The Golden Wall of China

July 23, 2010Sparxoo

Devil’s Playground is a documentary that captures the transformative period in a young Amish person’s life, when they must decide whether to stay among the Amish for the rest of their lives, or join the “English.” This period is called Rumspringa — the Pennsylvania Dutch word for “running around.” The film showcases several Amish young adults going through Rumspringa, who drink, smoke and even get hooked on meth because they think it’s what the “English” do. Their “English” reference point is derived from stories and likely tall tales, therefore, some Amish destroy their lives to experience the exaggerated “English” perspective.

China’s nouveau riche are experiencing a Rumspringa of their own, but careful to not swing too far. The Chinese market is trying to find its prestigious identity among established luxury brands in Europe and America. In fact, many affluent Chinese reject “Made in China” products in lieu of superior imported quality. “China is not an easy market. Chinese consumers are very demanding; they don’t like ‘made in China’ products,” said Florent Perrichon, CEO, Cerruti. Much like Amish youth trying to find their identity, Chinese too will undergo a cultural transformation whereby “Made in China” will be less synonymous with ticky tacky and more with rich cultural heritage, entrepreneurial spirit and quality.

China’s Affluence is a Brightspot for Global Luxury

Western prestige brands are not unhappy China is importing luxury. Chinese consumers account for nearly 25 percent of global luxury sales, followed by Americans, Europeans and Japanese, each taking around 20 percent of pie. In fact, China has become the fulcrum of the global luxury industry. “The euro zone is a sizable market, but today the growth reserve is in the emerging countries, and particularly in China, whose demand is pulling the entire sector,” said Isabelle Ardon, head of Paris-based SG Gestion’s luxury fund. Even while the Euro market is suffering amid the current financial crisis, prestige brands are finding security in China’s growing affluence.

Western Prestige Brands Flock to China

“For the Chinese consumer, luxury is synonymous with Western heritage. Today there are no big Chinese luxury brands, so there are no competitors,” Ardon said. Western brands, Cartier, Louis Vuitton, Hermès, Tiffany & Co or Gucci, have established a foothold in China through years of brand building in the country, reports the Wall Street Journal. Indeed, Tiffany & Co reported that sales at its Asian stores opened last year (excluding those in Japan) had risen by 21 percent during last quarter, with 11 stores in China. Jaguar and Land Rover are opening a new plant in Nanchang, East China soon. “Next year, Land Rover’s sales volume in China will surpass Britain as the world’s second,” said Scott Dicken, the general manager of Land Rover China.

There is Still Room for “Made in China” Luxury

Alongside Jaguar, Land Rover and Cartier of Western prestige, there still resides an opportunity for “Made in China” luxury. “China’s high-end market is highly fragmented, with no single brand dominating individual product categories,” writes the WSJ. “This is starting to change: In each luxury-goods category, five brands account for around 50% of the market, indicating early signs of concentration.” Shanghai Tang is an authentic emerging prestige fashion house that appeals to Chinese. The brand blends China’s subtle, delicate cultural heritage with Western flare. In fact, Fast Company dubbed Shanghai Tang “China’s first global, upscale brand.”

As China’s nouveau riche settle into their new status as purveyors of luxury, expect the Shanghai Tang’s — a confluence of China’s rich cultural heritage, entrepreneurial spirit and vision — to make in-roads into the country’s blossoming luxury market. Authentic Chinese heritage, as Tang illustrates, cannot be imported and presents and opportunity for “Made in China” luxury to flourish. After all, heritage is a cornerstone of luxury and China is rich with it.

To read more about luxury trends:

2010 luxury trends

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Image by Sandra Kühr from Stock.Xchng