If there was an overriding theme to this week’s luxury news it was definitely foreign investment in China. It seems just about every prestige vertical, from fashion houses like Hermès and Coach to hotel conglomerates like InterContinental and Starwood either launched new joint ventures with domestic Chinese partners and/or announced plans for expansion into the world’s fastest-growing luxury market. Even Neiman Marcus, the Dallas-based department store, said it too would be exploring Chinese e-commerce with the help of Hong Kong-based Glamour Sales Holding. The partnership and site, which is scheduled to go live later this year, cost the high-end retailer a cool $28 million.
While American, French, Italian and other foreign firms continue to pour money into ambitious new Chinese projects, another contingent has quietly begun to establish itself in the fray: the Chinese. Though still nowhere near as powerful as their foreign counterparts in terms of status, Chinese luxury brands do have a lot going for them. Gift-giving in China is serious business; people buy not just for the typical weddings, birthdays and (now) Christmas but for those and a half-dozen other special occasions on the Chinese calendar. And there, the familiar western qualifier “it’s the thought that counts” does not exist. Expensive and name-brand are paramount among Chinese young and old, which is why well-known brands and logo-emblazoned everything is so popular.
The downside to the Louis Vuittons and Pradas in the Chinese market, however, is their burdensomely high luxury tax. Every few years Beijing considers revising the exorbitant 30-40 percent tax, but so far, no progress has been made–inaction that domestic Chinese brands will benefit from in the long run. With as much purchasing power as China’s luxury-seeking consumers have, there is room right now for everyone to grow and cash in on the boom. Whether it lasts, and for how long it lasts, those are different stories.
(Image via JingDaily)