Date: 03/08/10

By: Evelyn Rusli

“Fashion fades, only style remains the same,” says Jasper Liu, 26, summarizing his approach to shopping by quoting Coco Chanel.

Liu, a self-described “Shanghai Hipster,” represents the nouveau riche of China. He reads English literature, watches European movies, drinks fine champagne and is a loyal patron of luxury retailers, namely Lanvin and Yves Saint Laurent.

The affection is mutual: Fashion houses with global ambitions are courting Chinese consumers like Jasper, eager to learn how they spend, why they spend and just how much they’re willing to spend. (more…)

Date: 12/2/09
NEW YORK (AdAgeChina.com) — Chinese researcher Patricia Pao, who specializes in luxury marketing trends in China, offers ten tips to help advertisers reach affluent customers in the mainland.

1. Don’t ignore quality
Until the current recession, the Chinese appetite for luxury goods was so strong, luxury goods manufacturers could get away with doing little more than putting a label on merchandise with little regard for quality and value. Today, consumers are much more discerning about how they spend money and demand that luxury goods manufacturers provide quality.

A study conducted this year by Pao Principle shows mainland consumers no longer only care about logos and brand names. They buy luxury goods because they believe the quality is superior to comparable substitutes.

Over 88% of the study’s 448 panelists — all high net worth individuals, mostly women aged 20 to 39 — said they “strongly agreed/agreed” with the statement, “I buy products where design, quality, durability and performance were remarkably superior to other products.” (more…)

Date: 11/25/09

By: Valerie Seckler

The X factor in China’s burgeoning luxury consumption is the country’s one-child generation — a group of people who tend to be highly individualistic and perceive luxury goods as a way to set themselves apart.

The population policy, in place in China’s cities for 30 years, has created a value system among these millions of only-children that is “more self-indulgent and self-interested” than the more communal ways of their predecessors, said Patti Pao, president and founder of strategic consultant Pao Principle and author of a new “China Luxury Panel” report.

“The one-child generation will have a huge influence,” said Pao, who was born in the U.S. after her parents fled Mainland China for Taiwan when the communists took power in 1949. Theirs is often a sensibility inclined to “bring on the Balenciaga, bring on the Yves Saint Laurent,” she added, in contrast to the rising tide of young adults globally who are clamoring for the fast-fashion, designer one-offs of stores such as H&M and Zara, and the cheap chic of players like Uniqlo.

Young adults reared by mothers and fathers who were “prodigious savers,” the urban Chinese in their 20s and 30s are receiving some funds from their parents — cash flow that is propelling luxury spending, said Michael Silverstein, a senior partner and managing director at The Boston Consulting Group, who visited Beijing and Shanghai in the summer. “The vast majority of luxury goods [in China], around 75 percent, are purchased by people under 40,” he said. “This is a young movement.” (more…)

Date: 11/25/09

By: Keith Timimi

Back in 2001, I did some consulting work for CHANEL in Asia. They are one of the
leading providers of luxury products, otherwise known as Bling, selling fashion, perfume, cosmetics, watches and jewelry, and were growing fast in Asia.

Back in those days Japan was the motherlode, while Korea was growing double digits. What about China, I asked? They had just started selling in China, I was told, but it was a bit of a shabby market for them. Chinese customers were accustomed to buying fakes and no-one was sure if there would be any appetite for high-priced luxury goods.

My, how times have changed. Who would have thought that within 8 years, China would be challenging to become the largest luxury market in the world, overtaking Japan, a market that was fairly new to the crown itself. (more…)

BMW to Build Second Plant in China

Rising Demand, Consumption Smooths the Path for BMW and Local Partner Brilliance to Further Cement Position in China

Date: 11/12/09

One of the big stories coming out of the global auto industry today is the announcement that BMW is set to build a second plant in China with their local JV partner, Brilliance Auto. While this isn’t much of a surprise, given that BMW has sold nearly 72,000 cars in China in the first 10 months of this year, it certainly is an important move on BMW’s part as it works to challenge the dominant luxury automaker in China, Audi.With its new plant, BMW will more than double its current production capacity and be well-placed to compete with the dominant luxury player in China, Audi, which expects China to become its largest single market by 2013.

In addition to doubling its capacity, BMW’s new plant — scheduled to begin construction next year, with production starting in 2012 — is a smart move for the company to show its commitment to the Chinese market and the Chinese consumer, an important marketing point upon which its chief competitors Audi and Mercedes have placed paramount importance. Reaffirming its bond with Brilliance Auto, a leading domestic brand, and its involvement in this new plant is another smart move for BMW. From a company press release:

“Brilliance Automotive Holdings Limited is a reliable joint venture partner with whom we have already worked successfully for more than six years. Our plant has reached its capacity limit – so we are now taking the next step. The decision to build a second plant demonstrates that we are investing in our future in China and that we intend to participate in the strong growth in the Chinese market,” stated Friedrich Eichiner, member of the Board of Management of BMW AG,
responsible for finance and vice chairman of BMW Brilliance Automotive (BBA). “It is also an important strategic step towards reducing our exposure to currency fluctuations,” Eichiner added.

As successful foreign companies in China have proven over the last 20 years, showing a strong commitment — and localizingyour commitment — to the China market by proving to Chinese consumers that your company actually cares about its China operations and isn’t simply dumping excess stock into the country is critical. As Patricia Pao, President of luxury consulting firm The Pao Principle pointed out in a recent Q&A, marketing to the Chinese consumer in this way is key to continued success in the mainland:
Q: What advice can you offer [luxury marketers in China]?
A: Creatively “tweek” the existing promotional program to make mainland Chinese buyers believe they are getting a deal. This can take the form of gift-with-purchase, tickets to special events, frequent buyer clubs, etc.
• Don’t use mainland China as a dumping ground for excess inventory. Instead improve selection by offering limited edition pieces and the same merchandise that is only available in New York, Paris and Tokyo brand boutiques (but not Hong Kong).
• Invest in programs that increase mainland Chinese’ knowledge of your brand. Remember that education is key to conversion.

Date: 11/11/09

By: Miles Socha

Only a few years ago, it would have been unthinkable for a designer brand to leapfrog the fashion capitals of New York and Milan and open a boutique in Shanghai first.

But as fast-growing China surges to become the top expansion priority for a wide swath of European brands, that’s exactly what Lanvin is doing this week.

“It’s an urgent opportunity,” said Thierry Andretta, executive vice president of Lanvin, which on Friday will open a boutique in Shanghai’s Plaza 66 shopping complex — and is hunting for a Beijing location for 2010. “I was at Plaza 66 on [a
recent] Saturday, and morning and afternoon it was full of people with shopping bags.” (more…)

Date: 11/09/09

By: Luxury Travel Advisor

Questions and Answers with Ms. Patricia Pao, president of the Pao Principle, a global business strategy consulting firm, that conducts studies of the emerging Chinese luxury consumer.

1. What are some key similarities between Chinese luxury consumer attitudes and those of Americans?

Both mainland Chinese and Americans value individualism. As a result, they look to luxury goods to help differentiate themselves from the crowd. This is a fairly recent phenomenon in mainland China resulting from its “one-child” policy. Additionally, both groups value quality. Until fairly recently, mainland Chinese were more concerned with the logo. And like Americans, mainland Chinese luxury buyers value selection. Specifically, they want what is shown in New York, Tokyo and Paris brand boutiques. (more…)

Date: October 30, 2009

By: Elena Berton

PARIS — In a move to raise the profile of French luxury brands among young Chinese consumers, Comité Colbert, France’s main luxury association, has launched an interactive, three-dimensional Web site to create a virtual voyage through French luxury and culture.

Called cColbert, the site will target the young Chinese, who are heavy Internet users and turn to the Web as a source of information for luxury goods.

This online installation contains audio and visual elements provided by the 70 French luxury brands represented by Comité Colbert to illustrate their products and heritage.

According to consulting firm Pao Principle, browsing the Web is the second most important source of information for luxury goods in China, after magazines. But it’s the most used media for the 20-to-24 set, who prefer to check luxury brands’ sites to find information about handbags, luxury watches and fine jewelry before making purchases. (more…)

10 Tips to Get Mainland Chinese Luxury Buyers to Buy in China

Date: October 18, 2009

By: Patricia Pao

Patricia Pao, CEO of the strategic consulting firm The Pao Principle, shares some market research findings on mainland China from a panel of over 400 luxury consumers.

Unlike the rest of the world, the luxury goods business is alive and well in Mainland China, as demonstrated by our recent study of buyers of fine handbags, watches and jewelry.

To better understand the behaviors of Mainland China luxury consumers, the Pao Principle, a retail marketing consultancy, recruited and tracked the buying habits of 448 high-net-worth individuals, predominantly affluent, highly educated females, ages 20-40, with over 80% home ownership. The findings, which focus on understanding the usage, attitudes, buying behaviors and purchase motivators, provide some important learnings for luxury marketer seeking to enter or to expand their franchises in China and the Far East.

1. Identify and nurture relationships with your beauty and fragrance buyers.

Beauty products are the entry into your brand. Of the panelists who did not report purchasing either a designer handbag, watch or piece of fine jewelry over the past 12 months, 77.8% said that they purchased beauty and/or fragrance items from the list of brands furnished. Importantly, 100% said they were planning to purchase additional products from the same brand with handbags cited as the next category to be purchased. (more…)

Chinese are the New Kings of Bling

Date: October 13, 2009

By: Robert Frank

The great spending party of the rich never ends; it just moves from one country to the next.
The latest to pop the champagne corks of conspicuous consumption is China. The government stimulus, rising consumer spending and 6% GDP growth has kept China’s millionaire-making-machine well oiled. It also has fueled a no-holds-barred luxury-buying binge, as the newly rich Chinese seek to show their status.
An article in the Straits Times tells of a young Chinese woman who dispatched 30 Mercedes Benzes to pick up her $580,000 Tibetan mastiff from the airport last month. The canine caravan fueled growing public anger toward what the Chinese call the ‘fu er dai’ or ‘rich second generation’ Little Emperors. (more…)