Nouveau Woman
Nouveau riche’ appetite for luxuries expand in China
The first time Dan Ping, 25, a Shanghai public relations woman, was about to enter a posh Louis Vuitton (LV) store on Nanjing Road, she said a saleswoman’s “disdainful” look at her kept her from crossing the threshold.
But Dan said she got her revenge after she received her first annual bonus. After doing some online research, she saw the perfect LV handbag, walked into the same store and plopped down nearly 10,000 RMB ($1,465) for the luxury purse.
What a difference 10,000 RMB makes. “You know, they had totally different attitude towards me,” Dan said. While men may judge a woman by her appearance, in Dan’s world a woman judges another woman by the purse she carries. “What’s the point of me buying something extremely expensive and no one even recognizes the value of it?” she asked rhetorically.
Dan’s snob appeal makes her an ideal consumer as far as the companies that gathered March 27 at the Second Prestige Brands Forum held at the China Europe International Business School were concerned.
Eighty percent of the world’s top luxury brands are now cashing in on China’s growing nouveau riche and several of them were at the CEIBS gathering, along with up and coming Chinese brands hoping to establish the same “exclusive” image with status conscious mainland shoppers.
Michele Norsa, CEO of Salvatore Ferragamo, the legendary designer Italian shoe empire, was there. “Greater China will probably be our number one market within three years,” he said. “This market is bigger than we ever expected.”
“The biggest difference between a luxury brand and an ordinary one is pride,” said Edward Lu at the CEIBS meet. Lu is managing director of Montblanc China, which once rented Beijing’s Olympic “Bird’s Nest” stadium for its mainland coming out party.
Lu, who claimed he created the statistically unlikely record of selling enough Maybelline lipstick to paint the lips of fully half the women in China while he worked at L’Oréal China, said he relied on market research for that campaign.
He’s since moved professionally uptown to Montblanc where he said the German-based “writing instrument,” fragrance, watch, jewelry, leather and eyewear company’s exclusive image sells itself. “We choose our customers based on their pride and elegance,” he said. “A luxury brand doesn’t easily change itself to cater to its customers.”
But while it may be currently beneath the likes of Montblanc, mass marketing snob appeal isn’t beneath LV, Gucci, Hermes, Versace, Dolce & Gabana, Hugo Boss and other high-end brands in their efforts at localization in the vast Chinese market. But it’s also to the inevitable piracy problem and a flood of small companies and others on Taobao boasting they can create handbags and glad rags identical to the real deal at a fraction of the cost.
“People who buy fake products are not the real customers we want,” retorted Montblanc’s Lu. But the thirst to at least look as if you can afford a Prada, Gucci or LV bag is strong and drives the piracy market, to the dismay of people such as Dan.
“Like my LV bag, I bought it two years ago when few people owned one, but now it can be found almost everywhere. It’s so popular, just like something from a supermarket,” Dan said with a shrug.
Under such mass production, quality has also become a major focus. The Zhejiang Administration for Industry& Commerce released a report March 14, stating that nearly 60 percent of the foreign clothing brands they had inspected had quality problems, including Hermes, Versace, Dolce & Gabana and Hugo Boss.
“The bottom line of a luxury good is that it has to be good quality, rare and shines with glamour. If a luxury brand wants to survive, it has to stick to the bottom line,” said Wang Depei, vice chairman of China’s Economic System Reform Research. And the bottom line is where domestic companies looking to cash in on the thirst for luxury goods are starting to form.
After decades of making bags, clothes and accessories for international brands, Chinese companies have no problem making their own posh products with the same quality as the foreign ones, some experts and executives at the CEIBS forum said.
Unlike more mature markets, such as Europe where people buy luxury because they can relate to the brands’ concepts of lifestyles and attitudes, in China, people simply do not buy based on the same experience, said Xia Hua, chairman of Eve Enterprise Group, a Beijing-based haute couture company for men.
Zhang Zhifeng, chairman of NE Tiger, a fur fashion company in Beijing, said that when Chinese market just opened up, the foreign brands enjoyed a lot of preferential treatment, like free rent, tax breaks and the freedom to pick the best locations.”The biggest difficulty now is to change people’s deep-rooted concepts to accept a local and young brand with a sky-high price,” Xia said.
Branding is a big hurdle for the Chinese companies to jump over when they compete in such a niche market, and it will take some time for them to catch up with the international powerhouses. At the moment, many of the domestic luxury designers are perhaps just not exclusive, yet well known enough to impress the hard-to-impress, yet-impressionable wealthy Chinese young people.
There is also the problem of being “too Chinese” when it comes to design.”Many times we failed with the designs,” Zhang of NE TIGER said in a 2009 interview with a Chinese women’s lifestyle website: ‘www.mybagshop.com‘.
“Chinese culture has a lot of traditional and complicated totems and it’s hard to take good advantage of them. Before our written language was created, people tied knots on ropes to help them remember things. We could actually apply this to our clothing because it’s unique to Chinese culture,” said Zhang.
“However, we need a long time to study its application and if it’s too complicated people cannot understand, nor to mention accept it, especially the young customers,” said Zhang.
And for those local luxury brands trying to do something different from foreign brands, Eve Enterprise Group is focusing on 24-hour personal service.
They not only sell clothes, but also provide 24-hour laundry and dry cleaning services for the life of the clothing as well as designing bedding and tableware to match the threads.
About the Author
Jay King – I Have a Way With a Woman
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