When (And How) Will China Create A World-Class Brand?

Chinese Upstarts "Don't Realize It Takes Years To Create A Luxury Brand," Says Christian Blanckaert Although international luxury brands are plagued with challenges in mainland China, from uneven consumer education and poor buyer loyalty to 0ften low profit margins, the sheer size and potential for growth makes this market -- projected to become the largest in the world by 2015 -- impossible to ignore. But for upstart Chinese luxury brands, long accustomed to, but never comfortable with, playing second fiddle to dominant foreign competitors like Louis Vuitton or Gucci, the market is even more difficult. While industry figures like Zhao Yunhu of Shenzhen Copais, Zhang Zhifeng of NE-TIGER, and Jiang Qiong'er of Shang Xia are confident that Chinese designers will be able to call on their civilization's culture and long history of craftsmanship to create truly global brands that can compete both at home and abroad, so far Chinese consumers themselves have proven to be more fixated on Western imports. So when -- if ever -- will Chinese brands really hit the world stage? What will they have to do to not only sell in Europe or North America, but, perhaps more importantly, in their home market? This week, Shanghai's BundPic (外滩画报) speaks to Christian Blanckaert, former Executive Vice President of Hermes International, about Chinese consumption and the possibility that we might see a home-grown Chinese brand make a splash in Paris, New York or Milan. From the interview (translation by Jing Daily team): BundPic (B): How do Western academics view China's sudden obsession with luxury goods? Christian Blanckaert (CB): I'll tell you a story. I first came to China in 1979 on an official visit. I went to Chengdu, which at that time only had one hotel that would accommodate foreigners. They told me not to go out at night, but I snuck out anyway, to g0 take a walk. As I came to a park, I encountered a large group of young Chinese. Just like today, at that time I couldn't speak a word of Chinese, but there were some people there who could actually speak French. They were listening to an international French radio program, learning the language. And we spoke throughout the night. Those young men said to me: you have highways, your cars are so beautiful, and so are your watches and ties. Eventually, I gave my watch and tie to them. At that time, the Chinese people had virtually nothing, but they had dreams, and I said if China opened its doors, these people would be able to make their dreams come true. So, in my opinion, a long history, a cultural break from the past and a new kind of freedom all combined to create the obsession with luxury goods we currently see in China. B: Among the innumerable local brands in China, do you think any can emerge as a true world-class luxury brand? CB : This is a question of considerable interest to me. Some European and American scholars believe that real luxury is only likely to come from the West. But another viewpoint is that the dominant luxury brands today are simply a step ahead, and that we'll see new luxury brands emerging in the future. I agree with the latter viewpoint. But I have to emphasize that a luxury brand must first be recognized in its own country -- this is a critical point. Before hitting the world stage, Louis Vuitton built an outstanding reputation in Paris, and Gucci did the same in Florence. If a Chinese brand wants to capture the hearts of Europeans, it should first be successful in Beijing, Harbin, and Shenzhen. I think China already has the conditions needed for the development of world-class brands, but entrepreneurs need to have patience, because it'll even take quite a bit of time to become successful in China. Chinese people always seem to be overly anxious. They often don't know that it takes an extraordinary amount of time to create a good brand. B: How long do you think it'll take for this kind of brand to emerge in China? CB: At least 20 years. But this all hinges on whether there are already some far-sighted people in China who are willing to devote the time to accomplish this. If so, we'll see the results in 20 years. However, this will be a very difficult process, and there's a lot of work to be done: they have to determine their objectives, build a good design team, they need to have a story to tell. The reason Yves Saint Laurent was able to build a brand from nothing was because he had a very clear idea in his mind what look he wanted to create for women. So the brand founder must be clear! The brand needs to have substance, in order to avoid over-reliance on marketing, and let the clothes speak for themselves. B: In your imagination, what would a Chinese brand be like? CB : In my mind, the perfect Chinese luxury brand would be like calligraphy -- a kind of pure perfection, kind of Zen. The pursuit of quality should be of primary importance. Ancient Chinese lacquer-ware and ceramics were once very inspiring to [the Western world], but a more modern Chinese style needs to capture the hearts of the Chinese people themselves. B: It takes world-class production abilities to create world-class luxury goods. Isn't the standard of "Made in China" high enough already? CB : Frankly, the reputation of "Made in China" goods around the world is not good. If the best-known brands mark their products with a "Made in China" label, they may even damage their brand image, and even the Chinese people think things are made better in France. This is the situation today, but this can change in the future. Before anything, Chinese brands need to show that they can produce beautiful handcrafted items, such as silk or cashmere products, in order to let the market see that they are capable of world-class quality. In my view, the establishment of domestic Chinese luxury brands will initially be based on a process of cooperation, combining the design expertise of Europe, the production capabilities of China, and the pursuit of Japanese quality. If the strengths of these areas can be interwoven, it's quite a feasible idea. B: Another option is the acquisition of established European brands. Recently, media reported a Chinese businessman was trying to purchase a majority share of Prada yet was immediately refused by the board. What do you think about this? CB : The participation of the Chinese [in the European luxury market] terrifies Europeans. I am on the board of directors of an Italian brand, and I often hear people there say things like, "We're afraid of the Chinese! China is too big, and if so many Chinese enter the capital markets, what kind of scene would it create?" The Chinese people that these Europeans come into contact with are typically trade delegations. They line up dozens of people to negotiate business investments, who all say they want to buy such-and-such amount of shares, want to get such-and-such returns. This is, indeed, very intimidating. Many luxury brands are actually small-scale family operations, and for those who don't know anything about the Chinese, they'd be far more likely to better understand the Italian style of cooperation. I hope, in the future, that the Chinese learn to pay more attention to their communication style, sending only two or three people at a time who can connect on a personal level, maybe tell [the potential European partner] that they also love art, that they want to build whatever type of brand together. Don't always talk about money, as this will only create distance.

When (And How) Will China Create A World-Class Brand?

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Published December 01, 2010

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When (And How) Will China Create A World-Class Brand?