MAY 2010 – LUXURY BRANDS GO EAST
China market will be the first for luxury brands
The Shanghai Universal Expo 2010 will put China under the spotlight. It is the opportunity for luxury brands to reaffirm their strategy in the biggest market of the world, a market where potential customers for luxury goods are estimated at 250 million and average age for millionaires is 39.
Today, China is the second market for Louis Vuitton, the first for Hennessy and the first for the top category of premium car brands such as BMW (7 Series) , Audi (A8) and Mercedes (S Class).
Luxury and tradition
Luxury culture started in China many centuries before Christ and is connected to the fine arts tradition maintained until the 20th century by the most educated and wealthiest class of the population. This is why, a cultural event such as the Shanghai 2010 Expo is a perfect gate for luxury brands wanting to develop in China. The search for glory is even part of the Confucius teaching developed in the 6th century B.C. As social codes were broken by the culture revolution, Chinese are now looking for prestigious brands to establish their status.
As a communist country, China has a very hierarchical structure which implies that the social imitation mechanism has to be based on the standards set by the elite.
China specific production
In order to seduce Chinese customers, many brands propose exclusive products, designed or customized for the local market.
In the car industry, wealthy customers have drivers and seek for luxury rear seats in terms of comfort and sophistication. BMW is proposing an extended 5 Series with a chrome decorated interior. Audi already offers an A6 L (L for Limousine) and Mercedes will provide an extended E Class this summer.
Last year, Ferrari introduced a 599 GTB Fiorano unimaginatively called the “China Limited Edition". This car was designed by Chinese artist — and Ferrari owner — Lu Hao. It features an exterior finish influenced by Ge Kiln porcelain of the Song Dynasty. In April, Bentley presented to the Beijing Motor Show two new versions of its Continental, the GT Design Series and the Flying Spur Speed, exclusively available for the Chinese market.
In fashion, Fendi organized a fashion show on the Great Wall and Hermès asked Ding Yi, a contemporary artist, to design a silk scarf called “Rhythm of China”. Chanel created last year “Paris-Shanghai” a new ready-to-wear collection and Dior unveiled “Lady blue”, the third opus of its advertising campaign shot by David Lynch.
The watch industry, Omega and Vacheron Constantin, proposes yellow gold products with diamonds to a young a wealthy clientele. Ultimate luxury, in Sept 2009 Cartier organized, on the theme of the power, an exhibition of historical pieces in the heart of the Forbidden City.
Made for China
More than any other market, China has some very specific requirements in terms of style and quality. This means that luxury brands must be smart and agile in order to adapt their offering to the taste of local customers, even if it does not fit sometimes with the DNA of these brands.
For European luxury, it is a long and exciting road to China.
Yvon Le Gall
Luxury-world