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April 15, 2011

We’ve been hearing about China’s buying power for several years now, but there is a lot that we haven’t known before about the specifics of their spending habits. We know it has become a superpower, we know that mega brands like Louis Vuitton and Gucci are mainstay fixtures, and we know that Chinese people LOVE to shop. But how they shop, and where they shop is very much a little known subject, all we know is they have a magnitude of money and this money is often spent on designer duds and status handbags.

Up until now, little was known about what brands and products the Chinese are drawn to. A recent article in WWD opened up this conversation by discussing an observation of a group of uber-rich Chinese tourists as they toured and shopped through America.

While the majority of the WWD article focused on telling us that some Chinese have tons of money and love to spend it on big ticketed items, it also provided some insight on what brands are popular with the Chinese and which are surprisingly not. Some luxury brands that are popular with the demographic are Louis Vuitton, Gucci, Armani, Ermengildo Zegna, Lancome, and surprisingly Coach. Meanwhile, other brands that we LOVE and COVET such as Celine, Balenciaga, Prada, and Ralph Lauren, are nearly unknown and uninteresting to this group of subjects.

The Sche Report believes it comes down to what these mega-brands are doing in regard to their marketing and brand-building overseas in China. One thing about developing a new market is that there are no clear cut strategies. Everything must be adaptive and ever changing.

For example, luxury brands, though currently focused on commercial appeal, could one day face much higher demands as high fashion publications such as Vogue China, Harpar’s Bazaar, Elle China, & GQ China continue to shape and reshape the Chinese fashion aesthetic. It will be important for brands to follow that development tightly and perhaps alter their regional retail merchandising accordingly. Success will depend highly on a balance between commercial success and fashion uniqueness. You have to expect that after more brands enter China, it will start to come down to real fashion credibility, and that makes it more important to establish a brand presence now while the market is still somewhat open.

The Chinese are as much of a celebrity driven culture as most of Americans are. Therefore, strategically creating Chinese style icons such as Liu Wen, Fan Bing Bing (an international blogger’s favorite) can undoubtedly raise the profile of more niche brands such as Marc Jacobs, Celine, Balenciaga, Elie Saab…etc. In addition, more brands are featuring Chinese models and celebrities at their shows: Vera Wang currently stars Shu Pei Qin for Spring, Liu Wen is confirmed to be in the Dolce & Gabbana Fall campaign, and Ming Xi walked in countless shows this past season. It is also important to show the Chinese market a willingness to align with their culture such as translating the brand into a Chinese name that phonetically resembles the Western version.

Press and strategic local marketing are also very important factors to consider when trying to win over this market. Recently, there have been a growing number of mega-event in China. Chanel and Dior have hosted elaborate shows for Resort and Pre-Fall in Shanghai. Prada replicated its Spring 2011 show a few months back and Phillip Lim made a triumphant heritage comeback in Beijing last year. Even DVF is getting on the bandwagon with her recent launch of a retail store as well as an art exhibit in Beijing.

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And without a doubt, we know how important all forms of digital technology are to luring these super tech-savy consumers.  Last week, Burberry, the brand leader in interactive digital technology, held a hologram presentation of it’s Fall 2011 collection in front of thousands of people in Beijing.

Surely the Chinese market is slowing down as a fresh emerging market, but there is still much more room for growth. It is surprising to learn that brands such as Ralph Lauren are unknown to rich Chinese tourists because they can’t read English and do not even recognize the logo. And with local Chinese competition growing by the minute ( a CFDA-esque organization forming with the support of Vogue China will see to that), brands should start seriously strategizing their approach to the Chinese market. One thing we now know for sure, it is not just about opening a slew of stores over there.  Just because they have alot of money doesn’t necessarily mean it will be ringing through everybody’s cash registers.

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