Last year, Lawrence Allen's account of the trials and tribulations of the world's "Big Five" chocolate makers, Chocolate Fortunes, detailed the sustained 30-year push made by Hershey, Mars and others into the "blank slate" Chinese market. According to Allen, chocolate makers have had to contend with a litany of difficulties in China over the past few decades, from low consumer education to the comparatively high price of chocolate in the 1980s and 1990s. While chocolate has, since then, become far more popular, ubiquitous and inexpensive relative to income levels in China, over the past five to 10 years we've seen a flood of high-end chocolatiers entering the country -- some of them setting up shop and producing their wares domestically and others exclusively importing to assuage concerns about milk safety and preserve brand prestige.
This week, the 210-year-old French chocolatier Debauve & Gallais became the latest high-end chocolate brand to enter the difficult yet (for some) lucrative Chinese market, opening a location in Qingdao's Hisense Plaza. Positioning the company as a luxury brand and heavily pushing its "noble" heritage -- it once supplied chocolate to Kings Louis XVIII, Charles X and Louis-Philippe -- Debauve & Gallais is certain to make a splash in the rapidly growing second-tier city, for its sky-high prices if nothing else.
29 yuan (US$4.27) for one cocoa bean, 80 yuan ($12) for a truffle, and 3500 yuan ($516) for a 400-gram box of chocolates. At the grand opening of Debauve & Gallais in Qingdao, guests had their breath taken away not only by the deliciousness of the chocolate but also because the "Rolls Royce of chocolate" had prices to match.
"We don't look at the low-consumption base, or how strong consumer spending power is, we just care about the top of the pyramid." Regarding the chances for such a high-end product to stand firm in Qingdao, Debauve & Gallais China president Hong Lu is highly confident. She said that the company performed extensive market research before deciding to settle in Qingdao, all of which showed great potential for luxury consumption there.
Hong Lu added that top luxury brands like Louis Vuitton, Hermes, Prada, Cartier, Coach, Burberry and others have opened locations in Qingdao in recent years. In fact, Hong said, Debauve & Gallais shares the same target market as these European luxury brands, and if they're located in the same [mall], customers will be powerless to resist.
"Anywhere with a Hermes store should also have a Debauve & Gallais," Hong said with a smile.
It's interesting that Debauve & Gallais chose Qingdao for its first China location, but with annual disposable income of urban residents hovering somewhere around 20,000 yuan (US$2,946) -- not much by Western standards, and certainly not enough to afford the 3,500 yuan gift boxes, but not bad for east China -- apparently the chocolatier, like its European fashion house counterparts, thinks the city's growth potential outweighs its initial risks.