China'S Abacus For Luxury Goods Companies

On luxury consumption, micro-blog has recently started a battle of words.

The fuse is CCTV host Rui Chenggang. In June 13, 2011, he sent a micro-blog, LV (LV), Gucci (Gucci), Rolex (Rolex), Chanel (Chanel), Prada (Prada) and other international brands as "the ten major vulgar luxury brands", "today really hit the ten brands wear people at the same time." Rui Chenggang said that he called Hermes a female bag "the most favorite weapon of the new rich in China" and "it is used by a few middle-aged and old women in Europe and America".

His remarks caused a strong crowd of netizens, and many supporters said that some Chinese "wear brand-name is still a nouveau riche", and there are a lot of opponents, especially those who do luxury business.

Sun Yafei is one of the 70 "after", who is the founder and CEO of Fifth Avenue, a luxury discount website. She rebutted Rui Chenggang, "we need to produce evidence to be credible".

No matter what the battle on the Internet is, the reality is that more and more entrepreneurs and venture capitalists are focusing on luxury goods. Sun Yafei recently chatted with her friends and talked to everyone who could start to do luxury business. At the beginning of 2009, when she founded the Fifth Avenue, there was no large-scale luxury e-business website in China, but today, gathering style, Shang pin and Xiu Xiu nets are in full swing.

On the other hand, luxury magnates rush to China. In June 24th, Italy's famous luxury brand Prada (Prada) will be listed on the Hongkong stock exchange. Manufacturer Samsonite, Hongkong's second-hand luxury consignment shop Milan station.

Luxury goods merchants all take a fancy to China's new big market.

The consumption of luxury goods began in the middle of the last century. However, in 2008 the global financial crisis, the consumption of luxury goods in Europe and the United States dropped by about 10%, while the BRICs of China, Russia, Brazil and India had risen by more than 10% against the market.

China is the leading role. In 2010, the total consumption of luxury goods in the mainland of China accounted for 25% of the global share, and now it has become the second largest consumer of luxury goods, and is still developing rapidly.

Local power stimulates luxury giants

What is the mode of Fifth Avenue? It can not cooperate directly with Chanel and LV. It can only find dozens of buyers from abroad, scale the purchase of foreign entities in Chanel and LV, and then take it back to China.

Some first-rate and second tier luxury companies are right. Source of supply With a little looser control, Fifth Avenue can buy goods from their overseas agents or Chinese agents, but these luxury companies are also willing to take a small amount of new products for the same season to sell online, and most of them still take the products of the season to cooperate. These products are sold on Fifth Avenue website at a price of 4 to 20 percent off.

Fortunately, the market demand is large enough, and China's luxury consumption is at an early stage of development. The characteristics of blindness and conspicuous consumption are obvious, and business gifts consumption accounts for about half. Last month, the Milan station, which was listed in Hongkong, is the main source of business gifts. Its listing has set a number of records in Hongkong's capital market.

Sun Yafei said that her Fifth Avenue has already made profits, with millions of dollars in sales every month, and many investment companies are pouring in.

However, Sun Yafei will soon face two challenges: first, luxury goods giants are coming to China; two, luxury goods tariffs will be lowered.

Milan station and Fifth Avenue are astonished by the international luxury magnates: all of you purchasing agents and two dealers are making a fortune. If I don't act again, I will suffer a great deal. On the one hand, they came to Hongkong, a capital market closest to the mainland. On the other hand, they came directly to the mainland of China to open their shops. LV and GUCCI had already opened stores to two or three inland cities such as Ningbo, Changsha and Shenyang.

What makes these luxury magnates more exhilarating is a statement by Yao Jian, spokesman of the Ministry of Commerce in June 15th: "China will further reduce import tariffs, including tariffs on some medium and high grade commodities. This is the general trend, and there is a consensus among various departments."

Take perfume as an example. According to the current import and export tariff, imported perfume is subject to 10% tariffs, 17% value-added tax on imports and 30% consumption tax on imported goods.

According to the Ministry of Commerce survey, 20 kinds of high-end consumer goods, such as watches, bags, clothing, wine and electronic products, are 20 higher than the mainland market, 45% higher than Hongkong, 51% higher than the United States, 72% higher than France.

According to domestic media reports, the Customs Department of the Ministry of finance has investigated the comprehensive tax rate of luxury goods for more than two months, and is expected to introduce luxury tariff guidance regulations before this year's national day. The specific measures include: setting up tariff level; concreting tax brand; canceling certain products such as incense and cosmetics tax rates.

The tariff issue of luxury goods has been debated for many years in China. The General Administration of customs and the Ministry of Commerce of China have different opinions. The former wants to maintain high tariffs. The latter thinks that high tariffs exacerbate China's consumption outflow and are not conducive to stimulating domestic demand.

However, the Southern Weekend reporter learned that the general view of the industry is that tariffs may not be quickly reduced. Even if tariffs are lowered, it is very likely that the relevant luxury consumption tax will be introduced to keep the tax revenue.

It is said that the release of the tariff policy information mainly refers to the tariff of cosmetics, because the tariff of cosmetics is much higher than that of other luxury goods such as luggage and bags. "Compared to tariffs, we should lower other taxes." Sun Yafei said. She refers to value added tax and consumption tax. Lowering the tariff from the perspective of intuition will have a certain impact on the Fifth Avenue based on purchasing.

Like a song by Jacky Cheung, the legend of the hungry wolf, on the one hand, China's luxury e-business websites are springing up like mushrooms, while luxury goods giants are rushing to China.

Clever Temple Library

The luxury consumer market continues to boom, giving VCs great interest in luxury e-commerce websites. IDG, a well-known venture capital agency, has the most active layout in China's luxury market.

Yan Sheng, vice president of IDG, told the Southern Weekend reporter that IDG now has multiple luxury investment projects, which have invested in Beijing Temple store consignment Co., Ltd. (referred to as temple Library) and luxury e-commerce website.

"At that time, the main reason for investing in the temple library was that China became the second largest consumer of luxury goods in the world last year. Two, the location of the temple library is accurate, and the circulation of luxury goods needs channels and platforms. Yan Chi Sheng said.

If Fifth Avenue and Milan station are doing the first class market of luxury goods, then the temple library is doing the two level circulation market. {page_break}

The location of temple library is to make an idle resource circulation platform for high-end people and high-end brands. On this platform, the early stage is mainly aimed at the luxury goods market, which is easy to distinguish authenticity from luggage and bags, and then gradually extended to watches, cameras, diamonds, calligraphy and paintings, sports cars, yachts and private aircraft and other luxury goods.

Temple library CEO Li Rixue accepted the Southern Weekend reporter interview that day, just came to have a dozen sports cars of the original Morgan executives, his circle of many people want to replace the sports car, but there is a lack of replacement and identification of standardized platform, so they found Li Rixue. For them, they do not want to sell luxury goods to a second-hand luxury store like Milan station for cash, but look forward to a platform for exchanging luxury goods, and the temple library just meets this demand.

Li Rixue summed up the model of the temple library as "C2B2C", that is, the high-end people will sell the idle high-end brands on the platform of the temple library. The funds sold will not be returned to the sellers in cash, but will be entered into the "cool payment" card of the temple library. The money in this card can be used to replace the idle high-end brands of other sellers on the platform of the temple library. The platform will be based on a senior membership system, and a certain fee will be charged to members as a source of revenue.

In order to ensure that there is no fake, the temple library set up a team of appraisers for this platform. The seller can download the temple Library's client through the mobile phone or computer, upload the luxury photos to the temple library platform online, and the appraiser of the temple library will complete the authenticity identification and make the transaction guarantee online. At present, temple library has cooperated with the luxury research center of foreign economic and Trade University, hoping to build an independent third party luxury identification center. The identification center will be charged later, which will also be another source of income for temple library.

An employee of temple library asked Li Rixue, IDG invested so many luxury companies. What is the role of temple library? Li Rixue made a simile: the other luxury companies invested by IDG are "horses and generals", while the temple library is chessboard. Compared with international luxury companies, local forces can often win by dexterity.

Opportunities in high prices

The Chinese market is now recognized as the Savior of saving foreign luxury companies. In fact, the top luxury companies have "hate" for China: every time they spend a lot of money on a new product promotion show, Xiushui Street in Beijing will soon appear imitation. More than one thousand yuan of LV is not even recognized by professionals. More copies of the products are sold at a price of around 200 yuan, which greatly undermines the brand image of these top luxury goods.

Some top brand luxury goods companies are not very interested in e-commerce, and are afraid of disrupting their price system. Therefore, the top brands generally adopt the direct store mode, and are very strict with the source control.

But now, even the arrogant Chanel and LV have to curry favor with the Chinese market. Chanel has designed limited edition products for its opening in Shanghai, China, and LV has transformed the decoration style of American shops directly into typical Chinese elements such as cheongsam.

However, the loosening of policies and the appreciation of manufacturers do not mean that domestic consumers will buy very cheap luxuries.

Because of China's tax problem, many luxury companies' profits in China are much lower than those in Europe, America and Hongkong. Even if China reduces the tariffs on luxury goods, 5%-10% will only make up for the difference in profits.

"They are reduced from 5000 yuan to 4500 yuan at most, and it is impossible to reduce the" cabbage price "to 3000 yuan. Sun Yafei said, "like the three top luxury brands of Hermes, LV and Chanel, it is impossible to reduce the price. Instead, they may continue to raise their prices. For example, Chanel sold 27000 yuan on the Fifth Avenue website in March this year, and only 34000 in May.

Sun Yafei introduced that luxury goods go up 5%-20% every year. The marketing strategy of top manufacturers is to make luxury goods something that can be added and preserved. For example, Hermes's platinum package, at present consumers have to wait for at least two and a half years, this is a "hunger marketing" approach.

This means that Sun Yafei's purchasing mode still has the opportunity.

Luxury giant's Hongkong financing journey is not so smooth. Samsonite's listing fell below the issue price. The first day's closing price fell to 8%, which gave Prada a wake-up call, which lowered the size of the financing. However, in the subsequent public offering, it only received half of the subscription, and the final issue price was at the lower limit of the original offering range. "Breaking the issue price is a problem of global stock market volatility, not a luxury issue. I hope they will open a lot of stores, because without front-end, there will be no backend. Only when there are more luxuries, there will be more and more circulation. Li Rixue seems to be an optimist, but the luxury competition for Chinese market is just beginning.