Designer labels bank on China
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In December last year, Parisian fashion house Chanel set up a shop in Shanghai where potential customers could get a behind-the-scenes view of the creative process in putting its collections together.
The word Chanel was given a Chinese pictogram that was embroidered on the company's latest collection to give it a distinctive Chinese flavor.
"Chinese elements in the design, package and service of luxury brands are in essence a sign to show they attach great importance to their Chinese customers, but will not bring a substantial jump in sales," said Pei Liang, secretary-general at China Chain Store and Franchise Association (CCFA).
"What Chinese consumers favor are the uniqueness and different culture brought by these European brands," he added.
However, Pei said he believes that as choice expands for Chinese consumers they will be more particular when purchasing luxury goods.
"Some people around me are very familiar with luxury brands of bags, clothes, shoes and watches, but know little about those of household, tableware and musical instruments which can bring them pleasure rather than just show off their spending power," Zhou Yun, a 28-year-old public relations officer, said.
In December last year, Parisian fashion house Chanel set up a shop in Shanghai where potential customers could get a behind-the-scenes view of the creative process in putting its collections together.
The word Chanel was given a Chinese pictogram that was embroidered on the company's latest collection to give it a distinctive Chinese flavor.
"Chinese elements in the design, package and service of luxury brands are in essence a sign to show they attach great importance to their Chinese customers, but will not bring a substantial jump in sales," said Pei Liang, secretary-general at China Chain Store and Franchise Association (CCFA).
"What Chinese consumers favor are the uniqueness and different culture brought by these European brands," he added.
However, Pei said he believes that as choice expands for Chinese consumers they will be more particular when purchasing luxury goods.
"Some people around me are very familiar with luxury brands of bags, clothes, shoes and watches, but know little about those of household, tableware and musical instruments which can bring them pleasure rather than just show off their spending power," Zhou Yun, a 28-year-old public relations officer, said.
As an increasing number of wealthy people in China turn to specialist hobbies, horse breeding and horse racing are becoming more popular, following on the heels of yachting, racing cars and golf. It costs about 100,000 yuan a year to care for a Ferghana horse, including feed, veterinary services and training.
Currently there are 20 private horse ranches around Beijing. Chu Wen, owner of Beijing Yihe Stud, started his ranch in the 1990s. After he made a fortune in the property business, he put money into the ranch in Beijing's Yanqing district.
With an investment of more than 15 million yuan, Yihe Stud covers an area of 16.7 hectares and includes standard stables, tracks and also a swimming pool for horses.
"Experiencing a luxury lifestyle involving noble sports will become more common when China's rich people don't only focus on outward dressing to show off their personal fortune and prestige," Pei of CCFA said.
"I consider this a very likely consequence, because what is considered a luxury and fashionable changes frequently for many reasons, especially as 'exclusive' products become more widely purchased and societal values evolve," said Mike Bastin, a professor of brand management at China Agriculture University.
"But the new rich group is still the mainstream of China's luxury goods consumers, so it will take some time for them to change their style of consuming," Pei added.
According to a recent report from Capgemini and Merrill Lynch Wealth Management, China contributed more than 40 percent of sales in the global luxury market and China has 477,000 individuals with investable assets of $1 million or more.
This year's Hurun Report on top brands reveals that French and Italian luxury brands continue to dominate the Chinese market.
Also predictable is the finding that Louis Vuitton, Chanel and Gucci remained the "most desirable" luxury brands in China this year.
"Interestingly, the very richest people in the West try very hard to keep their wealth a secret and shun conspicuous consumption. Perhaps the richest Chinese may follow suit," Bastin said.
According to Pei, the newly rich in the West also buy the big names in the luxury goods industry. But he added the caveat: "There won't be so many people infatuated with luxury brands over the next 10 to 15 years. What rich people are most interested in is something that can provide them with mental affluence."
