Friday, March 23, 2012

More Chinese brands targeting the luxury market

SHANGHAI: Mainland Chinese spent more than US$33 billion on luxury goods in 2010, a 25 per cent increase from a year before, with the most popular brands being Louis Vuitton, Cartier and Hermes.

Now, an increasing number of Chinese luxury brands are emerging to try to get a slice of the pie.

Chinese brand Franz started selling its luxury porcelain products in China seven years ago. Prices range from US$200 for a cup and saucer, to tens of thousands of dollars for a limited edition vase.

The company is seeing revenue increase by 40 per cent each year.



It is just one of the growing number of local brands vying for the Chinese luxury dollar.

They say that made in China luxury products now have an advantage over their European counterparts because of the increasing cost of workmanship in the west.

Chen Li Heng, CEO of Franz Collection Inc, said: "The craft industry in Europe is weakening because few people are willing to do the job, so they are increasingly reliant on machinery. As Chinese, we are nimble by nature. Don't forget that we have strength and clever hands. Only with that will your products have the human touch."

One unique characteristic in China, is that gifting makes up 30 per cent of overall luxury purchases. In particular business gifting, which is part of doing business in China. Hence, it is still a male dominant market.

But in any case, it seems like Chinese brands are still not the top choice for many consumers in China.

According to a survey, the top four brands desired by Chinese consumers are French. In fact, local brands make up less than one per cent of the luxury market.

Bruno Lannes, a partner with Bain & Company, said: "It's really only early days of Chinese luxury brands. This is a very challenging industry. Some of the global brands have been here for hundreds of years. It's very hard for any luxury brand to really penetrate this industry successfully."

Jeongwen Chiang, Professor of Marketing at the China Europe International Business School, said: "The reason that the Gucci bags, the LV bags are so popular is because when we have these rich Chinese going out of China, they recognise these brands at the airport that this is something expensive.

"They bring it back, give it to leaders, give it to businesses, to someone they want to kiss up to or they use it themselves. This kind of face matters more than anything else. This is showing off."

Other issues the country's entrepreneurs have to sort out include ethics and product quality.

Organic+, a Chinese branded platform, plans to one day sell its own self manufactured organic cosmetics. For now however, it carries only imported cosmetic brands, certified in Europe and the US.

Edward Lu, President of Lezare, said: "The new emerging Chinese products are much too impatient to build the brand, we are too impatient (when it comes to making money). That Chinese businessman mentality in a way results in the problem of neglecting the product quality."

Experts said that it may take anything from years to decades for Chinese luxury brands to truly emerge and win the confidence of consumers.

-CNA/ac

View the original article here

Source From Channel News Asia

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