“Who do you think will queue for LV in Paris?…Not Westerners.”
A roundup of this weekend’s top stories from the Chinese luxury market, from Jaguar Land Rover’s ambitions to produce vehicles in China to Shanghai Tang’s ambitious expansion plans and Hong Kong’s retail expectations for Golden Week.
Citing Strong Demand, Shanghai Tang Plans To Double Mainland China Stores
Placing a bet on rising demand, the Richemont-owned Hong Kong brand Shanghai Tang, which currently boasts over 40 points of sale in nine countries in addition to the Greater China region, has set out plans to double its locations in mainland China. As Bloomberg notes, a growing proportion of sales coming from mainland China and stronger brand equity there (perhaps via the brand’s intensive digital marketing campaigns) has chairman Raphael le Masne de Chermont speaking in extremely bullish terms.
[Shanghai Tang] plans to open a flagship Shanghai store next year to expand sales of China-inspired fashions including silk kimonos for $470, men’s washed denim shirts with mandarin collars at $235 and travel umbrellas at $60. The brand also aims to increase its Chinese shops to 30 within the next two years from the current 17 as rising wages in the Asian country drives up demand for luxury goods.
The focus in China is also a recognition that consumers there are driving demand for fashion brands worldwide, including LVMH Moet Hennessy Louis Vuitton SA (MC), Chermont said yesterday.
“Who do you think will queue for LV in Paris?” he asked rhetorically. “Not Westerners.”
The proportion of Shanghai Tang customers from mainland China buying at the boutique’s 42 locations worldwide grew to 18 percent from 2 percent the same time three years ago. Chermont expects this number to surpass the sales contribution from U.S. customers — at about 22 percent — in the next 18 months.
“Shanghai Tang has done a fantastic job of building brand equity and has become a genuine luxury brand in Hong Kong and the West,” said Matt Marsden, director of consumer and retail research at Daiwa Capital Markets. “This will help give it credibility and increase the chances of success as the company expands in China.”
As Jing Daily wrote back in April, Shanghai Tang will soon vacate the flagship location it has operated in Hong Kong since its founding in 1994, making way for the American retailer Abercrombie & Fitch. Though Shanghai Tang has kept mum about its upcoming move, Chermont said this weekend that the new Hong Kong flagship — to be called “Shanghai Tang Mansion” — will comprise 20,000 square feet in a four-story building near the old flagship. The Shanghai Tang Mansion is expected to open in March 2012.
Jaguar Land Rover Wants To Produce Locally In China
They’ve said it before, but this week a spokesman from Jaguar Land Rover, the U.K.-based high-end unit of Tata Motors, told the Wall Street Journal that producing vehicles locally in mainland China remains the company’s “ambition.”
“There are many stages in such discussions and we have spoken to a number of parties and we continue to respect the official process and we have no news or further comment to give at this point in time,” [Del Sehmar, a spokesman for Jaguar Land Rover India,] said.
Sehmar didn’t comment about a report in the China Business News earlier Monday that said Jaguar Land Rover and Chery Automobile Co. are seeking regulatory approval for their China joint venture after concluding talks about the plan.
Ratan Tata, chairman of Tata Motors, has said in the company’s annual report for the year ended March 31 that it is “considering various options for assembly and localization of selected Jaguar Land Rover products in China, which has become an important market for the company.”
Hong Kong Retailers Pin Hopes On Golden Week Shoppers
Following a banner year in which local retail sales — buoyed by mainland Chinese tourist-shoppers — jumped 26 percent to US$34 billion in the first eight months of the year, Hong Kong retailers expect sales during “Golden Week,” which kicked off October 1, to show a 15-20 percent increase over last year. Despite rising accommodation costs, which some analysts feared could crimp total sales revenue this time around, rising costs for everything from low-end to high-end products in the Mainland appear to have worked out in Hong Kong’s favor.
Chow Sang Sang Holdings International Ltd., the biggest Hong Kong-listed jewelry maker and retailer, said revenue in the first six days of Golden week rose more than 50 percent.
Wellcome, the grocery chain run by Hong Kong’s second- biggest retailer Dairy Farm International Holdings Ltd., had “satisfactory growth” during this year’s Golden Week, according to an e-mailed statement. Mainland Chinese shopping at its stores bought shampoo, toothpaste, medicine, chocolate and cookies, it said.
The number of visitors from China to Hong Kong for the first five days of Golden Week rose 13 percent from a year earlier, Tien said. Hong Kong received an average of 117,008 daily arrivals from mainland China from Oct. 1 to Oct. 6, according to government data.
Visitors accounted for 34 percent of retail sales in Hong Kong last year, with mainland Chinese comprising 76 percent of tourist spending, ANZ’s Yeung estimated.
Golden Week wasn’t only good for retailers in Hong Kong, however. This weekend, Jing Daily spoke to a saleswoman at the Céline counter at Printemps department store in Paris, which was holding a special holiday promotion (complete with signs in Chinese). Surrounded by Mandarin-speaking tourist-shoppers, virtually all of whom toted Louis Vuitton or Gucci shopping bags, the saleswoman told us that Chinese tourists had “wiped out” her entire inventory within less than an hour of the store’s opening.
20 yards away, a group of Chinese tourists stood ogling the new Rolex watch purchased by a member of their tour group.