“Label Lust”: China’s booming Luxury Goods Market

China has experienced a relentless surge in consumer buying power after three decades of blistering growth. The world’s now second-largest economy has led to an explosion of millionaires with most of them under 40 years old.
And they love the glitz and glam: donning Louis Vuitton handbags and Richemont watches, sipping Dom Pérignon champagne, and cruising around in Lamborghinis.

Three Chinese shoppers make luxury purchases at Harrods in London - 三名中国妇女在伦敦哈罗德百货购买奢侈品

• China to be world’s largest luxury market by 2015

China is poised to become the world’s largest market for luxury goods by 2015, as rising affluence, urbanization and increasing competition stimulate demand, according to a new McKinsey report “Understanding China’s Growing Love of Luxury” released on March 8, 2011.
China is currently the fastest growing and second largest luxury goods market in the world, second only to Japan.
With fatter paychecks and stronger desires to display new wealth, Chinese consumers are building their appetites for designer handbags, watches, cars, fine jewelry, perfume and cosmetics and clothing. They’re pushing up profits at high-end retailers, such as Louis Vuitton and Hermès, and are expected to increase to about 180 billion yuan (US$27 billion) in 2015 from 80 billion yuan (US$12 billion) last year. LVMH Moet Hennessy Louis Vuitton and Hermes International are among luxury goods makers expanding in China as the nation overtook Japan to become the world’s second- largest economy last year.
McKinsey forecasts that most of this growth will come from an explosion of wealth among what it describes as ”upper middle class” households — homes whose annual incomes are between 100,000 and 200,000 yuan (US$15,000 to US$30,000).
Far from saturation
“Even with the proliferation of luxury stores in recent years, China is far from reaching saturation,” said Yuval Atsmon, the author of McKinsey & Co.’s report, “Hermes’s footprint in China still falls well short of its 45-store presence in Japan. This is true for other leading brands.”

Shoppers line up to enter a shop of French luxury brand Louis Vuitton in a mall in Shanghai. China is already the largest market for Louis Vuitton.

• Louis Vuitton, Chanel top China’s most-wanted list

China’s ever increasing economic clout has again been reflected in a survey by Bain & Company on consumer tastes in luxury goods which has shown the nation not only knows what goods it wants, it most certainly now has the means by which to buy them.
Bain & Company surveyed around 1,500 mainland Chinese consumers and found that those families living in “first-tier” cities such as Beijing and Shanghai, and earning between 5,000 and 15,000 yuan (547 and 1,642 euro) per month, would spend 21,000 yuan (2,300 euro) on luxury goods each year.
In response to this growing lust for spending, the 15 high-end luxury brands polled in the survey revealed they had between them opened 80 new outlets across China in the past 12 months. And it appears the majority of the money being spent is by consumers ages between 25 and 44 whereas in Japan and Europe most of the cash is splurged by those over 40.
According to this report, Louis Vuitton, Chanel and Gucci are the most lusted-for brands.
China’s most popular brands
1.  Louis Vuitton (路易威登) – 46%
2. Chanel (香奈儿) – 36%
3. Gucci (古驰/古琦) – 22%
4. Armani (阿玛尼) – 20%
5. Christian Dior (迪奥) – 17%
6. Rolex (劳力士) – 14%
7. Cartier (卡地亚) – 11%
8. Hermès (爱马仕) – 8%
9. Prada (普拉达) – 8%
10. Lancôme (兰蔻) – 5%
“Louis Vuitton’s biggest customers are already Chinese … Greater China represents 28% of sales for Swatch, 22% for Richemont, 18% for Gucci, 14% for Bulgari and 11% for Hermes.” said Leo Lui, president of Hermes China: “Men’s ready-to-wear is … a top seller, which is quite unusual. In most other markets, it’s women’s ready-to-wear that sells. China is still a men’s market, and more traditional.”
Whereas the market for luxury goods in other countries is typically dominated by women, in China the men fill the tills with nearly equal abandon. They buy both for themselves and for other men, since gifts lubricate business in China. They are often willing to pay a large premium over the list price for desired items—many believe, for some reason, that the more something costs, the better it is.

French Fashion Label Chloé (蔻依) Doing Well in Chinese Luxury Market

• Chloé Positions Itself to Cash In on China’s Appetite for Luxury

French fashion house Chloé (蔻依), owned by Swiss luxury group Compagnie Financiere Richemont  SA (which also includes high-end jewelry and watch behemoths Cartier and Piaget), plans to expand from 10 boutiques in China to 14 by the end of the year, including stores in the eastern city of Nanjing and the central city of Xian.
Chloe’s expansion plans will position it to gain a larger share of China’s luxury-goods market.
“China isn’t just catching up with the world, it’s leading it,” said Geoffroy de-la-Bourdonnaye, Chloe’s president and chief executive, who joined Chloe last year from a London department store, Liberty.
As a small brand for Richemont, the world’s second-largest luxury goods group by sales behind French rival LVMH group, Chloe is joining a growing roster of high-end labels, such as Prada and Fendi, that are wooing famed Chinese actresses and wealthy businessmen.
Recently, Chloe streamed live its first-ever online runway event in Shanghai on a Chinese-language website it rolled out in December for China’s luxury lovers. The brand is hoping to fetch younger customers who aspire to own one of its handbags for 13,000 yuan to 15,000 yuan ($2,000 to $2,300), chiffon skirts for about 10,000 yuan, and black leather ballet flats for 3,500 yuan. Chloe isn’t the only luxury brand to notice that China’s shoppers are taking to the Internet. Late last year, Emporio Armani and Gucci announced plans to hit China’s Web.
Chloe — which counts fashion heavyweights Karl Lagerfeld, Stella McCartney and Phoebe Philo among its former artistic directors — is currently helmed by British designer Hannah MacGibbon, who has assisted Philo. The fashion house specializes in ultra-feminine, casual clothes in muted colors designed to go straight from the catwalk onto the street.
Chloe’s products will be made available to China’s online shoppers in 18 months.

• China’s Luxury-Car Love Affair Goes On

China became the world’s largest car market in 2009, selling nearly 13.6 million vehicles and surpassing the U.S’s 10.4 million sales that year. China has also staked a sizable claim in the luxury-car sector. The appetite for high-end autos seems insatiable in the world’s largest car market.
Lamborghini
China became the second-biggest market for Italian luxury sports car maker Lamborghini （Chinese: 兰博基尼). Lamborghini, owned by Volkswagen, sold 178 sports cars to Chinese customers in the first three quarters, a 200 percent growth from a year ago. Lamborghini was expected to sell 200 cars in 2010, up from the 80 cars it sold in 2009.

Lamborghini Murcielago LP 670-4 Superveloce at the 2010 Beijing Auto Show 兰博基尼中国限量版车型LP 670-4 SV车型亮相2010年北京车展

The company hopes to have 20 showrooms in China by the end of 2011 and offer more limited editions. It launched a limited edition of the Murcielago LP 670-4 SuperVeloce at the 2010 Beijing Auto Show. Although it has a limit of only 10 cars worldwide, the 8 million yuan ($1.2 million) models were sold out during the seven-day event.
Bentley
The British automaker Bentley (Chinese: 宾利) has 13 dealers in China and sold 815 Bentley cars in the mainland last year.

2011 Bentley Mulsanne - 2011款宾利新旗舰车型Mulsanne

Bentley plans to launch the Continental GT and Mulsanne in China shortly. While its product positioning will not change, Bentley will determine engine type based on local regulations and tastes, according to Wolfgang Dürheimer, chairman and CEO of Bentley, who is extremely bullish on the Chinese market. The company also has considered introducing high performance hybrid luxury cars.

2011 Bentley Continental GT is arguably one of Bentley's sexiest machines ever 宾利2011款Continental GT，此系列车款是宾利旗下最具宾利特色也是销售最好的车款

Bentley is expanding its sales network to 30 by the end of 2014, mainly targeting places with strong economic growth in second-tier cities of Shenyang, Dalian, Taiyuan and Xi’an.
While the U.S. is currently Bentley’s largest market, China is expected to replace the U.S. as the new market leader.
Rolls-Royce
Rolls-Royce Motor Cars Ltd. (Chinese: 劳斯莱斯), Bayerische Motoren Werke AG’s luxury nameplate, plans to sell 800 cars in China in 2011 as it aims to raise sales eightfold in two years in the world’s largest auto market.

A Rolls-Royce Phantom starts at 6.6 million yuan in China 劳斯莱斯幻影

The exclusive marque, which competes with Volkswagen AG’s Bentley and Daimler AG’s Maybach, is selling more of its Phantom and Ghost sedans in China as rising incomes in the world’s fastest growing major economy boost sales of luxury cars.

A Rolls-Royce Ghost starts at 4.1 million yuan in China 劳斯莱斯古思特

A Rolls-Royce Phantom starts at 6.6 million yuan ($990,000) and buyers pay 4.1 million yuan for a Ghost in China where consumers pay higher taxes on imported luxury models. In the U.S., the Phantom starts at $380,000. Yet demand remains strong. Chinese customers ordering a Phantom will have to wait until late May to receive their cars.
Ferrari
Italian luxury-car maker Ferrari (Chinese: 法拉利)  sold nearly 300 sports cars in China in 2010, a 50-percent increase over 2009 sales and a record since it entered the Chinese market six years ago.

Ferrari 599 GTO at the Beijing 2010 Auto Show 2010年北京国际车展首发的法拉利599 GTO

Rather than luck, Ferrari credits the sales increase to several key investments it has made in recent years. It culminated in 2010 with the introduction of special initiatives and such crowd-pleasing events as the display of the HY-KERS laboratory vehicle at the Shanghai World Expo and the launch of the 599 GTO at the 2010 Beijing Auto Show, Ferrari’s first-ever world premiere in China.

2012 Ferrari FF (Ferrari Four) is the company's first-ever four-seat, four-wheel-drive model 法拉利FF2012

To further demonstrate its commitment to this strategic market, the automaker announced that it will increase the number of dealerships in China from the current 10 in the next few months, as well as start the first Asian championship in the Ferrari Challenge single-make racing series in 2011.

The Maserati Quattroporte is a luxury four-door saloon made by Maserati in Italy 玛莎拉蒂总裁

Maserati
The Italian luxury car maker Maserati (Chinese: 玛莎拉蒂) saw a 60 percent sales growth in the first three quarters of 2010. The company now has 11 stores in cities including Beijing, Shanghai, Dalian and Qingdao.

BMW 5 Gets Even Longer in China: All-New 2011 Brilliance-BMW 5 Series 宝马5系旅行车

BMW
Record results by luxury automaker BMW (Chinese: 宝马), which also owns the Rolls-Royce and Mini brand, highlighted the power of the German export machine as China emerged as a bigger market for German industry than the United States.
BMW posted record revenues and net profit for 2010, in part owing to an 85.3 percent jump in sales to China, Hong Kong and Taiwan while Germany as a whole saw total exports soar 24.2 percent in January.
BMW shipped 183,328 vehicles to China, Hong Kong and Taiwan last year, putting the region in third place behind Germany, with 267,160, and the United States on 266,580.

2012 Audi A6 sedan - 2012款奥迪A6

Audi
German carmaker Volkswagen’s premium brand Audi (Chinese: 奥迪) expected to stay ahead of the competition in fast-growing China.
Audi’s volumes, revenue and operating profit all set a record in 2010 due mainly to China where sales moved to within 1,000 vehicles of its home market total.
Audi is the world’s third biggest luxury carmaker behind German rivals BMW and Mercedes.
The company wants to increase sales by 10% this year to 1.2 million as it aims to topple BMW as the world’s leading luxury carmaker.

• In Wine Circles, It’s All China

A Bordeaux Bubble

Châteaux Lafite-Rothschild 1869 is the world's most expensive wine sold for $232,692 a bottle in 2010 by a Chinese bidder, far eclipsed the previous record of $168,000 for a Lafite 1787 - 最贵葡萄酒1869Chateaux Lafite-Rothschild,每瓶美金232,692 元

The Chinese are also rapidly emerging as wine aficionados. Late last year, at a Sotheby’s auction in Hong Kong, an anonymous Chinese phone bidder paid $232,692 each for three bottles of 1869 Château Lafite Rothschild (Chinese: 拉菲酒庄/拉斐酒庄), a Napoleon III — era wine that was already maturing nicely when the Boxer uprising stymied European imperial ambitions in China. That price smashed the previous record of $156,450, paid in 1985 by the Forbes publishing family for a 1787 Lafite bottled for U.S. Founding Father Thomas Jefferson. What really shocked the wine cognoscenti was the $70,000 paid at the same auction, not for another rare trophy bottle of Bordeaux but for a case of 2009 Lafite — a wine so young it has yet to be bottled. Prior to the auction, the much hyped 2009 vintage was being priced at around $18,000 a case.
More than 60 per cent of Sotheby’s entire wine sales in 2010 were made in Hong Kong. The price of 1982 Château Lafite Rothschild, China’s favorite brand, has risen by 60 per cent in the last 12 months. Over the past decade, the price has risen by 1,000 per cent, largely thanks to the insatiability of the Chinese market.

While Chateau Lafite remains a firm favorite among Chinese wine aficionados, others including Mouton-Rothschild, Margaux, d'Yquem and Haut Brion are snapping at its heels.

Thanks to Lafite’s halo effect, wine merchants around the globe are already marking up prices of Lafite’s main Bordeaux rivals, including Chateau Latour (拉图酒庄), Chateau Margaux (玛歌酒庄/玛高酒庄), Chateau Mouton-Rothschild (木桐酒庄/武当王), Chateau d’Yquem (伊甘酒庄/伊甘堡) and Pessac-Leognan producer Chateau Haut Brion (奥比昂酒庄/奥比康庄园). The index of 100 top wines maintained by Liv-ex rose 40% in 2010.
China is now the largest export market for Bordeaux wines, according to Le Conseil Interprofessionnel du Vin de Bordeaux, a promotional agency, which says sales of the wine in the country have doubled in each of the past five years
Chinese Labels

Chinese painter Xu Lei Creates 2008 Chateau Mouton Rothschild Label 中国画家徐累为木桐•罗斯柴尔德酒庄2008年份创作酒标

The 200-year-old vineyard Château Lafite Rothschild last year put the Chinese symbol eight (八) on its 2008 vintage bottles, a lucky number in Asian culture, while Château Mouton Rothschild , known for bottle art by a different artist each year, selected an image by Chinese artist Xu Lei (Chinese: 徐累) for its 2008 label.
Wine comes and goes to China

A model shows a bottle of Chateau Lafite Rothschild (about US$20-30,000) at an auction preview in Hong Kong

According to Robert Beynat, CEO of wine-trade show Vinexpo, Chinese wine consumption doubled in five years and the country is now seventh-largest in terms of volume and the eighth-largest in value. Of that wine drunk, the Chinese overwhelmingly prefer red wine: 90% of consumption was red. While counterfeiting could undermine confidence in the market, China will price the rest of the world’s wine lovers out of the top end of the market. Last year, more fine wine was sold in Hong Kong than in New York City and London put together, and by some estimates 1 in 4 bottles of the world’s greatest wine is now in Chinese hands.

• China’s Cuban Cigar Lovers

Opened by Castro's former Chinese translator, Casa Habana Cigar Club (哈瓦那之家雪茄俱乐部) offers the finest imported Cuban cigars in Beijing

Cigars seem to be the latest object of desire for the growing number of wealthy Chinese, according to Habanos SA, the worldwide distributor of Cuban cigars. The company said that China has now replaced Germany as the world’s third biggest cigar importer.
Habanos’ total global sales edged up 2 per cent to $367m in 2010 despite smoking bans  and recession, with smokers in China and the Middle East providing most of the uplift.
Spain and France remain the biggest markets, but following the opening of Cuban cigar shops in Beijing, Guangzhou, Shenzhen and Shanghai, China is catching up. Brands such as Montecristo, Cohiba and Patargás offer an image of luxury and sophistication, qualities sought by China’s burgeoning middle class.
As the number of wealthy customers in China grows, Habanos is beginning to put more resources into its presence in China. Currently four of Habanos’ 142 Casa del Habanos, or Cigar Houses, where cigar aficionados can sample a variety of Cuban cigars, are in China – two in Beijing, and one in Shanghai and Guangzhou.