Jing Daily’s Top Posts For The Week#
In case you missed them the first time around, here are some of Jing Daily’s top posts for the week of August 23-27:
Cosmetics Brand “Shanghai VIVE” Brings Back 1930s Glamour; But Will Chinese Consumers Bite?
This week, the long-awaited launch of Shanghai VIVE (双妹), the new high-end line by the Chinese cosmetics manufacturer Shanghai Jahwa, took place at the newly restored Shanghai Peace Hotel. Designed to emulate the extravagance and elegance of 1930s Shanghai, the Shanghai VIVE line marks the latest attempt by a domestic Chinese company to make the shift from low-cost, low-profit manufacturer to high-end brand operator.
As Wang Zhuo, vice-president of Shanghai Jahwa, recently told China Daily, Shanghai VIVE is hoping to tap into the lucrative middle-class, 30+ female market through a combination of “branding power” and quality.
Ge Wenyao, chairman of the company, added that VIVE would open at least five outlets in Shanghai by the end of the year, with more than 20 more in the works over the next two to three years.
Boom Or Bubble? Shanghai Villa Sets Price Record
Whether you think the sky-high housing prices in Beijing and Shanghai are in for a crash, soft landing or natural correction, one thing that’s certain is that a small percentage of ultra-rich Chinese don’t seem to care at the moment.
Though Beijing is currently taking measures to cool speculative purchases and prevent prices from rising too fast, steps which are expected to cause developers to drop prices in the fourth quarter, this week a villa in Shanghai set a new price record, selling for a whopping 138,214 yuan (US$20,385) per square meter.
For reference, that’s nearly double the average price per square meter in Manhattan, which currently stands at $11,420.
From Mundane To Must-Have: Retro Sneaker Brand Huili To Re-Debut In Hangzhou
In 2006, a group of Shanghai-based Frenchmen purchased the rights to the Chinese sneaker brand Feiyue, launching a “revised” version of the classic plimsoll in their home country at a significant markup.
In the four years since, the reimagined Feiyue has made its way to shops throughout Europe, the UK and Asia, formed high-profile design partnerships with French street artist Steph.Cop and upscale brand Celine, and been spotted on the feet of celebrities like Orlando Bloom.
Now, following the success of Feiyue in overseas markets and among some of Hong Kong and mainland China’s hipper crowds, the domestic Chinese sneaker brand Huili (回力, also sold under the English name “Warrior”) is set to relaunch with a specialized boutique at Hangzhou’s upscale Yintai mall.
Consumption Standard For Chinese “New Nobility” Up 22% Over Last Year
As Rupert Hoogewerf of the Hurun Report told a reporter earlier this year, he views China’s ultra-rich as the country’s “new nobility” — distinct from the bao fa hu (or nouveau riche) and fixated upon educating themselves about what “the good life” entails, rather than just spending at random. But, as Hoogewerf pointed out, even a group as new as China’s new nobility must follow certain social norms.
For instance, a member of the new nobility should own three houses (courtyard house, apartment in the city, suburban villa), an impressive art collection (probably of Chinese contemporary and traditional art), and spend around $1 million per year on luxury goods (many of which they’ll probably give away as gifts).
Although these requirements seemed at the time to be exclusive enough, this week a new Hurun Report finds that the price tag for new nobility “membership” has risen to 110 million yuan (US$16 million) in consumption per year, a 22% rise over last year and the first time the threshold has passed the 100 million yuan mark. Presumably, this is the result of more super-rich being minted in China in the last year.
Private Equity Firm TPG To Create First Yuan-Denominated Fund In Shanghai
This week, TPG became the latest private equity giant to express interest in creating its first yuan-denominated fund in an attempt to capture more business from China’s newly wealthy, as well as international investors interested in the rapidly internationalizing Chinese currency. According to the New York Times, the new $735 million (5 billion yuan) fund — a partnership with the Shanghai government — is being encouraged by Beijing, which hopes that RMB-denominated investments “will help strengthen the nation’s capital markets and create a more efficient system for allocating capital to private Chinese companies.”
In recent months, we’ve seen similar moves by firms such as the Blackstone Group, Kohlberg Kravis Roberts, Fortress Investment Group and the Carlyle Group, making it clear that the RMB fund is the new “must-have” for any high-flying private equity firm. As of last week, the Carlyle Group’s RMB fund with the Beijing government has already received about 2.4 billion yuan (about $350 million), worth of commitments to begin investing. With so much hot money flying around, the apparent boom in RMB-denominated funds begs the question: are they a good idea?