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Will China be the new Dubai? It’s only a question of time.

January 22, 2011 in Doing busines with China

Actually China is the fastest growing market in the world. It’s just a question of time (exactly it’s a question of next five years) when it become also the biggest market for luxury goods in the world. Currently it is in the second position, just after Japan.

Under the name of luxury goods we understand items not so necessary but very desirable, possession of which gives a sense of comfort and indulgence. Most of them belong to one of these sectors: fashion, accessories, footwear, perfume, cosmetics, jewellery and lingerie.

The recent 21st Century Deluxe 2009 Report effectively describes what types of products are most wanted in China. For all the high-end Italian brands it seems to be an opportunity not to be missed. Until recently the purchases were made with little awareness – today situation is completely different. Rich Chinese know exactly what they want and what they need. That’s why many fashion houses are looking to open more boutiques in the country of the Rising Sun. But luxury is not only fashion and accessories – it’s simply a lifestyle.

Here are the brands favored by the new rich Chinese:

Jewelry & Watches – Cartier (France)
Fashion – Gucci (Italy)
Airline – Air France (France)
Hotels – Peninsula (Hong Kong)
Alcohol – Martell (France)
Cars – Mercedes-Benz (Germany)
Christmas gifts – Omega (Switzerland), Swarovski (Austria)

Crisis? Not for Chinese millionaires.

The Chinese people love and buy luxury goods. Their passion for luxury is irresistible and the market seems to be rising despite global crisis. In 2009 they bought a quarter of the luxury goods produced in the planet, at a total of 9.4 billion USD. This sum could be even higher, if account were taken of the purchases made by the Chinese outside the country. It is undoubted opportunity for all those who want to start their own business in China. Business opportunities which offers the country widened to a new field.

This trend has been noted by luxury brands (mainly French and Italian) which invest all the time in Chinese market. Louis Vuitton, Bally, Gucci, Salvatore Ferragamo are one of the first brands that have opened their first stores in the country of China.

Customer Profile

Among those who drive the situation on the higher-end products are mainly young people of China that are 20 years younger than their counterparts in the United States and Japan. It is the new rich class that are potential consumers of the best quality goods. China has great potential for this type of market, primarily due to the huge population living in large cities. Not without significance is that the young consumers wish to emphasize their status. Being an influential person of high social status impresses others. And how to let others know with whom you’re dealing with? Of course with branded gadgets.

It’s also worthy of note that young Chinese accepted very quickly “shopping and mall culture”. In 2020, seven of the ten largest malls in the world will be located in China. But Chinese like to shop abroad as well. Mainly because it is often more cost-effective. That’s why they often travel to shop in Europe’s designer fashion boutiques. According to The Word Trade Organization about 100 million of Chinese will go abroad in 2020.

Which are the basic strategies for those who plan the opening of luxury brands in China? First of all, investment in promotion of new brands with sufficient incentive to the client is very important. For example, organizing promotional, closed events necessarily with the presence of celebrities. Second of all, it is necessary to involve local elements to the production of luxury brands, mainly by moving the factories into China and by cooperation with local partners.

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Rapid Development

December 7, 2010 in Export to China

When chatting to British friends, or meeting new people at networking events, it often becomes apparent that some people have no idea of what China is like. Is it a third world country? What is a developing nation? Do you have TV’s and mobile phones, running water?

Well, yes. We do. Also China is investing and developing state of the art technology. I was just reading an article about a new high speed train that is due for completion in 2012. It will link Beijing (that’s the capital for those who flunked geography) with Shanghai (that’s a huge city and centre of China’s financial industry). It will halve the train journey between the two, and will run trains traveling at over 500kph (312mph). That is fast! There have been faster trains – the French managed 357.2 mph in 2007,  and the Japanese, a flying 361 mph back in 2003 – but those speeds were on test runs. A recent Chinese trial came in at a cool 302 mph but this should be improved upon by the 2012  deadline.

Not bad eh!?

Chinese culture – Parots, Pornography and David Cameron.

November 10, 2010 in Export to China

I did a 4sight at 4networking Swindon today, which was a presentation about some of the cultural differences between China and the UK. Some are interesting or  amusing but awareness of others could make a real difference to your business.

There were a few useful questions raised at the end which I thought it might be of interest to others  so I have shared them here.

Q1. Why did China ask David Carmeron not to wear his poppy in China.

A: Poppies are a symbol of the opium wars, representing humiliation to the Chinese. The Opium War reminds China of the Treaty of Nanking—the first of what the Chinese called the unequal treaties which granted an indemnity to Britain, the opening of five treaty ports, and the cession of Hong Kong Island, ending the monopoly of trading in the Canton System. The war marked the end of China’s isolation and the beginning of modern Chinese history but at quite a cost. See this link for a recent British press article on the situation: David Cameron should not have worn that poppy in China

Q2. Andy Sawers: With David Cameron in China today negotiating business links, but under pressure to raise concerns about other sensitive issues, do you think he would succeed bearing in mind your comments about the Chinese culture to be subservient and not to criticise?

AThere is a difference between being subservient and being tactful. By being overly direct he is likely to come across as both rude and arrogant – traits that are deemed evidence of being uneducated and uncouth. The Chinese way of dealing with such a situation and one that would be far better received, is to build a relationship first and certainly make the focus of such talks on the mutual benefits of a strong relationship. Criticisms should be tactfully approached indirectly and discussed in a way which shows respect. David Cameron is walking a fine line if he generally wants to succeed in improving business relationships – the UK economy needs this far more than the Chinese one does. In summary, I understand his predicament, if he does not force the issues he will face criticism at home, if he does, he risks damaging the trade relations with China. Either way, being culturally aware and sensitive would surely have been the better bet.

Q3. Andy Holt: “When I was in HK airport, I got asked two questions: Do you have any pornography? Do you have a parrot? “

A: I really can’t think of an answer to your question. Perhaps the security guard was bored, and thought you looked like the kind of guy to have such unsavoury material that he could ‘confiscate’. As for the parrot, still being bored and failing the porn, maybe he thought you could re-enact the dead parrot sketch from Monty Python?!