NEW YORK — Almost every luxury brand is buzzing about China, but few ever talk about some of the cultural nuances and the necessity of understanding them that doing business there comprises. At Fashion Group International’s panel discussion last Tuesday, four executives shared their experiences on entering a market that most refer to as crucial for a global brand of the future.
According to data given at the event, wages increased by 130 percent in China between 2000 and 2006, and from February 2006 to February 2007, retail sales rose 19.1 percent — a clear sign that it’s a market with unprecedented growth, particularly as the upper-middle class is projected to increase sixfold by 2025.
The panelists were Daniel Annese, senior vice president and general manager of Estée Lauder International; Emilie Jackson, president of Wathne Ltd.; Robin Merlo, the director of marketing and communications for Cotton Inc., and Jacquelyn Wenzel, president of Ports 1961.
Wenzel said the methodology of building a brand in China is not too dissimilar from Europe and North America. She stressed the importance of promoting a brand’s heritage, as the Chinese customer, whose lifestyle is strongly tied to family values, appreciates a story when they buy into a brand.
Ports 1961 is well-versed in China. While it was launched in Canada by Luke Tanabe in 1961, the company was acquired in the Nineties by Chinese entrepreneur Alfred Chan, who decided to concentrate on the Asian market, where the company now operates over 200 stores.
Estée Lauder’s Annese, meanwhile, stressed the importance of considering the triumvirate of China, Taiwan and Hong Kong as part of growth in the region. He said that in China, 60 percent of the Estée Lauder brand’s business consists of skin care, 28 percent of makeup and about 12 percent of fragrance. Annese said while U.S. customers’ skin concerns often center around lines, wrinkles and loss of firmness, a typical 26-year-old in Asia is more likely to be concerned with brightness, clarity, luminosity and skin tone.
When asked about the unexpected costs, Annese said, “When we launch a product in Mainland China, we have to pay $800 to the government.” That, he added, must be paid for each lipstick shade launched, for example.
This story first appeared in the April 29, 2008 issue of WWD. Subscribe Today.
He livened up the conversation, displaying Estée Lauder’s aggressive marketing push in the region by displaying photos of actual initiatives. They ranged from touch-media displays behind taxi seats to temporary sample booths outside subway stations, major displays inside them, ads on the back of every seat of a commuter train and billboards along the route for those looking out the windows. “Outdoor [marketing] is very important,” he said.