These were the questions I got from an industry analyst the other day. In fact, these are the questions being posed constantly in the press covering the business of luxury.
Full of myself, I thought that maybe more than one person might want to read my take on the subject and engage in the discussion…
“I think you will see the growth of one might call the “sophisticated” luxury segment in China over the coming years – and there will be a few locally created Chinese- as well as Western labels acquired by Chinese companies in the mix. I see it as a natural market evolution. The first phase we are still in is all about chasing generally recognized, ostentatious symbols of success and power. What are perceived as ‘safe choices’ also when it comes to good taste. LV, Dunhill or Château Latour have made brisk business with the frenzy of copying and out doing each other that developed.
But now, there is segment of the population that is maturing and a second generation of high net worth/upper middle class individuals who want to differentiate themselves from a crowd they consider rather ‘primitive’ and bling. They want to show their professionalism and sophistication by choosing lesser known brands. Brands that require some searching for and deeper understanding. This trend will also be ‘helped along’ by the new communist government policy of ‘toning down the blunt exhibition of wealth’ as well as ‘helping emerging Chinese industries’. A policy put in place to soothe ‘unease’ about the ever-increasing social disparity. Small, more subdued Chinese luxury brands might particularly benefit from these two overlapping dynamics. You might have read about the buzz the new Chinese first lady created in China (and said press) by wearing clothes and handbag by “Exception de Mixmind’ a niche Chinese label from Guanzhou, rather than the typical Chanel or Prada. You might also have read about Chinese (incl. Hong Kong and Taiwanese) investors scooping up niche luxury labels from Lanvin to ST Dupont and Kent & Curwen and investing in their revival. At the same time, Western groups are looking to own Eastern Brands (eg. Hermes and Shiang Xia, L’Occitane and Korean Erborean, etc.) or at least are seeking collaborations with cutting edge local artists or celebrities (eg. Lacoste/Li Xiaofeng or Botteg Veneta and Jinjun Di). The consumers, the government and Chinese investors, all want to see a local sense of sophistication and luxury to emerge and homegrown brand to succeed. … They just don’t trust themselves – yet.
Your own take on the subject and comments are welcome!