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Luxury sales aid world economy (3)

By  Yang Ning and Zhu Jin  (China Daily)

09:29, January 17, 2012

China has become the largest market in the world for many top brands. Montblanc, although it now already operates nearly 100 boutiques across China, including the recent launch of a large new boutique in Guangzhou, still chose Beijing for its largest store, showing the brand's commitment and confidence in China.

Besides recruiting and training high quality shop assistants for boutiques, McKinsey also suggests luxury brands can leverage their cultural heritage since it can add value and increase the attraction of products for Chinese people.

Many brands are looking to exploit their heritage by building small museums and staging exhibitions. However, more than one-third of Chinese shoppers prefer products with Chinese designs and traditional elements, especially the emerging middle-class customers, according to McKinsey.

"It is critical to establish our luxury European brand heritage image well before we consider local elements because we need to make the customers believe in the brand first in terms of reliable quality, European craftsmanship and the prestigious status of owning a Monblanc product," said Bethge.

But even if they want to, luxury brands cannot ignore the preferences of Chinese buyers. For instance, the traditional desirability of gold for Chinese people mean that Montblanc watches and writing instruments that contain gold are their best sellers in China. They have also launched products specific to the Chinese market, such as the Fortune Number 8 writing instrument introduced in 2009 - eight is seen as the most auspicious number in China.

Some brands have gone as far as launching Chinese lines - most notably Shang Xia (topsy-turvy in Mandarin), a new brand established by Herms especially for China. Many brands now have exclusive lines for the Chinese market. This is a particular strong trend for watches.

Atsmon said: "We will see more Chinese designs, trends and insights influencing the European teams, very possibly with parts of the design team actually being in Shanghai. This trend is already being seen with some luxury car makers."

Because it will become the largest luxury market in the near future, those brands that have a strong position in China may need to behave as if they are Chinese companies. This will include not only their investment strategies and designs, but also management. While Japan has a very prominent share, the current trend in China suggests it will become a bigger market and therefore more important than Japan for the makers of luxury goods.



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