It’s not often that someone rejects Patrizio Bertelli — and it’s especially rare for a person to turn down money from the billionaire businessman. But standing in a street market in China, the chief executive officer of Prada Group and husband of Miuccia Prada found his money was no good.
“We had to pay about two euros. They didn’t want cash — they asked for mobile payments,” Bertelli said.
The executive recounted the anecdote the same week seven new stores for the group were unveiled at the new SKP Xi’an mall. That cluster pushed the company’s store count in greater China, excluding Taiwan, to 100, with 67 of those under the Prada brand. Prada has also taken its first online steps in China with a direct e-commerce site, preceding any such platform for its other markets.
While it is evident the company has been very active in China as a first mover and even listed on the Hong Kong Stock Exchange in 2011, Bertelli explained it was equally about being able to appeal to the Chinese outside of the country as within.
At the group, 20 percent of revenues come from China as a geographical market but Chinese spending overall is as much as 36 percent of total sales. Furthermore, only a small sliver of the Chinese population owns a passport, he pointed out as he discussed the overall demographics of China and the market’s immense potential.
“Something else that is interesting but we tend to forget about at times — only 175 million Chinese citizens out of a grand total of 1.4 billion citizens have passports,” Bertelli said. “In 2015, only 120 million Chinese citizens had passports, which means that every year about 16 million new passports are issued. Many more Chinese are going to travel abroad, which will certainly have a positive impact on markets.”
While there has been antiforeign sentiment in Europe making headlines — both on a wider political scale in Italy with a new populist-leaning government, and smaller but still troubling viral incidents involving luxury retailers, Bertelli pays it no significant heed.
“At the time, there was a lot of criticism of many Japanese shoppers,” Bertelli said, recalling the Nineties. “People said they invaded the stores in Italy and France. This is what we’re seeing [again] today.”
According to Bertelli, China stepped up as a consumer market in 2008, with the major turning point being the Summer Olympics.
Other data points he noted included that “there are 400 million Millennials in China, 29 percent of the population, which means five times as much as the Millennials in the U.S., which is still the largest economy globally.”
“In other regions of the world, Millennials tend to shop an average of five times a year but Chinese Millennials are estimated to shop eight times a year,” Bertelli said, “nearly twice as much as other Millennials.”
Over the years, the ceo observed that consumers have gravitated towards gender-neutral products, and for all the hype around Millennials and Generation Z, the consumer was also becoming more “ageless.”
“I’m 72 years old and I’m not ready to retire,” Bertelli shared, a sentiment he would reiterate a later at a press conference in Italy. “The average life span has gotten longer and longer and consider that people with some experienced and maturity may be just as insightful as the younger people.”
Bertelli also spoke at length about the Rong Zhai villa in Shanghai, the early 20th-century mansion that the company renovated and reopened to the public last fall, which rounds out the brand’s presence in China in addition to Prada’s freestanding stores.
“It used to belong to fabric traders. We carefully restored all its historic details and furniture,” he explained. Debuting with a fashion show and party, the villa currently plays home to art exhibitions.
“In agreement with the mayor of Shanghai, we decided to open the villa, which I may say is maybe the most beautiful villa in all of Shanghai, and welcomed 120,000 visitors,” Bertelli said.