As the Asian economic powerhouse rises to its highest potential, Asian Luxury goods are soaring to new heights in demand and popularity. This growth is powered by factors like population size and purchasing power, and less on the political and environmental fronts. Luxury brands are rising to the challenge by offering unique and highly specialised luxury items that are becoming a hot item in the High Street. The Asian Luxury brand umbrella includes some of the most respected names in the industry such as Burberry, Dior, Gucci, Chanel, Louis Vuitton, Kate Spade, Dolce & Gabbana, Gucci again, Mulberry and Top of the range products from Versace.
China is the fastest growing and also the fastest turning largest consumer of luxury goods across the globe. It is no surprise then that brands like Gucci, Prada, Fendi and others have set up shop in China over the past few years. One of the biggest changes in the Chinese economy over the past five years has been the opening up of more industries to foreign ownership. This has led to the rise of brands like Juicy Couture, Louis Vuitton, Apple Computers and Kering in China. These brands represent just a small proportion of the total number of luxury goods market in China but their sheer size alone underlines how big this market is becoming.
As an aside China itself has undergone a massive economic slowdown, much like the UK and the USA before it. And whilst there is little point in discarding the benefits of economic slowdown there is no doubt that Chinese consumers are becoming more sceptical about Western brands, much like the public in the UK. This scepticism can only be bad for the future of the luxury brand sector in China, as it seems the sector is built around the idea of long term investment and many Chinese citizens see no benefit in spending their hard earned cash on non-essential items. In addition to the worsening economic situation there has also been growing criticism over the lack of transparency in the Chinese market and some feel that it is actually a theft of intellectual property by some of the largest companies in the world such as Microsoft.
So although China has the world’s fastest internet and one of the biggest retail sites in the world with its own stock exchange it still lacks the other essential ingredient to become a top luxury brand. That element is an easy market. The problem is finding a large enough supply chain to keep prices low enough for Chinese consumers to be able to pay the premiums for brand name goods. If you look at the brands that have already launched in China, particularly the luxury brands, you can see that they are either struggling to find partners in the traditional markets, or have limited partnerships, suppliers and distribution in their own country.
This presents an interesting dilemma for any new entrepreneur trying to break into the Chinese market. If the Chinese were to open up their markets to foreign competition there would undoubtedly be a huge demand for high quality, branded goods and the internet makes it easier than ever before for large companies to access these markets. However if your company focuses on luxury goods and you do not have a partner in China who can provide the goods and you do not have access to the luxury goods online enquiry market, how can you successfully penetrate the Chinese market? It seems that many of the more successful luxury brands have already been forced into the online marketplace and have had to rely heavily on web presence and marketing in order to remain viable. How much of your business can you safely rely on the Chinese internet and how much is left to traditional marketing?
The answer may surprise you. Despite all the talk of Chinese manufacturers closing down and the rise of local brands, there are still some large, well-established brands that have enjoyed strong growth in Asia over the last few years. Some of these brands have enjoyed unbelievable growth in their Asian counterparts and enjoyed double digit growth in China alone.
Some of the names you may have heard of include Longine, DKNY, Louis Vuitton, Dior, Burberry, Chanel, Gucci, Salvatore Ferragamo, Celine and Prada just to name a few. This list is not dominated by Chinese brands anymore but by some of the biggest brands from Europe and North America. Top of the list still includes brands such as Dolce and Gabbana and continues to grow with new players like Coach and heels. Luxury brands are growing in China and Hong Kong and this is because they too have realised the benefits of online marketing in attracting new customers through the internet. In the Western world brands such as Burberry, Dior and Chopard have moved into launching their own web stores and doing their own online marketing campaigns, something which they never did before.
There is one other thing that you may need to be aware of when looking at the top luxury goods companies in this region, and that is that not all the brands listed here are the same. Many of them have offices in China and many of them have small retail presence in China. You also need to realise that the economic development in China has had a huge impact on the price of these brands as well as on the availability of goods. It is very different to the situation in the UK where there are hardly any costs involved.