Perspectives
Rolls-Royce is honoring the Chinese New Year with a new “Year of the Dragon” model. Barbara Demick of the Los Angeles Times describes the growing taste for luxury goods in China in her article Chinese are up to speed with life in the fast lane. Demick reports that the $1.6 million vehicles will have “hand-embroidered versions of mythical animals on leather headrests.”
Retailers also say that high-fashion apparel is popular. This China Daily report on The Villa, a Shanghai boutique, makes it clear that shoppers in China are willing to open their wallets for the right products:
Yigal Azrouel is one of the designers that The Villa has carried since its opening and has seen the market and interest for a broader range of style grow.
“What I love about China is the excitement about fashion, not just clothing,” says Azrouel, who adds that he has a more international presence.
“It’s refreshing to have a market that you don’t see resistance for price,” he adds. “Of course value has to be there but the price ticket doesn’t affect them if they find something unique and special. They seem to like over the top.”
New evidence shatters the myth that the rush to Western brands ends up rewarding counterfeit goods. This, from the Economist, notes that Chinese shoppers now scorn fake products:
As China grows richer, life is growing harder for fakers. A recent study of China’s luxury market by Bain, a consultancy, concludes that “demand for counterfeit products is decreasing fast.” McKinsey, another consultancy, found that the proportion of consumers who said they were willing to buy fake jewellery dropped from 31% in 2008 to 12% last year. This is good news for all brands, not just the blingy ones. “Consumers are looking for the real thing, and they are increasingly willing and able to afford it,” say the authors.
That leaves a big opening for top global companies, where sales executives are working hard to take advantage of a wave of popularity for their products. Helen Wang, author of The Chinese Dream: The Rise of the World’s Largest Middle Class and What It Means to You
, writes in a post for Forbes about the forecast that China will become the world’s largest importer by 2014:
Many Western brands are doing extremely well in China. For example, Chinese consumers prefer to pay a premium price for furniture that is made in Italy. The UK-listed retailer Burberry has opened 60 stores in China and plans to have 100 stores in the near future. Western automakers, from Volkswagen to Bentley to General Motors, are enjoying huge success in China.
The phenomenon is carefully examined by Demick, who also writes in her LATimes article:
Gucci’s sales in China in the first half of 2011 were up 39%; Bottega Veneta’s more than 80%. Prada plans to open 50 shops over the next three years.
Chinese fashionistas are displacing those immaculate Japanese women in their Burberry scarves as the world’s leading consumers of luxury goods.
How can smaller companies turn this drive for quality to their advantage? Wang’s advice in Forbes resonates for Export Now partners:
For smaller brands, e-commerce is a great way to break into the China market without significant upfront cost. China’s ecommerce has been growing at 60 percent each year in recent years. More than 100 million Chinese shopped online last year. And China’s Internet users are expected to reach 750 million in 2015.
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