Will China'S Luxury Market Be The Norm?

Many agents Luxury goods The jCG group recently rejected a very high-end jewelry brand cooperation intention. Although the brand can make the brand of the group agent brand look more high-end, atmosphere and grade, but after careful consideration, he refused to throw the hydrangea.

As the managing director of the group, the reason for the refusal is that the upmarket luxury brands in China's stores have become an image publicity display, while interested consumers have gone overseas to buy them. The Group believes that the current focus of the group is to tap the real demand of Chinese consumers, and the high-end brand that the public can afford is their first choice.

Whether today's agents are more interested in brands or the performance of different brands in the Chinese market is proving the fact that light luxury is in the right direction. Luxury goods seem to go through a longer period of reprieve.

"The slowdown in China's luxury market last year may not be a temporary phenomenon, but a new normal." Angela Ahrendts, chief executive of Burberry, a British luxury brand, warned in an interview with foreign media a few days ago. From the financial data of 2013 and the anticipation of many people in the industry, Angela's view is not a alarmist talk.

Last year, the sharp decline of China's luxury market made many luxury brands unprepared. The first early warning of profit beforehand in the first quarter of 2012, China's Asia Pacific region sales growth dropped from 67% in the same period last year to 16%. In the second half of 2012, the government's attack on extravagant winds made it worse for the luxury industry, which was affected by the macroeconomic slowdown.

From the performance of 2013, many luxury brands still grow weak in the Chinese market. In the past, the Chinese market, which sold as an engine for sale in the Swiss luxury brand (Richemont) group, has even become a drag. In the 5 months to the end of August 2013, Calendar peak The Asia Pacific region, led by China, has the worst performance in global sales, with an increase of only 4%.

"The performance of the company has made up for the negative impact of the downturn in mainland China, and Mainland China has been more cautious in its buying mentality after several years of high growth." That's what he said in his earnings report.

In the past, it could maintain strong growth in the counter trend. Prada (Prada) in the first quarter of 2013, Asia Pacific growth slowed by nearly 50%. Despite the rebound in sales, Angela, chief executive, said in an interview with foreign media: "last year's slowdown in China's luxury market may not be temporary, but it will be a new normal."

Lu Xiaoming, President and founder of organic home, once told an interview with our reporter that the impact of China's luxury market in 2012 will bring the market back to reason ahead of schedule. The so-called reason is that the luxurious growth of luxury brands up to 30%, 40% or even 60%~70% in the past will no longer be staged.

"People are beginning to get used to the slower growth rate of China's luxury market," he said in an interview. "In the future, it may no longer be two digits, but a single digit growth rate."

Although luxury brands still have high expectations for the future of the Chinese market, they are producing, investing and marketing a lot. "However, these resources will not necessarily achieve the desired results, whether the policy impact or the rationality and maturity of consumers, China's luxury market is indeed slower than before." He said.

On the other hand, the light extravagance that can be placed on the public can usher in the spring in China. Their high growth rate in the Chinese market is the surge of luxury brand development yesterday.

Furla, chief executive of the luxury leather goods brand, revealed that its brand sales in the Asia Pacific region increased by 32% over the same period last year. In February this year, Furla formed a joint venture with the company to expand its business in China.

Coincidentally, the US luxury goods and clothing brand Kate Spade recently decided to set up its Asia Pacific headquarters in the Asia Pacific region. Its parent company Fifth & Pacific is also planning to sell its two other brands, Lucky Brand and Juicy Couture, in an effort to develop a thriving and light luxury market.

Because of the emergence of a large number of new middle class and the continuous progress of urbanization process, UBS Securities's analysis report pointed out that the mass consumption of luxury goods is the long-term trend of the Chinese market. In Lu Xiaoming's view, the product of the entry-level market of luxury goods will continue to grow in the future. Products suitable for the middle class will continue to grow, and the growth rate may be as high as the growth of luxury goods in the previous two years, because these products are the real needs of Chinese consumers.

Since the introduction of Dyson, a high-end appliance brand in mainland China in 2012, the company has opened 85 retail outlets as of July 2013. By the end of this year, the company will have another 80 to 90 stores. Behind the rapid deployment of the channel is the expectation of jCG on the market potential represented by China's growing middle class and new rich people.

"More visionary brands should set the consumer group as a local consumption Chinese rather than just buy it overseas. I think the opportunity in this industry is based on the local market." I suggest.