the mainland — and actually may have had the opposite effect. Among China’s business elite and/or nouveau riche circles, conspicuous consumption has become a way of life, and as such owning a car for which you had to pay upwards of $35,000 in import taxes alone is a good way to flaunt your cash.
As the Globe and Mail points out today, China’s import tax seems to benefit all parties involved — from the car companies who are recording record profits in China, to the government offices collecting mountains of tax revenue, to the conspicuous consumers cruising around Beijing or Shanghai in their pricey sports cars:
Shortly after the Beijing Olympic games last summer, the Chinese government slapped a hefty luxury tax on imported European cars with high-horsepower engines. Klaus Berning, the Porsche executive vice-president of sales and marketing who attended the Frankfurt Auto Show, said the tax added $35,000 (U.S.) or more to the price of a Porsche.
Posted in Automobile, Business, China, Luxury
Tagged canada, China, chinese, germany, globe and mail, import, import tax, porsche, tax, treasury
Will Bentley Follow The Success Of Rolls-Royce In The Chinese Market? Or Will More Chinese Luxury Buyers Opt For Rival Brands?
The Bentley Mulsanne includes many features popular in the Chinese market, such as a spacious interior and chauffeur-ready driver's seat
As we’ve pointed out time and time again, with the global doldrums cutting into the vehicle budgets of many luxury consumers in developed markets like North America, Japan and Europe, high-end car companies like Rolls-Royce have increasingly looked to emerging markets like China to get them through the economic crisis and create a new, loyal buyer’s market. As Chinese luxury models become more prevalent (and popular) over time and truly begin to rival the dominant luxury models by BMW, Mercedes-Benz and Porsche, automakers at the highest end are already starting to plan ahead for a strong China strategy to ensure their brands remain at the top of the heap for years to come.
Following the lead of the 2010 Porsche Panamera, which was unveiled at this year’s Shanghai Auto Show, Bentley has taken the lid off of its 2011 Mulsanne, with what is sure to be an eye towards the Chinese market — where the country’s ultra-rich still have no domestic alternative that can match Bentley quality. After making its initial debut in August, the Mulsanne has become the talk of the high-end luxury scene, not least because it is the first all-new Bentley model to roll off the production line since the 1930s. As Motor Authority writes, though this car is most certainly beyond the budgets of most lustful car enthusiasts, it is a sight to behold and has an engine to match:
Posted in Automobile, Business, China, Luxury
Tagged Audi, auto, automotive, bentley, bentley mulsanne, bmw, car, China, chinese, ferrari, mercedes, mulsanne, porsche, rolls-royce, sports, vehicle
American Retailer Looking To Target Lucrative (And Still-Growing) Chinese Tourist Market?
Is Macy's going to push for more brand recognition among Chinese shoppers?
For years, American retailer Macy’s has adopted several strategies to entice foreign tourists to spend more at its flagship location in New York’s Herald Square, from discount cards for international shoppers to promotions tied to free coupon books. As the global financial crisis bit down on New York tourism in the last year, there are signs that stores like Macy’s may be looking abroad to markets they have never before targeted specifically, namely China, where the number of tourists traveling overseas has skyrocketed in the last 20 years. Cities like New York, where travelers from places like mainland China tend to spend most of their time shopping, are expected to benefit the most from the oncoming wave of Chinese tourists, and since the relaxation of some travel restrictions last year, a noticeable rise in Chinese tourists has already been noted in New York — where Chinese spend an average of $2,200 each, making them the city’s most profligate foreign tourists.
With its size, midtown location and historical pedigree, Macy’s has always appealed to foreign tourists looking for a “New York shopping experience” (or those who just want to take advantage of a comparatively weak dollar to stock up on clothes). If Macy’s truly wants to target the Chinese market, and get a larger slice of the Chinese tourist dollar, they would be well advised to learn a few cultural particularities about Chinese tourists:
1.) Chinese travelers love giveaways…and will go out of their way to get them
Posted in China, Culture, Luxury
Tagged bus, China, chinese, ferrari, gray line, gucci, guidebooks, louis vuitton, Luxury, macy's, manhattan, midtown, New York, porsche, prada, shopping, sightseeing, tour groups, tour guides, tourism, tourists
Female Luxury Shoppers Powering Growth Of Luxury Brands Throughout Country, From First To Third-Tier Cities
Shaun Rein sees the female demographic as one of the major drivers of luxury spending in China over the long term
Shaun Rein, founder and managing director of the China Market Research Group, writes an interesting feature today for Forbes, focusing on female Chinese shoppers, and the continued growth that this demographic has shown in the face of the global recession. Although female luxury customers have largely cut back in traditional luxury markets like Japan and North America, spending remains strong in emerging markets like China, where luxury brands are still new to some second- or third-tier cities — where much of China’s sustained growth will center in coming years, as we have written before.
As Rein sees it, the urban female demographic shows great sustained potential because of the speed at which they have become choosy — rather than simply profligate — spenders. Chinese shoppers are increasingly purchasing luxury goods because they like them, and have developed stronger brand loyalty based on style or quality, rather than simply spending for spending’s sake. This is a good thing for major brands, many of which take unique advertising or marketing strategies for the Chinese market to carve out loyal niches. Obviously, this strategy is working, as Rein notes, “Women [in China] are becoming less price sensitive and more sophisticated about the brands and products that they finally buy.” Unlike many male shoppers in the Chinese market, who are less apt to shop around or develop strong brand loyalty — mainly choosing based on status (for automobiles, mainly) or price (see success of Ferragamo and other high-end men’s luxury apparel brands) — women are more likely to become brand “connoisseurs.”
Posted in Business, China, Culture, Economy, Fashion, Investment, Luxury
Tagged China, demographics, ferragamo, Luxury, porsche, shopping, spending, women
Middle Class Estimated At Upwards of 150 Million And Growing; Consumers Hungry For Entry-Level Luxury Products That Offer Status As Well As Quality
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:
Posted in Business, China, Culture, Economy, Luxury
Tagged asia, China, coach, Economics, Economy, emerging, gucci, louis vuitton, Luxury, middle class, porsche, spending
Brands Spending Heavily On Advertising, Brand Messaging To Maintain Strong Growth In Competitive Developing Markets
The Luxury Institute's results seem to indicate that luxury brands with a strong foothold in China will need to work harder to maintain their dominance
This week, the Luxury Institute published its list of the top luxury brands in China, as ranked by Chinese high-net-worth consumers. While the results are not terribly surprising — as the “Best of the Best” probably don’t differ dramatically from any other major luxury market — it is still important to see that traditional favorites like Louis Vuitton (for women) and Dunhill (for men) have slipped a bit. This (to me, at least) gives an indication that brands which have developed strong footholds in the Chinese market throughout the late ’80s and ’90s are giving luxury shoppers in China a bit of “luxury fatigue.”
Possibly driven by younger luxury shoppers in the cosmopolitan east (where consumers are generally more trendy as well as picky), the split between brand lust in first- and second-tier cities must be growing nearly as fast as the advertising expenditures. Unfortunately, the Luxury Institute’s results do not break the survey down into regional variations, so I’m basing all of this on my own observations and opinions.
Posted in Automobile, Business, China, Culture, Fashion, Luxury
Tagged armani, asia, bmw, China, ferragamo, gucci, hermes, Luxury, mercedes, paul smith, porsche, prada
Brands, Companies With Limited Knowledge Of Cultural Buying Habits, Brand Recognition Face Difficulty Even In World’s Fastest-Growing Market
Porsche has worked hard to prove to potential buyers in China that they are a critical part of the brand's global strategy, choosing the Shanghai Auto Show as the venue to debut their new Panamera Turbo
This week, Reuters wrote on the difficulties that many brands have encountered when trying to enter or expand in the Chinese market. Although many like to think that Chinese consumers will be ready and willing to snap up any and all imported luxury goods, the difficulties often lie not so much in the products themselves or their prices, but in their marketing and branding techniques. Everything from the transliteration of a foreign luxury brand’s name to its “localization” strategy to advertising and consumer outreach can mean the difference between an imported brand becoming the next LVMH or BMW (two brands that have excelled in China) and brands that have only managed to break even or have given up on the Mainland altogether.
Over the last couple of months, several articles have tried to explain the phenomenon of the Chinese luxury consumer — the opportunity and difficulties inherent in this massive and growing consumer base. Why will they save for months to buy a Gucci handbag, yet will pass up the lower-priced yet still-luxury Coach bag? Why will the white-collar office lady sacrifice her food budget for a Gucci wallet yet remain indifferent to Prada? Why have some (mainly European) brands attracted this important luxury buyer base while other brands leave them cold? Much of the answer seems to come back to the cultural particularities of the Chinese middle- and upper-class, particularities that set them apart from other Asian consumers and illustrate how different they are from other global buyers.
Posted in Automobile, Business, China, Economics, Economy, Fashion, Investment, Luxury
Tagged bmw, China, china daily, gucci, LV, LVMH, panamera, porsche
The American Automaker Is Enjoying Record Gains In China’s Rapidly-Growing Automotive Market, Despite Difficulties At Home
GM has enjoyed record success in China over the past four years. But will domestic upstarts like BYD woo Chinese car buyers away? Photo © BusinessWeek
With GM’s impending bankruptcy and restructuring in the news over the last week, it is easy to lose sight of the company’s global reach and mixed revenues. Although the company has had unprecedented difficulties in the North American market, brought on by the global economic downturn, in China — where the company has operated (with a roughly 30-year interruption) for decades — GM has been the leading foreign carmaker for the last four years.
Although China’s domestic car makers — spurred by huge foreign and government investment over the past few years — are making great strides, since the formation of the Shanghai GM joint venture in 1997, the company has worked hard to rebrand itself for the China market. All of this work has paid off in China, since as of last year, GM built an estimated market share of 12.1% on sales of nearly to 1.1 million units.
Posted in Automobile, Business, China, Culture, Investment, Luxury
Tagged Automobile, automotive, buick, BYD, cadillac, car, China, chinese, general motors, GM, GM Shanghai, Luxury, PATAC, porsche, shanghai, shanghai auto show
Analysts Indicate That Low Ownership Rates, Government Subsidies May Spur Faster Growth Of World’s Largest Auto Market
Dongfeng is looking to compete with other domestic Chinese brands to capture market share from foreign competitors
From the recent Shanghai Auto Show to news that the Chinese government plans to offer higher subsidies for consumers trading in old vehicles for new ones, China’s auto market has been a busy place in recent months. With the sluggish performance of carmakers in more developed global markets, the news that auto shares in China — currently the world’s biggest car market — are expected to outperform this year will, in many ways, comfort global auto companies.
However, as we have previously discussed, the news that Chinese car buyers are growing rapidly as a consumer base shouldn’t be enough for foreign automakers — as domestic brands like BYD, Geely, Chery and others vie for dominance in this rapidly-changing market, foreign automakers will have to invest heavily if they are to keep the lead they have built in the last 10-20 years.
Posted in Art, Automobile, Business, China, Investment, Luxury
Tagged Automobile, beijing, bmw, car, chery, China, dongfeng, geely, great wall, marketwatch, porsche, shanghai, shanghai auto show, vehicle