Sales of luxury goods in China represent 20% of the global market in 2015. Chinese tastes for luxury are evolving … which leaves room for local brands. A real threat to the traditional luxury brands and groups, especially French ones. Indeed, if there was an economic sector that links China and France that would be for sure luxury. China is set to become the world’s largest market for high-end products and services and France still remain one of the top exporters of luxury goods worldwide.
1/5 of Luxury sales will be done in China
The Chinese Eldorado, with its million millionaires, its rapidly expanding cities and especially the $ 27 billion (20% of the world market) that represent its luxury market of course attract all desires. Starting with … the “Made in China” brands.
Herborist for cosmetics, Maotai for spirits, Longio for watches, NE Tiger for sewing… 100% Made in China brands are beginning to make a name, and not just in their home country… The first is already sold by the LVMH cosmetics chain, Sephora. What’s the common point of all these brands? They are playing on the taste of refinement and tradition and thus respond to the changes of consumers’ expectations and tastes.
A promising market
Nowadays, the first criterion for three Chinese buyers of high-end products out of four, is the quality. While the logo, the brand, are relegated to the eighth priority as a determining factor in the decision process. As they are less attracted by only renowned brand, this level of maturity reached by a rich section of the population represents a favourable condition for the development of a 100% Chinese sector.
China has all the ingredients for the emergence of strong luxury brands. There is a craft, finesse, traditions … and already very strong brands such as Chow Tai Fook, the world No. 1 in the Jewellery sector even head-on Tiffany’s who is generating $ 6 billion of revenue.
More China, less show off
Moral Laws have been imposed by the Chinese government to fight against corruption and ostentation, which would highly strengthen this phenomenon. Discreet items would be rather preferred than shiny ones. With Chinese luxury brands, these products could recall traditions, history, lifestyle, calligraphy. This could even play on the traditional patriotism of Chinese people, the “China Pride”.
Buying imported luxury goods is 51% more expensive in China
A gap is created between European prices and Chinese prices due to Customs fees, Export procedures but also the margins practiced by manufacturers that consumers are aware and which is why a growing number of them prefer to buy their watches, hand bags and other branded perfumes when traveling. The great mass of those who stay in China, notably in less big cities such as Shanghai, Beijing or Shenzhen, represent a market of choice for local houses less concerned by practices that may annoy.
The emergence of these brands are a healthy competition. The only danger identified is counterfeiting. But the more there will be Chinese luxury brands, the more there will be people to fight against this issue. They will now share the same interests.
Chinese luxury boutiques in Paris ?
Chinese brands are even starting to get out of their borders to settle in the world capital of luxury, Paris. These brands focus heavily on their domestic market but will soon come to western markets and compete with traditional brands. Kering (ex-PPR) has bought Qeelin, a jewelry brand that has achieved success by creating jewellery from Chinese symbols.
But the reverse is also verifiable. The giant Li & Fung has acquired Sonya Rykiel in 2012, after the Franco-Italian house Cerrutti, the shoemaker Robert Clergerie and the Belgian leather goods company Delvaux via its Fung Brands fund run by a French business man, Jean-Marc Loubier.
By partnering with European names, and more “Parisian” names, Chinese luxury will be given credit and legitimacy. Made in China invites itself on Parisian catwalks. Last year fashion designer Ma Ke, who dresses the first lady of China, made her models scroll in Paris.
In a few years, China may be a trend setter in the worldwide luxury market.
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