Sino-French Relations “Linked Together By Luxury Goods”

“Maybe China Should Learn More About Paris’s Experience Crafting ‘Soft Power’ That Fascinates The World.”

The French pavilion at the upcoming Shanghai Expo

The French pavilion at the upcoming Shanghai Expo

Jing Daily regularly looks at the French “charm offensive” in China, which began in earnest following the Parisian Olympic torch relay protests of 2008 and has, in more recent months, intensified via the efforts of major French luxury brands (via initiatives like the Comite Colbert website and LVMH’s involvement in the French pavilion at the upcoming Shanghai World Expo) as well as France bestowing honors like the Legion d’honneur (Jia Zhangke) and Order of Arts and Letters (Wang Xiaoshuai) to Chinese artists.

This week, the Chinese newspaper First Financial Daily (via Hexun) looks at the unique relationship shared by China and France, and investigates how commerce — more specifically, France selling luxury products or high-tech goods to China and China selling shoes and other consumer products to France — is helping to smooth over some of these countries’ disagreements. Although the author criticizes France’s relative upper hand, noting that the France derives more profit selling one Airbus to China than China does selling 100 million pairs of shoes to France, the overall tone is supportive, noting that China could possibly learn something from France’s experience with “soft power.”

From the article (translation by Jing Daily team):

What word has the same meaning as “romance” and “art”? “France” is a good answer. At this year’s Shanghai World Expo, France will build their largest-ever pavilion — dubbed “The Sensual City” — which has already made a strong impact on everyone who’s visited it. “It’s a miniature France,” Jose Freches, the general representative of the French pavilion, told a reporter from the First Financial Daily.

This revolution is as soul-stirring as red wine, a country tied up with art and enlightenment, as well as industries like transportation, energy, telecommunications and aviation, which has long been one of China’s most important European trading partners.

Behind the Luxury Goods Supply Chain

Nowadays, French luxury culture, which began at the time of Louis XIV, is facing the embarassment of low luxury consumption. In October 2009, due to the sharp drop in the luxury market, premium haute couture brand Christian Lacroix declared bankruptcy. [Recently,] Paris has begun an unprecedented campaign targeting Asian markets.

China is without a doubt the part of the “magical Orient” adored by Parisian luxury brands. McKinsey recently issued a report indicating that more than 50% of Chinese consumers won’t reduce their luxury purchases as a result of the global economic crisis. The nouveau riche has made the Chinese market a haven for luxury brands.

Industry insiders lament that there’s no definitive guide for French luxury companies to understand Chinese consumers, but people marvel at the purchasing power of these consumers and they’ve certainly enticed France.

However, many Chinese travelers have noticed “Made in China” clearly printed on the tags of luxury goods they purchased in France. Aside from a handful of brands, most French high-end companies have transferred their production facilities to China. Following the global financial crisis, in order to cut costs, the volume of luxury products being produced in China has increased greatly.

In cities like Wenzhou and Dongguan, countless factories do contract manufacturing for international luxury brands. These products are then shipped off to Parisian boutiques, where they’re purchased for sky-high prices — maybe by the same bosses from Wenzhou [who made them in the first place.] Of course, the bulk of the profits from this product chain end up in France.

In the midst of the financial crisis, aside from just being a top buyer of French luxury goods, maybe China should learn more about Paris’s experience crafting “soft power” that fascinates the world.

The article goes on to discuss China’s trade surplus with France, which in 2009 hit US$5.3 billion, up from $2.63 billion in 2006, and the dynamics of Sino-French trade, which is to say that France exports high-tech and high-end products and equipment to China and imports low-end textiles and consumer goods from China. The article then mentions the “classic example” of French Airbuses and Chinese shoes, saying at the end of 2004, China had exported 120 million pairs of shoes to France at a value of 5.6 billion euros, but the profit made exporting 100 million pairs of shoes is less than France took in from exporting just one Airbus. The article concludes by discussing the increasing trade and political frictions that have flared up between China and France over the past few years, but notes that relations have improved in the wake of the global economic crisis.

Although the article delves into some controversial issues — such as those that surrounded the torch protests of 2008 — for anyone who is interested in reading more on recent developments in Sino-French relations from an academic point of view, be sure to keep an eye on the blog Sinologistical Violoncellist, maintained by Jing Daily “10 for ’10” respondent Adam Cathcart.

Categories

Culture