China’s Luxury Appetite A Boon For Scotland

Country’s Elite Fans Of Golf, Scotch, Cashmere

Whisky producers like Johnnie Walker have been keen to tap growing demand for imported spirits in China

While China’s wealthy urbanites are expected to continue cutting back on conspicuous consumption this year, one country that stands to continue to gain from China’s evolving luxury demand is Scotland. Less known for flash in China than Italy, yet enjoying a reputation for craftsmanship that rivals France, Scotland’s ancient history and deep association with quality cashmere and whisky (as well as that most quintessential of wealth-connoting activities, golf) has translated to massive opportunity in China for many Scottish companies.

In the face of flagging demand from continental Europe, the China opportunity for Scotland is naturally becoming an area of interest for luxury-segment producers, particularly in the whisky market. In recent years, as Chinese drinkers have moved beyond the stereotypical “Chivas and green tea” concoction into premium single-malts and niche distilleries, high-end whisky exports have ballooned. Between June 2010-June 2011, China imported £57 million (US$90 million) worth of Scottish whisky, a rise of nearly 30 percent over 2009, with whisky imports expected to climb a further 25 percent or more this year.

As Lawrence Law, brand director at Moët Hennessy Diageo, told Jing Daily at Shanghai’s Johnnie Walker House — which launched in May 2011 to promote premium Scotch whisky to a high-end Chinese clientele — a growing number of Chinese drinkers are gravitating towards the “culture” of Scotch, actively seeking to cultivate their understanding of the history, production and nuances of the spirit.

As with French wine, which many middle-class Chinese equate with sophistication and “the good life,” premium aged Scotch is developing a reputation (particularly among middle-aged men in China) as a drink that connotes history, heritage and cultivation. This has also been instrumental in the growing popularity of golf, which has fueled an explosion in golf course construction despite an official ban. Between 2006 and 2010, the number of golf courses in China surged from 170 to an estimated 600, though the actual number may be even higher. At the moment, industry observers now estimate there to be anywhere between 300,000 and 5 million regular mainland Chinese golfers, who — following their counterparts in Hong Kong, Japan and South Korea — often see the links as their preferred spot for business meetings and deal-making.

A special tartan was created this January to welcome two giant pandas to the Edinburgh Zoo

Reflecting the popularity of the sport among the country’s movers and shakers — or those who aspire to be — one worker at Tianwaitian Golf Club in Wuhan told Xinhua last year, “China now just has two types of rich people: those who play golf and those who don’t.”

Growing demand for Scottish salmon and shellfish in emerging economies has also been a boon for exporters, with food exports increasing 9 percent year-on-year as of March 2012 to a record £1.16 billion (US$1.8 billion) and 56 percent of the segment now made up of fish and shellfish. According to the Scotsman, China is now the world’s sixth largest consumer of Scottish salmon, and demand continues to rise amid concerns about domestically or regionally farmed seafood — a point that has not been lost on Scottish politicians and business owners. As First Minister Alex Salmond put it, “even if 1 percent of the people of China decide to take the opportunity to eat Scottish salmon, then we’ll have to double production in Scotland.” Currently, demand in China for salmon shows no sign of dropping, and currently sits at more than 150 percent of total Scottish output.

Chinese tourists are still a relatively rare sight in Scotland, but they are the top spenders per capita (Image: The Scotsman)

However, the booming trade between Scotland and China isn’t limited to feeding, clothing and intoxicating the Chinese elite. In 2011, China leased a pair of giant pandas to the Edinburgh Zoo — an occasion for which local tartan designers Kinloch Anderson created a special design — and PetroChina purchased a half share in the Grangemouth refinery from Ineos. Scotland has also seen an influx in the number of Chinese outbound tourists hitting its shores, with more than 21,000 Chinese travelers visiting the country in 2010, up from only 7,000 in 2005.

As of 2010, Chinese tourists spent an estimated US$18 million in Scotland — a drop in the bucket compared to the €500 million (US$626 million) they spent in France in 2011, but their average individual spend per trip of US$1,163 is nothing to shrug off.


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