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China's love affair with luxury

10-08-2010 15:50 BJT

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With growing wealth and global influences, Chinese consumers are developing a taste for the finer things in life. In the first episode of our special series on luxury consumption in China, Haidi Lun looks at how the global luxury industry is tapping into Chinese spending power.

The French have a saying: it's impossible to overdo luxury. And for Chinese consumers, that's not for want of trying.

As China's economy powers on, so does its population's appetite for symbols of their growing success.

"This is Shanghai, the heart of China's seemingly unstoppable economic miracle. Here, there are few signs of the global financial crisis. In fact, wealthy Chinese are buying up on luxury more than ever before. And global luxury brands are jostling to expand into a country that's producing more millionaires, faster, than anywhere in the world."

In 2009, while their overseas counterparts were tightening their belts, Chinese consumers were busy ringing up almost 10 billion dollars in luxury products. That's almost 30 percent of the global market.

Bruno Lannes, Partner of Bain & Company said "China is already the number 2 luxury market in the world, and it's growing very very fast. The other big markets like the U.S. and Japan are of course not growing as fast, and in some cases even declining. I think in a few years, less than 5 years, you'll see China - again, the mainland Chinese market - becoming the number 1 in the world. "

For China's early adopters, the investment is paying off. After almost two decades in the country, Louis Vuitton's monogrammed handbags are some of the most sought-after by Chinese shoppers.

And like many luxury brands, it's now bullishly expanding to the so-called second and third-tier cities. From Hangzhou to Harbin - designer stores are shooting up in locations, where booming industrial growth is creating a ready-made luxury market.

Christopher Zanardi-Landi, President of Louis Vuitton, Greater Asia said "I think the key point is yes, you see these cities continuing to upgrade and to transform. And of course therefore we have to continuously upgrade our presence as well."

The new breed of affluent Chinese have an euphoric enthusiasm for showing off their wealth, and an increasingly sophisticated appreciation for luxury.

Patrick Thomas, CEO of Hermes said "There is this view all over the world that what we do in Europe in 20 years, the Chinese do in 3 years. And learning - they are doing extremely well. So we find more and more of our customers with a very developed, very subtle, very elegant taste. And we have more and more customers in our stores who know about quality, about beautiful objects about also style. "

One European brand has realized there's no better strategy than to give China's consumers true luxury - with Chinese characteristics.

So, from one of the France's oldest luxury brands, to China's newest. Hermes has lent its 170-year-strong history to Shang Xia, the first luxury venture designed for, and targeted at the high-end Chinese consumer.

Patrick Thomas said "The whole idea of Shang Xia is to transfer the philosophy of a European, French, Parisian brand, Hermes, and to transfer it into a different ground, a different soil. And to say the values which have made Hermes successful, craftsmanship, top quality materials, creativity, style are the reasons why a company like Hermes is successful all over the world. So if that's right, we have to check it and make it in a different environment. "

"As Chinese shoppers demand for luxury grows, the challenge now is to boost domestic consumption. The traditional investment destinations of Beijing and Shanghai are now making way for a wealth boom in China's developing cities. And with luxury consumption linked integrally to urban development, we're in store for phenomenal growth."

Editor:Xiong Qu |Source: CNTV.CN

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