Made [For] China: Growing Luxury Demand Buoys US Manufacturers, Brands

High-End Demand Rising For Everything From Faucets To Handmade Shoes Going against the decades-long trend of lower-priced Chinese imports flooding the US market, a growing number of American manufacturers, fashion brands, leathergoods makers, and family-run wineries are looking to China's luxury consumer as a new and important target market. Over the past few years, smaller companies -- rather than just high-end giants like Tiffany & Co. and Coach -- have found that undertaking a higher pricing strategy, rather than targeting the mid- or low-end mass market, is a plus in China. As the young New York-based designer Patrik Ervell told Bloomberg earlier this year, "I’m manufacturing clothing here in New York, and I’m exporting it to China and South Korea and Japan. Suddenly 'Made in America' has a value to the Chinese customer in almost the same way that “Made in France” or “Made in Italy” once had for Americans." This week, the New York Times highlighted one decidedly less glamourous Brooklyn-based company that has found a receptive market in Hong Kong and mainland China and managed to stay afloat regardless of competition from lower-priced Chinese imports in the US. From the article: [Jack] Abel’s company, Watermark Designs in Brooklyn, is standing history on its head: it is making plumbing parts and shipping them to China. After generations of manufacturers in New York and across the United States folded because they were unable to compete with imports, Watermark, with its only factory in the East New York section of Brooklyn, has managed to crack the code. Instead of trying to make Watermark’s products cheaper, Mr. Abel has prospered by first making them more expensive — offering custom-made fixtures unique to each building — and then figuring out how to do that at lower cost. The company has supplied thousands of fixtures to six new luxury hotels and condominiums being built in Shanghai, Macau and Hong Kong. “The days of mass producing in New York City are gone,” Mr. Abel said. “If you were producing nuts and bolts by the tens of thousands 50 years ago, you’re not going to do it today. But creativity, or uniqueness or design is definitely something that can flourish in New York.” Demand from high-end property developers in search of top-quality faucets and construction materials isn't the only trend leading American companies to China. For some apparel, accessories and footwear brands, the growing number of wealthy mainland Chinese now moving away from "bling" and towards low-key high-end consumption is providing a whole new demographic. This November, the Wisconsin-based shoemaker Allen Edmonds -- for decades, the go-to footwear brand for US presidents and business leaders -- plans to open its first location in Shanghai, with an ambitious expansion plan to follow. As Paul Grangaard, president and CEO of Allen Edmonds, said this summer, "We are scheduled to have at least six to 12 flagship stores and over time, 40 or 50 stores in China in the next five years." The 80-year-old company has added 120 new employees over the past two years to meet increased international demand, with Grangaard adding that "China is certainly an important part of that. And the development of the Chinese market will also create some jobs in the US." Along with altering its store decor to give it a more exclusive look for the China market, Grangaard said Allen Edmonds will also branch into China's growing e-commerce market after its launch, and has already added Chinese-language functionality to its official website.To further burnish the brand’s “All-American” image, each Allen Edmonds store in China will sell the brand’s business and casual lines, as well as its new even higher-end line, “The Independence Collection,” each model of which is named after a signer of the Declaration of Independence. While most smaller-scale, US-made heritage brands generally don’t have the production capacity (or, for some, the desire) to expand into the China market in any major way, a niche is clearly forming. With the likes of Patrik Ervell on the more adventurous side, and Allen Edmonds on the more traditional side, making inroads in China despite virtually nonexistent advertising budgets or huge online campaigns, we can safely assume that demand will only continue to rise for American brands besides Tiffany and Coach. Given the number of well-curated, small multi-brand retailers grows in China as well, the trend may really take hold in a measurable way sooner than we’d expect.

Made [For] China: Growing Luxury Demand Buoys US Manufacturers, Brands

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Published September 21, 2012

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Made [For] China: Growing Luxury Demand Buoys US Manufacturers, Brands