China Becomes A New Hero In Luxury Market

All men and women wore uniform blue suits, no department stores and supermarkets, and only small wooden shed for selling vegetables.

This is the scene when Brown first came to China in 1977, who was the chairman of the French boutique Association, and he thought "in my lifetime, this backward situation can not be changed."

What made it clear to him is that 30 years later, this once backward country has become the second largest consumer market of luxury goods in the world.

But this seemingly appealing market is not so easy to get.

"Luxury brand building is a fanatical campaign to burn money."

CEO, a company that runs luxury websites, said it.

According to his understanding, 95% of the international luxury brands in China are not profitable.

"If the brand is only open in the first tier cities, it is almost impossible to make money, because almost all the shops in the first tier cities are image shops."

Bain's latest research report on China's luxury goods market shows that the brand awareness and consumption intention of consumers in many two or three line cities in China are already very close to consumers in Shanghai, Beijing and other tier cities. The two or three line cities are becoming the emerging battlefields of the major luxury brands.

"150 million yuan is a rough balance."

Even if the sales volume of luxury enterprises in China failed to reach 150 million yuan, it would be very difficult to make profits.

"In the golden lot, the rent of a store may need 2 million ~300 yuan per month, for example, if LV opens a store in Shanghai, the cost will be as high as $25 million."

"If it is not for a large group to hang on, it will be difficult for ordinary luxury brands to survive for a long time."

"We must prepare well for a long period of time," he said.

This has led to the fact that only a few luxury brands such as Coach have insisted that the high-end luxury brands such as Pierre Cardan and so on have now been reduced to a street store on the two or three line cities in China.

"When entering the Chinese mainland market, it was blindfolded."

Charriol, a French luxury brand, acknowledges that the Chinese authorities are responsible.

This brand is doing well in Taiwan, but in the mainland, in order to open up the situation, different provinces and cities have adopted different channel strategies. Some provinces and cities have set up joint ventures, and some provinces and cities have hired agents. Such a result has caused the confusion of market prices, and the grades of the entire products have slipped to a higher level.

"Now I don't know whether to win or lose."

The official said that he had to deal with the mess and recover all the agency rights.

Not only is Xia Li Hao, but even some luxury brands who have entered China earlier and have a high reputation in China are also confused.

In July 17, 2010, Burberry group, the largest luxury retailer in the United Kingdom, announced the acquisition of its franchise partner Kwok Hang Holdings, a Burberry franchise in mainland China.

In March 2008, the Montagut company, which entered the Chinese market for 30 years, began to recover the agency of the product and directly manage the mainland business.

In September 2008, the US Coach also withdrew the retail business in China from 80 million yuan from the agent Junsi group.

Huge market risks

Now China's luxury goods market has become the second of the world, and those luxury brands that have not yet entered China are eager to get a slice of the cake.

"There are two considerations for luxury brands to enter China," said Christopher. "Is China really a luxury land?

What risks will it enter into China?

The other is whether China will bring its luxury brands into the market.

In fact, not only in China, but even in the local market, the success of luxury brands is not easy.

The stalls in the luxury industry are also full of once famous brands, and the "sick and wounded" in the luxury industry is enough to form a legion.

Although they all tried to master their own business, they had to choose to join the big conglomerates such as Louis Weedon group or Paris spring group to avoid wind and rain.

These brands are either integrated or reorganized to fight against the bad situation at that time and to retreat before they die, or to avoid borrowing or dealing with rivals that are hard to compete tomorrow, or to prevent stagnation or to cause burnout in response to increasingly complex markets.

There are many factors behind the luxury brand.

Christian said that many brand designers are excellent, but business operations can not adapt to the rapid pace of modern society, or swing in strategic positioning, see that the mass brands do well, they can not control, launch their own second line brand, and finally the whole brand can not survive.

China's luxury brands should learn from such lessons in the future development.

"China's luxury market has its own characteristics. China is a complex and diverse country, and the demand for luxury goods is also diverse," she said.

On the other hand, the most popular "LV" Sina fashion map of China is, "although the market prospect is very promising, it will still be very risky for a top French luxury brand to enter China."

First, consumers do not know the brand at all, and need to reestablish their popularity. For example, a French luxury brand is more likely to choose LV than LV, because it is more famous among Chinese consumers.

But in fact, in France, this brand is a more expensive and popular luxury brand than LV.

Another worry is the competition of Chinese brands.

"The development of China's luxury market is unthinkable, but at the same time, China is also a formidable opponent," he said.

Although China does not yet have a world famous luxury brand, "China will become a leading role in the luxury market, because the Chinese know manufacturing and know how to innovate and change.

A few years later, China will not only buy brands from Europe and the United States, but also create new brands of independence. "

"The Chinese model has always made us nervous, but it is also inspiring us," he said.