Chinese brands struggle in luxury market (2)

Shanghai Hero Group was once China's most prestigious pen maker, famed for its iconic black Hero pen with gold inlay that was used in 1997 at the signing ceremony for the Hong Kong handover.

The company said late last year that it plans to sell a 49-percent stake to a new partner after suffering severe losses for the past two years.

"Foreign brands are much stronger, not only in financial strength but also many have a clear strategy," said Qi Xiaozhai, director of the Shanghai Commercial Economic Research Center. "They came into China with a Westernized look that was desired by many young Chinese."

Diana Tsai, CEO of Bundshop, an online design company in Shanghai, said she feels branding is more important than quick sales.

"Consumers, especially young people, are totally different from their parent's generation," she said. "An age-old brand really has to be open-minded and adapt to the fast-changing market, or people won't buy it. Financial support just won't help."

China has the world's fastest-growing luxury market, but some Chinese brands struggle to get a foothold.

Consulting firm A.T. Kearney has predicted that a younger generation of Chinese shoppers may return to the local brands.

"The turning point ... will be the influence of a new Chinese generation ... those born in the 1980s and later who have more exposure to better-quality Chinese products and will prove more confident about purchasing them," the consulting firm wrote in a recent report.