Monday, 7 June 2010

Luxury Houses Face Barriers When Setting Up Shop in China - 7/6/10

With a case of "can't live with them but can't live without them", luxury brands need to be in China as part of their next stage of growth but it is not easy - don't 'they' also say "no pain no gain", the thrill of the chase and all that! The Chief Executive Officer of Taittinger Champagne says “China is the new United States". "It's why we have to promote champagne in China - to make them happy and peaceful. They are going to lead the world for the next 200 years."

With the scope and the complexity of this market in mind, many luxury brands have tackled the Chinese market successfully but it's not a template approach. Who and what you know will expedite and make the entry into China, a country of several important provinces, both efficient (if you can work well with the complex bureaucracy) and ultimately effective. Market features such as China’s excessive luxury goods taxes need to be taken into consideration by luxury houses that plan to enter into China. For example, the price of a Lamborghini sports car in China is twice what it is in Italy. You have to be very wealthy in China to afford luxury products given the exorbitant tax rates... so the weaker Euro for the time being will help satisfy the voracious appetite of some of China's wealthiest consumers.

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Jing Daily said...

It is evident in marketing strategies that China is a new frontier for luxury brands. Thank you for the insight about luxury taxes, it does have to be the particularly wealthy that can afford luxury goods after the excessive luxury goods taxes.

MO said...

Thank you for your comment. It must be both exciting and challenging at the same time as so much of the global growth expectations in the luxury consumer goods area is in China now with forecast continuous strong growth. Will the higher taxes force more consumers to shop outside of China, thus taking revenue away from the country? Food for thought. The MO Down

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Melinda O’Rourke is the founder and Director of MO Luxury, a dynamic, Sydney-based management firm specialising in luxury brands and services. Melinda and her associates at MO work with local and international brands across prestige retail, fashion, fine jewellery, timepieces and specialised services. Melinda is well-connected, well-read, and well-versed in the demands of the luxury market and its client base. Her advice is firmly based in objectivity and ultimately, accountability. Melinda offers constructive counsel and both strategic and creative thinking and is able to draw upon a strong network of specialised talent to compliment the MO Luxury team as needed. Melinda enjoys excellent industry relationships and is regularly quoted in the business and fashion media. Read more about MO Luxury,