luxury goods in China

  "It was an incredible golden age," says Guillaume Brochard Qeelin, a Chinese jeweler. From 2007 to 2011, many companies of luxury goods grew at an annual double-digit growth in China, which has become their most important market. The first blow came last year with an economic slowdown and nervousness about the political transition. Now the fight against corruption is added gifts and populist backlash against pomp to the suffering.

The outlook for the luxury goods company seems faded. Users have posted compromising photos suspect as poorly paid officials wear expensive watches that have caused heads to roll. Mobs have also disturbed and event spaces as too generous, sometimes forcing officials knees to beg for forgiveness.

This traumatized Some providers conspicuous consumption. Beijing Xiangeqing, a contribution from the high-end restaurant is usually very profitable, has plunged into the red last quarter. Sale of shark fins, the main ingredient of a soup is served at fancy dinner, are almost 70% over the previous year. Imports of Bordeaux bottles worth more than $ 800 have collapsed.

But beyond the public sumptuous banquets and a more complex picture emerges, not only because the officials now its throwing extravagant parties look diverted to private. It is true that some luxury goods companies are struggling with falling demand in China: imports of Swiss watches, for example by 24% year on year in the first quarter of 2013. But Andrew Keith Lane Crawford, an upscale department store, which opened in Hong Kong in 1850, reported no slowdown in its stores are or Beijing. Burberry, the British fashion brand, sales in China rose by about 20% in the year to March. Sales of private jets in China are still rapidly.

So what actually happens? It seems that China remains the biggest prize in the luxury industry, but the fruit disappeared at hand. Luxury companies are now venturing beyond coastal cities, where they have just lucky, maintain, experimenting new types of customers and market niches, and new business models. It will be worth the effort. Despite the recent problems, stresses Bruno Lannes Bain & Company, a consulting firm that "will become the Chinese and stay for a long time, the largest consumer of luxury." His company estimates that sales of luxury Greater China (including Taiwan, Hong Kong and Macau) will grow by 6-8% this year, to exceed $ 35 billion, making it a luxury market, second only to America.

But even that is not telling the whole story. China's rich travel more and more, and do a lot of luxury shopping on their travels, especially in Europe, weak currencies encourage Chinese visitors to squirt. Judging by the nationality of the purchaser, China has become the largest luxury market in the world and is growing rapidly (see chart). The last year has 83m mainland Chinese travel abroad, an increase of 18.4% compared to in 2011. Global Blue, a tax-free shopping wholesale company says its reimbursements to Chinese buyers jumped 58% last year to more than 24 billion yuan ($ 3.9 billion).

To take full advantage of this development, companies need to adapt their business worldwide. You need to bear the Mandarin, VIP rooms are big enough to speak large tour groups and payment systems that process credit cards Chinese place. Philippe Léopold-Metzger, head of Piaget, a Swiss watch and jewelery brand, he said in reference to the points of sale of the company in China is still more windows than profit employees: half of the global business comes from Continental but they mostly while traveling abroad . Buy

That said, there are still many ways to develop sales within China. Kent Wong, Director of Chow Tai Fook, the largest jeweler in the world, with more than 1,700 stores in the mainland, said sales continue to grow. Any weakness is mainly in the coastal cities of China suspended exports seen. Inside, where the people are not used to foreign commercial breaks, "the income of the middle class are still rising."

Luxury companies must adapt to this fragmentation in the Chinese market. While flashy "bling" always sells new money in the small towns inland from coastal cities are world travelers return from their trips to more knowledgeable and demanding buyer. Armando Branchini of Fondazioni Altagamma, the Italian association of luxury brands, says that these customers are looking for more subtle and modern designs.

Numerically challenged

More than two-thirds of the Chinese use the internet to research brands, but most luxury companies have digital strategies pathetic. One study found that sites have to charge four times longer luxury in China and elsewhere (as most companies do not take into servers Great Wall of China, however, the slow access to foreign sites) and rarely offer yuan price or purchase options. Mobile commerce is growing in China, but some of the pages optimized for mobile devices luxury companies.

As the taste of wealthy Chinese develop business models emerge warned combination of global and local flavors. Qeelin, recently acquired by Kering, a luxury French formerly known as PPR, is an example. Another reason Shang Xia, a label household goods from local craft, launched in 2010 by Hermes, also of France is inspired. On the orders of the government in Beijing, foreign manufacturers and their Chinese joint venture partners, creating new local brands: BMW, the cars Zhinuo badge and Mercedes will start producing new models under the brand Denza.

So far, the Chinese luxury buyers were, including cars, found face to national brands. But hybrid brands may require a reassessment of "Made in China" label, says Michel Gutsatz the China Europe International Business School. At a conference recently held at the schools, Haiming CCTV, the national broadcaster dominant China, stressed that "in Germany" and "Made in Japan" were also once derided but now are quality criteria. While luxury goods companies grow in Europe of exclusive low-volume semi-industrial scale, thanks in large part to voracious appetite of China for their goods, says Mr. Gutsatz they "must think of the economy" and consider the production in China itself, rather than primarily to export it. Company wealthy Chinese to get open their wallets is required to go through evolution, but growth opportunities make it irresistible.