Launching Chinese brands in Europe pose questions about the direction of the luxury landscape

Posted on August 1, 2012

0


Image

 The first European flagship store for Chinese brand Bosideng opening up on Mayfair’s South Molton Street has been raising some questions about the direction of the luxury landscape in Britain and in Europe.

The word luxury immediately conjures up ideas of artisanal craftsmanship, high quality pieces made and designed in Europe – almost an antithesis of the label “Made in China” which has (and, in some cases unfairly) gained a stigma of cheaply manufactured, mass produced items. This is an image which many luxury European brands have taken so seriously that returning to domestic manufacture has been a major brand focus recently and will be for the coming years.

 These established brand names have also seen a vast expansion in the East, with flagship stores opening in the rapidly growing cosmopolitan emerging markets. Additionally, Western designers inspired by this cultural exchange, the success of these countries and their global aesthetic, have released ever more collections incorporating exotic fabrics, patterns and styles. A rise in deep pocketed tourists with money to spend on the most exclusive items has ensured that luxury markets have ridden through the recession and in some cases even profited during the turbulent economic period. This is especially true of China, where affluent patronage of luxury goods has experienced a rapid growth both at home and internationally. According to a report by McKinsey earlier this year, China, for example will account for 20% of global luxury sales by 2015. Even now, fewer than 2% of the population are these high spenders, meaning a golden era of luxury is set to be on the cards.

This has had such an impact on our domestic retailers that all kinds of CRM initiatives are being put forward to accommodate this influx of new visitors, notably luxury department store Harrods installing 75 point of sales terminals at their Knightsbridge location. These terminals allow the use of China UnionPay debit cards, the most commonly used method of payment amongst their Chinese shoppers.

Bosideng however, intends to target an entirely different market: the European consumer, a clever aim to be accepted by established Western markets which could further validate domestic operations. It follows in the footsteps of Chinese investors taking stakes in a variety of companies such as Thames Water, Weetabix and Gieves & Hawkes. With its sales of more than £800M last year, and over 8,000 stores the domestic operation is viewed in China much like Marks and Spencer is in the UK. Its UK offering aims to appeal to a higher-end aesthetic, drawing inspiration from brands like Paul Smith and Hugo Boss and working closely with designers Nick Holland and Ash Gangtora (known for their collaboration with Liam Gallagher on his label Pretty Green) to reflect this in their products. As well as this, while most British high street retailers remain reliant on Chinese factories to produce low cost clothing, only 10% of Bosideng’s UK clothing range is made in China.

In conversation with the Guardian, UK chief executive Wayne Zhu, Zhu said the brand wanted to win over Europeans rather than target wealthy Chinese shoppers already familiar with the brand. “We are a Chinese brand, designed in the UK and made for Europe.” Retail Director Jason Denmark added “The brand draws on Chinese history and inspiration but also has a UK feel to it… We have to make a collection that’s right for the European market if we are to succeed”.

Bosideng’s debut not only comes just in time to cash in on the Olympics but also coincides with government initiatives to attract Chinese investors and promote British business. Set to arrive later this year is menswear brand, Eve which aims to be the new McQueen. It is run by Xia Hua, who also spoke to the Guardian, “We would like to be the Chinese McQueen…There are a lot of western brands that go to China and achieve business success but not that many Chinese brands that have succeeded in western markets. I would like to see high quality Chinese products on the [British] high street. Not just made in China but designed in China.”

Another notable Chinese introduction into the British market is China’s most popular liquor, baijiu, after the drinks giant Diageo bought a controlling stake in the company that owns Sichuan baijiu, Shui Jing Fang. At about 52% proof, this white spirit is a celebratory toasting drink, and will be available at high-end Chinese restaurants, upmarket department stores and hotels. This will capitalise on the influx of China’s luxury consumers but there is also the hope to educate and endear the Western palate to the complex flavours of the liquor.

With all of these ventures and more scheduled for the horizon it will certainly be interesting to speculate what our luxury landscape will look like in a few years time. Will the iconic streets of Mayfair for example be dotted with more international additions from the emerging markets, and will the West welcome these new settlers? There are already changes with the digital age, rise of independent retailers and a redefinition of luxury actually is, so we can only wait and see.

Posted in: All