A Roundup Of This Weekend’s China News
Prada Cracking China, Miuccia Takes Beijing
This weekend, Miuccia Prada was in Beijing for more than just tourism; Her company held its first runway show outside of Europe at the Central Academy of Fine Arts Museum. Attended by celebrities like Gong Li and Maggie Cheung, and featuring a performance by the Pet Shop Boys, the Prada show was the place to be this weekend. (Photos at Stylites in Beijing)
As the AFP points out, Prada is now eyeing major expansion in the China market. As Jing Daily wrote last week, the company will soon open its first location in Chongqing, indicating that its coming expansion will increasingly target cities in China’s interior. From the AFP:
Like many Western fashion brands, Prada is already established in China, with at least 15 stores in operation and plans for nearly 30 more by the end of 2012. It has also announced it will open a design studio in Hong Kong in 2011.
But luxury goods analysts say foreign firms have only scratched the surface of the market’s vast potential, which is based on the country’s population of 1.3 billion and the mounting wealth of an ever-growing middle class.
“In China, we consider that luxury is still in a pure recruitment phase,” HSBC analyst Erwan Rambourg told AFP, explaining that 90 percent of Chinese buyers are newcomers to a brand, while the rest are repeat customers.
“It is still a very underpenetrated market.”
Could Coach Replicate its Japanese Market Success in China?
NASDAQ looks at Coach’s long term prospects in China, where the company is in the midst of a massive expansion effort aimed mostly at the country’s burgeoning middle class. (Previously on Jing Daily) According to the article, Coach’s current strategy in many ways mirrors that of its experience in Japan in previous years, where Coach positioned itself as an “affordable luxury” brand rather than a direct competitor to Louis Vuitton or Gucci.
Seeing the potential in the Chinese market, Coach acquired domestic retail businesses in Hong Kong, Macau and mainland China (”Coach China”) from its former distributor, the ImagineX group, in fiscal 2009. The acquisitions provided the company with greater control over the brand in China, enabling Coach to raise brand awareness and aggressively grow market share with the Chinese consumer.
As a result of its timely entry into the Chinese market and its “aspirational” luxury image, Coach has done extremely well in China over the last few years and witnessed a three-fold increase in China sales in fiscal 2010. Recently, the firm announced the opening of 25 new stores in China and now expects China sales to increase by 75% in fiscal 2011.
Reputations At Risk As Wineries Estimate 1/3 Of All Icewine In China Is Fake
Although Chinese wineries are fighting to be taken seriously as makers of high-quality icewine (a segment dominated by Canadian vintners), the reputation of icewine in general is at risk in one of its most lucrative markets, as insiders now estimate up to one-third of this category is counterfeit in China. As the Drinks Business wrote this weekend, unscrupulous fraudsters are using techniques such as harvesting grapes early and freezing them, using bulk icewine juice that doesn’t meet regulation standards, adding sugar and food coloring to low-end sweet wine, and counterfeiting labels from well-known producers.
While counterfeiting is a problem across all wine categories in China (previously on Jing Daily), as a relatively new wine segment in China, icewine’s reputation is far shakier. Producers, quite reasonably, see this problem as critical, particularly as they have seen great success so far throughout East Asia and want to continue to expand into emerging markets like mainland China.
[Fake wines] have infiltrated the icewine market, especially in the Far East. [Randy Dufour, export director at Inniskillin, one of Canada’s largest icewine producers,] observed: “There are no official figures documenting the size of this fake category, but from my personal experience, at least a third of the icewines that I see in several Asian markets are not authentic.”
He adds: “Our biggest concern is that a consumer purchases one of these ‘fake icewines’ in a retail store – and at a very high price point – and as such, assumes that they are buying an authentic icewine.
“Often what they find is little more than sugary water, or worse, so their experience of an icewine is not positive, and they are turned off of the category as a whole.”
New York University Cleared To Open University In Shanghai
New York University’s third degree-granting university, and its second outside of the United States, has gotten the go-ahead from China’s Ministry of Education, paving the way for greater exchange and study opportunities for American and Chinese students. In a campus-wide e-mail sent Friday, NYU president John Sexton and provost David McLaughlin called the approval from the Ministry of Education an “important step towards creating a campus,” but added that a litany of challenges remain to be dealt with, not least of which is the project budget.
Until the budget is finalized, NYU’s plans for NYU Shanghai will be “based around a financial model in which the district of Pudong would pay for the construction of the campus and the cost of operating the institution will be paid for by student tuition,” according to the Washington Square News. The remainder will be covered by the government of Shanghai.
Students remain relatively supportive about NYU’s rapid expansion plans. A recent WSN poll showed that 60 percent of students said they supported NYU Abu Dhabi and 61.8 percent said they supported the university’s plans to open a campus in Shanghai.
McLaughlin also said NYU Shanghai would not just be a school for Chinese students.
“I’ve been told that people are reading the letter we sent as if it says or indicates or implies that NYU Shanghai will be composed of only Chinese nationals and that is not the case,” he said. “The undergraduate population will have a majority of Chinese nationals, but it will have a large number of students from all over Asia and the rest of the world, including the United States.”