Let’s Hear It For the Boys: Men Lift Luxury Market
Despite the recent slowdown of retail sales of luxury items, such as jewelry, Chinese men are driving the rebound in the luxury market. Men now account for more than half of luxury goods spending in China, but some claim that men’s spending differs from their female counterparts, from Reuters:
Companies such as Burberry Group Plc and LVMH which sell luxe clothing and accessories benefit from this gift-giving culture, and wealthy Chinese men’s penchant for designer ware.
At the Gucci store in Macau’s Wynn casino, four men clustered around a glass counter examining leather wallets, while seven other men browsed items such as the 6,000 patacas ($750) shoulder bags. Only two women were in the shop at the same time, while other customers queued up outside, waiting for security guards to let them in.
CDT previously reported on the growing presence of luxury brands, such as Prada, as well as the high street fashion brands vying for the Chinese market. The South China Morning Post reports PPR, which owns Gucci and Yves Saint Laurent, are looking to expand its stakes in China’s male market:
PPR, the French luxury and sportswear group headed by the billionaire Francois-Henri Pinault, which owns the sportswear brand Puma as well as Gucci and YSL, bought a large stake last month in Qeelin, the Hong Kong jeweller founded by local designer Dennis Chan and the French entrepreneur Guillaume Brochard in 2004.
Qeelin has seven shops on the mainland, four in Hong Kong and three in Europe. PPR did not disclose its holding in Qeelin or what it paid for it.
Alexis Babeau, managing director of the luxury division at PPR, said the Paris-based conglomerate will focus on “making small and high-growth investments, which should offer synergies and avoid cannibalisation of our existing portfolio”.
“The acquisition of the men’s clothing label Brioni, which once dressed James Bond, has broadened our reach to tailor-made suits, representing our commitment to the market for male fashion,” Babeau said.
Although foreign brands, such as Burberry and Louis Vuitton, have been profiting from China’s fashion forward men, Chinese brands are struggling in the luxury market, from The People’s Daily Online:
Established Shanghai brands should be offered financial aid from the government to ensure their survival. That was the message given to the city’s top political advisory body over the weekend.
An earlier report by the Shanghai Academy of Social Sciences said just 10 percent of Shanghai’s traditional brands are making a healthy profit. Roughly 70 percent are struggling, with the rest on the verge of bankruptcy.
Shanghai is home to many household brand names, including Three-gun underwear,Conch shirts and Maling food. In the 1980s and early 1990s, it was fashionable to be seen wearing Shanghai-made products. But as more overseas brands have arrived in China, local names have lost their place in the market.
“Foreign brands are much stronger, not only in financial strength but also many have aclear strategy,” said Qi Xiaozhai, director of the Shanghai Commercial Economic Research Center. “They came into China with a Westernized look that was desired by many young Chinese.”
Amid this spending trend, Chinese state media published an article by Colin Speakman, an economist and director of China Programs at CAPA International Education, warning against overspending, from China Daily:
In Western economies, the rainy day provision often comes from access to credit from unused credit card balances or equity withdrawal from housing assets. We know the dangers that uncontrolled access to credit can bring in the West, yet we see increasing marketing of credit cards in China to the younger generation. Caution is urged here.
Hence, China faces a difficult balancing act in transition. It remains important, in an era of apparently lower economic growth, to hold on to modestly paid jobs in the export sector where labor costs and controlling any significant appreciation of the yuan remain key factors.
If that is not done, multinationals will increasingly look to countries like Cambodia, Laos,Indonesia and Vietnam for lower costs. Yet, if more demand can be internalized within China, it would increase household income from employment in higher added value industries and the resulting higher incomes would help consumers to afford higher priced products – a virtuous cycle.
It makes more sense for China to increase consumer spending in the general market (as opposed to just the high-end market) to raise the living standards of the majority of workers.