Who Is The New Favorite Of China'S Capital Circle?

Like the Chinese process of many new things, the evolution and development of luxury goods in China are deeply marked by "Chinese characteristics".

In China, private aircraft and yachts may still be the top patents of various wealth lists, but the middle class is the absolute main force in terms of the luxuries of life.

According to AC Nielsen's data, at this stage, if the luxury brands want to stand firm or even make profits in China, the most important thing is to catch up with the middle class wallet of 15 million and annual income of more than 250 thousand yuan.

According to the survey, more than half of the respondents paid more than 500 thousand yuan a year. Up to 94% of them had master's and doctorate degrees, most of whom were 35-44 years old (73%).

The brand preference of people in the capital circle shows their interpretation of luxury goods, and partly depicts the consumption behavior and lifestyle of the middle class people with the same "tens of thousands" attributes.

In the eyes of capital circles, the two most important components of luxury goods are history and technology.

31% and 25.3% of them chose "long history, strong foundation" and "excellent material and excellent technology" respectively.

Early in the winter of 2006, the president of the Asian region of some luxury brands pointed out that the luxury market in China is still in the stage of cultivation, and it is their primary task to educate consumers.

At the Hermes Beijing store, someone bought a value of 600 thousand yuan porcelain once, without knowing that the most famous brand for making a saddle is the Birkin bag and silk scarf.

The luxury consumption of Chinese people, like the title of the book "luxury worship", is a homage to LOGO. It ignores the essence of luxury: its history and culture.

Obviously, the survey shows that at least in the capital circle, the "educational consumers" in the luxury brands seem to have achieved initial success. The people in the capital circle have recognized the importance of culture and history to luxury brands.

On the basis of emphasizing quality and service (16.1%), another 13.7% of the respondents chose "brand reputation and identity". The symbolic function of luxury goods still affects consumer decisions.

The luxury characteristics of people in the capital circle are also reflected in the choice of different objects.

In the "most respected clothing brand", Armani's near 1/4 absolute advantage has become the capital circle's first choice.

Although Armani, which was only deployed in China in 2002, belongs to the latecomers, the number of outlets has increased rapidly, and has made great efforts to improve brand awareness. Not only Armani personally brought fashion conferences to China, but also in the Bund, Shanghai, three, there are about 11150 square meters of flag shop.

According to its official website, 5 of the 6 adult clothing brands have now set up 22 stores in China, followed by 4 in Xi'an and Suzhou.

Combined with other non monopoly outlets, Armani's retail network in China has already achieved initial success.

In the eyes of people in the capital circle, Armani's preference for Dunhill is second higher than that of Dunhill.

Meanwhile, 10.7% of the respondents are fond of Armani's leather products.

On the other hand, LV is still not allowed to take the top 16.5% of the leather and accessories brands in the capital circle.

Since LV opened its first store in Beijing in 1992 to 18 stores in 2007, LV has pulled the front line into China's two tier cities.

In 2008, LV will open 10 new stores in China.

For many Chinese who still have little knowledge of the true meaning of luxury goods, LV's logo is the pride declaration of "I have luxuries".

In the selection of accessories, a total of 35.9% of the capital circles indicated that Cartire was the first and second place in the ranking of watches and jewelry / jewelry.

Cartire has invested about $9 million a year to enhance its image in the eyes of Chinese consumers, thus becoming the most popular jewellery brand in China.

The cost of market cultivation is huge, but it is very rewarding.

In the ranking of jewelry / jewelry brands, Tiffany ranked first in the proportion of more than 1/5.

In recent years, Tiffany has vigorously opened up a relatively popular market. Low price silver series has won a wide market in all countries and has become a typical example of "affordable luxury".

The average sales price of $200 silver sales accounted for 31% of the company's retail revenue, and the highest level of diamond jewelry.

This mode of selling low-end products with high-end brands is a big trend in the luxury industry.

From jewelry to handbags to cars, luxury brands have straddled the mass market to expand their market share while maintaining the luxury image of high-end goods.

BMW has established a production line in China by joint venture to lower the entry level, but still flaunted its status symbol.

In the first 5 months of 2007, BMW sold 7621 cars in China, 60% more than the same period last year.

More than half (57.1%) of the capital circles with male employment ratios up to 92% indicated that BMW was the luxury brand they wanted most.

The earliest brands to enter China often have the opportunity, and Callaway is a typical example.

In the 90s of last century, more than 80% of Chinese golf enthusiasts were using Callaway balls, and once the word "Callaway" became the pronoun of golf in China, three words.

After experiencing the pains of marketing mode pformation, Callaway has introduced a series of Asian standard products which are more suitable for oriental people since 2006.

In the choice of people in the capital circle, he was the first in the golf product brand.

Besides, in the cosmetics, hotels and banks' preferences, the most popular brands in the capital circle are Chanel, Shangri-La and China Merchants Bank (600036 market share).

The survey asked respondents to list the most luxury brands of local brands in mind.

The six categories were all vacancies. Only four brands of clothing, famous liquor, banks and hotels appeared national brands: Oku Tokuchen, Moutai, national cellar 1573, Wuliangye, Jin Jiang Hotel and China Merchants Bank.

Among them, liquor has become the most luxury brand recognized by the capital circle. It is also the only category that surpasses the same brand in the rankings.

Chinese liquor culture has a long history.

The key to becoming a luxury brand is to disseminate "historical stories and cultural details" through appropriate commercial packaging and public relations.

"Story" is a prerequisite. "Telling stories" is the key to success.

In the May 2007, Louis Weedon, Cognac brand Hennessy of LVMH group (Hennessy) held a 55% stake in holding Wenjun liquor of Jiannanchun wine group, trying to create its own luxury brand in the Chinese liquor market.

From the "output" to "cultivation and creation", the strategic pformation of LVMH in the Chinese market also implies the importance of 160 million of potential consumers to major luxury brands.

It is undoubtedly one of the core elements of luxury consumption nowadays that luxury industry and capital are integrated into capital circle, but the relationship between capital and luxury goods is not only here.

Since the 80s of last century, luxury groups such as LVMH, Richemont and Paris spring (PPR) have embarked on the path of collectivization through capital operation such as listing and acquisition. However, a large number of luxury companies still insist on independent operation.

In recent years, with the continuous growth of the global economy, luxury consumer groups are expanding. In order to occupy more market share and more consumer groups, luxury companies overturn the tradition and carry out unprecedented innovations and reforms. Many independent luxury companies are listed in order to get more expansion funds. As a result of the growing consumer support, luxury company equity has also become the goal of private equity fund acquisition.

Under the background of economic globalization, the scale of the industry has become very important, and the luxury industry is no exception.

Large companies can invest more in advertising and marketing, which is very important for the luxury industry whose brand image is the first element.

They can also set up a wide range of retail outlets, providing the latest technology to their subsidiaries and employing the best designers and managers to bring synergy into full play.

This is demonstrated by the case studies of the four luxury groups LVMH, PPR, PPR and Swatch group.

Since its establishment, LVMH has been able to acquire independent luxury brands such as Italy and France through its acquisition. Although the relative independence of most brands has been retained, the core brand of flagship brands such as LV, Fendi (Fendi), Hennessy and so on can not be ignored by other brands.

In fact, the way to build flagship brand is widely adopted by luxury group.

It is Cartire, Van Cleef & Arpels (Van Cleep & Arpels), PPR is Gucci, Swatch group is Baoji and OMEGA, these flagship brands not only promote and enhance other brands of brand in brand image, but also contribute to the proportion of 20-50% in terms of revenue contribution.

The successful experience of the operation of the luxury group and the capital pressure in the expansion of emerging markets are forcing some well-known companies that have previously adhered to independence to plan to go public.

In the past six years, Prada, one of the largest luxury goods companies in Italy, has failed several attempts to go public.

Recently, INTESA SANPAOLO, the largest retail bank in Italy, paid 100 million pounds to acquire Prada 5% shares, valuing Prada worth 2 billion pounds and possibly listing in 2008.

In 2007, Italy leather product manufacturer Ferragamo employed Michele Norsa as chief executive, the first president of the 42 family businesses that do not belong to the luxury industry.

This may be an inevitable move. In 1993, Ferragamo was larger than Gucci, two times the size of Bvlgari, and today it is only half of Bvlgari, Gucci's 1/4.

Norsa is determined to lead this backward family business to "go public in the next two years".

Of course, there are also those who do not follow the crowd.

Armani, the founder of the most successful luxury business in Italy, prefers to keep the company independent.

Although L'OREAL and LVMH both want to buy their business, he thinks that the company's fiscal 400 million is enough to support its further expansion.

His view is that financial markets do not understand fashion and fashion is changeable. If a new listing is criticized, the company's share price will fall.

In recent years, the change of luxury mode of operation has also been reflected in the pformation of sales channels.

Statistics show that at least 18 luxury brands have launched online pactions as a supplement to their traditional stores.

Since 2005, the online trading volume of luxury goods has been increasing at an average annual rate of 40%.

In addition to this, luxury brands also use auction houses as a special channel to promote investment grade products, and skillfully use the pricing function and eye catching effect of the auction houses to publicize the brand image and maintain the high price of other brands.

With the rapid growth of the number of affluent people in the world, luxury companies are also turning their eyes on the super rich to the increasingly large middle class.

Their practice is to introduce sub licensed products.

Armani has its own clothing brand Emporio Armani and children's wear brand Armani Junior to cater to the needs of consumers at different consumption levels and jointly build a chain hotel with the UAE Emaar Real Estate Company.

At present, some luxury brands such as Burberry, Donna Karan and others have introduced derivative cards with relatively low threshold, which will not degrade their brand, but also make diversification of their products and bring more revenue.

Luxury brands such as Coach and Tiffany are holding high the banner of "new luxury". In order to lower the threshold of entry level products and set up discount stores, they attract more consumers to the door and get high speed growth. Sales in recent five years are growing at an average annual rate of 20%.

From this point of view, the luxury industry "tied down" has tied itself to the needs of the global economy and consumer demand. It has become one of the fastest growing and most profitable industries in the world. It has also become a symbol of global economic strength in recent years.

Industry surveys estimate that global luxury annual sales are about $200 billion.

According to LVMH chairman Bernard &#8226 (Bernard Arnault), global luxury sales are expected to double to $400 billion over the next 5 years.

He believes that Russia, India and China will be the fastest growing market, and 1/3's luxury goods will surge to the three countries in the next 10 years.

Russia is becoming the world's fourth largest consumer of luxury goods after the United States, Japan and China.

Analysts predict that the luxury market will continue to grow at a rate of 8% to 10% per year.

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