 Radha Chadha and Paul Husband are co-authors of The Cult of the Luxury Brand: Inside Asia’s Love Affair with Luxury – a study of the genesis, evolving trends and projected future patterns of luxury brand consumption in Asia’s leading markets, including China. Published in late-2006, its first print run sold out in two months.
Radha Chadha is a marketing and consumer insights specialist, and has her own brand consultancy, Chadha Strategy Consulting, in Hong Kong. Paul Husband is a retail centre planning and development consultant, and runs his own Hong Kong-based company, Husband Retail Consulting.
When researching the book, what was your target readership?
PH: Our main target market had three components. The business community in Asia; whether they are connected or not to luxury, many people need to understand consumer trends across different markets. We felt our insights would be useful to help them develop strategies in the different markets of the region. Secondly, an academic readership, as there was no academic reference on luxury in Asia. Thirdly, consumers, people with a liking for luxury and who are intrigued by this incredible ongoing phenomenon.
RC: We approached the book in a sociological, as well as a marketing and business, way. We did detailed retail studies in 10 Asian countries and around 150 interviews with industry experts, fashion designers and consultants, publishers, advertising specialists and financial analysts. This research helped define the book’s style.
What is China’s current standing in Asia’s luxury brands market?
RC: The Chinese consumer is already very significant to the luxury industry. Ten per cent of the world’s luxury brand purchases can be attributed to Chinese consumers, shopping either at home or abroad, yet only around one per cent of China has, thus far, been touched by luxury consumption. Japan is the world’s largest luxury market, but China is scheduled to overtake it by 2014.
In today’s Asia, and this is very relevant to China, you are what you wear. The old ways of defining your place in society – such as birth, family, caste and profession – have been dismantled. Now there is one key classification, how much money you have – then how you translate bank balance into social esteem. That’s where luxury brands come in with their loud logos and unmistakable sign language. We are talking about a new luxury brand-defined class system. This is particularly intriguing in countries and societies, like China, that are currently undergoing a huge identity crisis, and where new money is writing a new rulebook. Luxury brands are expanding in China, but they are targeting a limited market at present.
Can retail markets nationwide support such growth?
PH: China, like every other Asian country, is moving from department stores to retail centres. And certainly in China there is a long, long way to go. There are probably about 600 retail centres in the country, and less than half of these are good quality in terms of the planning and leasing. For example, in Shanghai, Plaza 66 appears quiet, and recently there was a quite critical article of it in the LA Times, but many of the brands there are expanding. They do make money. That location is probably the top store in China for LV and, for that matter, many of the other brands on the first floor.
Development in China is quite uneven. At present, there really are only 10 to 12 cities, out of maybe 100 that you would call significant cities, that have some kind of critical luxury mass. Certainly, the main drivers are on the east coast, with Beijing in the north and Guangzhou in the south. But, we can see the real emergence of cities like Chengdu, Shenyang and Tianjin. All these markets are driven by real estate developments that provide the appropriate environment for luxury brands. That’s often the biggest obstacle, actually finding a suitable location.
How do you see the luxury growth curve evolving in China?
RC: I think the answer is linked to the risks of the economy in general in China. It seems the whole world is betting that China will keep growing. The key driver for this whole cult of the luxury brand is new money, and as long as new money keeps getting created, then the curve will rise.
We’ve seen the first generation of teens who have grown up in a branded environment in China, and this has helped foster a sense of style. At the same time, there is a movement beyond traditional marketing to create a buzz around each brand.
PH: Celebrity endorsement, sponsorship and event marketing and collaborations – these are in overdrive in China at the moment. Whether through motor racing, collaboration with MTV or something else – because it’s all about creating and setting the new rules. Diversity of luxury products is also happening. Property is also a huge thing in China. Private jets and yachts, these too will be big areas.
RC: We looked carefully at future trends, and all the factors that throw up the development of a luxury brand seem to be ripening in Asia. Now, the actual process of making luxury goods is slowly being transferred from Europe to China because of the economic cost. The consumer markets are ready to be more discerning, and the marketing and retailing expertise of brands is being transferred to Asia. On top of that, Asians are buying and running luxury brands, such as Dickson Poon owning Harvey Nichols. All these factors are coming through.
And Asia has that heritage, it just lost it over the last 30, 40, 50 years, depending on which country you’re talking about. Right now, we look up to the west, but the next stage is where Asian roots will help create new Asian brands. For these reasons, there’s no reason why Chinese brands can’t become global, there is every possibility of that.
Last update : Monday, 30 July 2007
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