SHANGHAI — Industry leaders and local government officials discussed their outlook for the Chinese luxury goods market at a conference over the weekend, touching on a range of topics such as the untapped potential of third- and fourth-tier cities and whether Chinese consumers are ready to accept Chinese made luxury products.
“The whole world is confused. How can a poor country like China surpass Japan in the luxury market sector? Is this sustainable?” asked Wang Depei, the vice chairman of China’s Economic System Reform Research Association.
He went on to answer his own question with optimism, explaining that China anticipates a high level of growth this year. China’s government is aiming for 8 percent economic growth in 2010, Premier Wen Jiabao said earlier this month. Ongoing investments in transportation will propel growth beyond that, Wang said. “By 2020, China will have 50 percent of the world’s high-speed trains,” he concluded.
The conference was held at the China Europe International Business School in Shanghai and drew industry professionals and representatives from the Shanghai government and local business districts.
Salvatore Ferragamo chief executive officer Michele Norsa said he expects the company’s growth in China to continue, particularly in second- and third-tier cities. Ferragamo directly controls 75 percent of its business in China but has local partners in outlying cities like Urumqi, Kunming, Harbin and Dalian, he said.
“Mainland China only is already our third-largest market, but by the end of this year, if you take in Hong Kong and Macau, China will definitely overtake Japan,” Norsa said.
In a recent report, Bernstein Research estimated the Mainland Chinese market for luxury goods was worth 6.6 billion euros, or about $8.9 billion. The report went on to state that Greater China, comprising the Mainland, Hong Kong, Taiwan and Macau, accounts for 10 percent of the world’s demand for luxury goods. Japan accounts for 12 percent while Europe and the Americas represent 39 percent and 29 percent, respectively.
Norsa also said the company’s global business is off to a “positive” start this year.
One of the most debated topics at the conference was whether Chinese consumers are willing to accept homegrown luxury brands. Shanghai Tang has been actively boosting its presence here through a series of initiatives including the opening of a cafe and the launch of an iPhone application. Meanwhile, Hermès is in the process of launching its own Chinese-produced luxury brand, Shang Xia.
Wang Xingzheng, the chairman of the management company that owns the exclusive Yongfoo Elite Club in the French Concession here, stressed the importance of craftsmanship.
“For the Chinese to appreciate the value of their own brand, we must honor our Chinese traditional craft,” he said, citing the importance of using high-quality silk and embroidery.
“Chinese men often do not understand the beauty of their own [traditional] clothes,” he explained.
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