Issuu on Google+


Chapter(Four(–(Distribution(Channels(of(Luxury(Brands(in(China(

063 064 076 084

Chapter(Five(–(Promotion(of(Luxury(Brands(in(China(

094 095 105

Chapter(Six(–(Customer(Relationship(Management(for(Luxury(Brands(in(China!

111 112 114 121

Chapter(Seven(–(A(Long(Way(to(Go(for(Chinese(Local(Luxury(Brands!

123 124 125 126

Fortune(Character(Lists

129

Appendix(

130

About(us(

137


Foreword

Deeper In China

001


1.(Sinification(of(Brand(Building International(luxury(brands(are(now(either( acquiring(or(merging(with(Chinese(brands,( or( they( are( launching( subsidiaries( or( products(with(Chinese(elements. Chinese(capital(has(started(to(enter( international(luxury(brand’s(board(of( directors,(acquisition(is(prevailing

Chinese(luxury(brands( are(gradually( earning(its(place(in(the(competition

The ( lar ge s t ( f la g ship ( s t or e s ( o f( numerous(international(luxury(brands( are(opened(in(China

002


2.(Designing(for(China Forming( Chinese( design( teams( or( cooperating( with( Chinese( designers( and(artists

3.(Manufacturing(in(China Establishing( a( factory( in( China( or( choosing(a(Chinese(OEM

Fully( adopting( Chinese( elements( in(design

Sourcing(raw( materials( from( China,( par ticularly ( those ( with( int ense( Chinese(elements

Chinese( luxury( brands( with( strong( Chinese( design( elements( are( now( being(widely(recognized

003


4.(Distribution(in(China Building( their ( o wn( distribution( channels(and(reducing(or(getting(rid( of(Chinese(agencies

More(international(luxury(brands(are( creating( their( Chinese( versions( of( eVcommerce(sites

Store( penetration( in( second( and( thirdVtier( cities,( while( some( luxury( brands(build(stores(in(nonVCBD(areas

Starting( to( cooperate( with( Chinese( logistics( provider s,( while( some( consider ( establishing( their ( own( logistics(and(distribution(system

004


6.(Communications(in(China 5.(Service(in(China Shifting(from(reliance(on(international(to( Establishing(independent(service(centers( globally( and(launching( special( services( especially(for(Chinese(customers

Increasing( service( agencies( and( customer( service( teams,( greater( focus(is(now(given(to(the(training(of( professional(service(staffs

005

titles(targeting(the(Chinese(wealthy


!

Shif ting( from( sole( dependence( on( international( advertising( and( public( relations( (PR)( agencies( to( gradually(building(trust(with(Chinese( Establishing(professional(publications( a d v e r t i sin g ( a n d ( P R ( a g e n c i e sZ(

for( the( Chinese( market,(primarily(in(

Beginning(to(fully(leverage(the(local(

the(form(of(internal(magazine

advantages( of( Chinese( advertising( and(PR(agencies

Transitioning(from(using(international( spokespersons( to( more( Chinese( spokespersons

Emphasizing( communications( in( cir cles,( paying( at tention( to( the( impact( of( key( opinion( leaders( and( hosting( more( activities( for( Chinese( wealthy(groups.

006


7.(Teams(in(China Professional( Chinese( managers( are( more(involved(in(senior(management( level(of(international(luxury(brands,(this( is(particularly(common(in(China(region

Emphasizing( consumer ( training,( more(brands( are(providing( Chinese( customers( with( information( about( their(products(as(well(as(culture(and( lifestyle(activities

Ma s t er y ( o f ( Mandar in ( b e c ome s( luxury( brands’( prerequisite( for( foreign(employees

International( luxur y ( brands( ar e( starting( to( pay( more( attention( to( cultivating( their( Chinese( team,( with( some( brands( placing( significant(

007


e f f o r t s ( in ( b uil din g ( t h e ir ( o w n( meetings(in(China,(especially(some( marketing(meetings professional(training(schools

8.(Management(in(China A(clear(trend(in(the(market:(more(and( more(luxury(brands( are(choosing( to( move(their(AsiaVPacific(headquarters( and( managerial( decisionVmaking( powers(from(Hong(Kong(to(Shanghai

International( luxur y ( br ands( ar e( tending(to(hold(global(management(

008


Chapter One

2012 Global Luxury Market 009


1.(Despite(slowdown,( the(market(is(still(rapidly(expanding

2.(Eminent(advantage( growing(in(groups,( discrepancy(in(performance

010


6.Global(development(strategy( shifts(east(

3.Luxury(industry(is( mingling(with(fashion

5.(Continuous(extension(of( product(chains,(highlighting( diversification(strategy

4.(Ridding(the(family(brand

011


012


Chapter Two

Luxury Map in China 013


Section(One:( Current(storefront(situation( for(international(luxury(brands(in(China

0"#"20"""""less"#"saturated 20"#"50"""modest"#"saturated 50"#100""saturated 100"#"+"""highly"#"saturated

014


Rank

City

Index

Rank

City

Per/Capita/Retail/Sales/ of/Consumers/Goods (Unit:RMB/10/Thousand)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Hong/Kong Beijing Shanghai Macau Shenyang Shenzen Dalian Hangzhou Guangzhou Chengdu Harbin Kunming Tianjin Qingdao Suzhou Chongqing Nanjing Taiyuan Xian Wuhan Wenzhou Ningbo Changsha Xiamen Changchun Zhengzhou Wuxi Urumqi Sanya Jinan

98.8 39.6 39 21.8 13.8 12.4 11.6 11 10.2 10 8.8 8.2 8 7.8 7.2 7 6.6 5.8 5.6 5.6 5.2 4.8 4.4 4.4 4.2 4 3.6 3.4 3.4 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Hangzhou Shanghai Shenzhen Chongqing Wuxi Hohhot Shenyang Xi'an Xiamen Nanning Beijing Dalian Canton Nanjing Changsha Jinan Fuzhou Tianjin Qingdao Taiyuan Wuhan Ningbo Changchun Urumqi Changzhou Chengdu Kunming Zhengzhou Harbin Wenzhou

4.1 3.5 3.4 3.3 3.3 3.1 3 3 3 3 2.9 2.9 2.9 2.7 2.7 2.7 2.7 2.6 2.6 2.3 2.3 2.3 2.3 2.2 2.2 2 2 2 1.9 1.9

Data/Source:/Fortune/Character/Group/ Fortune/Character/Institute/analyzes/and/ models/main/indicators/of/luxury/storefront/ distribution,local/economic/development,/ total/consumption,/wealthy/population/to/ obtain/the/above/figures./All/the/data/are/ derived/from/public/information.

015

Data/Source:/Fortune/Character/Group/ Fortune/Character/Institute/generated/the/figures/ from/total/retail/sales/of/consumer/goods/and/ resident/population/of/each/city.


Low(saturation(of(luxury(storefront( in(most(cities(allowing(huge(room( for(development

When(entering(China,(international( luxury( brands’( first( storefront( choices(are(in(Beijing(and(Shanghai Setup ( in( f ir stV tier ( mark et s ( ar e( formed,( while( secondVtier( cities( T hir dV t i e r ( c i t i e s ( a r e ( gr a du a ll y( developing(and(fourthVtier(cities(are( in(the(planning(and(testing(stage

016


The( number( of( luxury( stores( is( closely(related(to(local(commercial( real(estate(development

The( purpose( of( opening( stores( in( second( and( thirdVtier( cities( is( to( satisfy( local( consumption( needs( and( provide( brand( experiences,( as( well( as( to( strengthen( local( customer(service(capacity

L a n d m a r k ( b r a n d s ( l e a d ( t r e n d s( whereas( the( “cluster( effect“( is( common( among( luxury( brands( that(follow(the(leading(trend

017


Shanghai:( Dalian:(

Beijing:! Hangzhou:(

Guangzhou:(

Shenyang:(

Shenzhen:(

Chengdu:(

018


Suzhou:

Harbin:

Kunming:

Chongqing:(

Tianjin:( Nanjing:!

Qingdao:(

Taiyuan:!

019


Wuxi:( Ningbo:(

Urumqi:( Changsha:( Xi’an:(

!!!!!

Xiamen:

Sanya: (

Wuhan:( Changchun:(

!

Zhengzhou:( Wenzhou:(

J i n a n: !

!

020


Section(Two:( Urban(development(for(different(categories( of(luxury(goods 1.(Fashion(brands

0"#"20""""""less"#"saturated 20"#"50""""modest"#"saturated 50"#100"""saturated 100"#"+""""highly"#"saturated

021


2.(Watch(and(jewelry(brands

0"#"20""""""less"#"saturated 20"#"50""""modest"#"saturated 50"#"100""saturated 100"#"+""""highly"#"saturated

022


3.(Luxury(car(brands

!

0"#"20""""""less"#"saturated 20"#"50""""modest"#"saturated 50"#"100""saturated 100"#"+""""highly"#"saturated

023


024


4.(Yacht(industry

0"#"20""""""less"#"saturated 20"#"50""""modest"#"saturated 50"#"100""saturated 100"#"+""""highly"#"saturated

025


026


Section(Three:( Decrease(of(sales(for(international(luxury(brands( in(2/3(V(tier(cities

Troubles(with(penetrating(brand(recognition

Troubles(with(expanding(consumer(trust

Troubles(with(enhancing(brand(impact

027


Troubles(with(strengthening(sales(channel

!!!!!!!!

Troubles(with(maintaining(brand(service

Troubles(with(reinforcing(communication(channels

028


029


Chapter Three

Luxury Lifestyle in China

030


Section(One:( Characteristics(of(the(wealthy( population(in(China The(wealthy(Chinese(population(are(creating(positive(impacts !

China(Has(a(Wealthy(Population(of(1.4(Million(

Wealthy(Population(in(China(are( Younger,(Primarily(35(to(45(Years(Old

1.4+Million

with+assets+over+

10+million+RMB

0.08+Million

with+assets+over+

100+million+RMB

High+net+worth+individuals+ with+assets+over+100+million+ RMB+are+over+0.08+million+

High+net+worth+individuals+with+ assets+over+10+million+RMB+ have+reached+1.4+million

MaleVDominated Female

25.4%

Male

74.6%

031

18%

Above+55

35%

45.55+yo

40%

35.45+yo

7%

20.35+yo


Dominated(by(males

Relatively(younger(in(age

“Family(fortune�(trait

Bucking(the(geographical(concentration

032


Outflow(of(Chinese(Fortune

67%

14%

67%$of$Chinese$billion/ aires$own$overseas$assets$ or$have$family$members$ holding$foreign$passports$

14%$of$Chinese$wealthy$ own$assets$overseas$or$ have$family$members$ holding$foreign$passports

Priority(given(to(personal(consumption,(with(more(focus(on(lifestyle(quality

033


Consumption(of(the(Wealthy(Chinese(Population(are(Mainly( on(Luxury(Goods(and(Children’s(Education

35%

35%

30%

26%

25%

18%

20%

17%

Luxury&Consumption

15%

4%

10% 5%

Children’s&Education&&&&&& Healthcare Vacation Other

0%

Luxury& Children’s& Consumption Education

Healthcare Vacation

Other

Whether(Rich(Chinese(are(Considering(

Their(Major(Reasons(for(Buying(Real(Estates(

Buying(Real(Estates(Overseas

Overseas(are(Children's(Education

Other Immigration

Undetermined

21%

12%

2%

Considering

67%

Investment

15% Not+Considering

Children’s+ Education

51%

12% Vacation

20%

034


Section(Two:( Consumption(trends(of(Chinese(wealthy

1.( With( the( temporary( setback( of( consumer( confidence( on( luxury(products,(future(demand(remains(inelastic

The(Richer(the(Consumer(is, the(Firmer(the(Demand(for(Luxury(Consumption(Becomes

Unit0RMB

43%

Over0100 million

38%

50090100 million 1009050 million

25%

29%

23%

32%

20%

23% 18%

3% 16%

30% Increase

Less0than010 million

23%

21%

Flat Uncertain

37%

Decrease 0% 10%

035

19%

20%

30%

40%

50%

60%

70%

80%

90%

100%


036


2.(Luxury(consumption(desire(curve(surfacing,(lowVasset(crowd( have(strong(consumption(desires

!

.

Willingness$to$Spend

Male General Female

RMB$10$Million

037

RMB$50$Million

Individual$Assets


Over(Half(of(Consumers(Spend(Less(Than(20%(

The(Less(Assets(the(Consumer(Owns,(the(

Annual(Spending(on(Luxury(Goods

Much(He(Spends(on(Luxury(Goods

Below 10% 40% 35% 30%

Unit&RMB

25%

25%

Over&100M

24%

45%

25% 6%

50&*&100M

23%

43%

29% 5%

10&*&50M

22%

42%

33% 3%

20% 15%

Above 50%

4%

33%

10% 5% 0%

10%()(20%

Below&10% Less&than&10M

25%

37%

36% 2%

10%&*&20% 20%&*&50%

38%

0%

20%

40%

60%

80%

100%

Above&50%

20%()(50%

038


3.(Luxury(consumption(are(becoming(popular(with(participation( of(mass(consumers

The(Most(Expensive(Luxury(Goods(Purchased(by(Chinese(are(Mainly( Less(Than(0.5(Million(RMB Top(3(Categories(are:(Watches,(Cars(,(Bags&Luggages Unit$RMB Less$than 0.5M

53% 19%

0.5$1$1M

16%

1$1$2M

More$than 10M

3%

Yachts

1%

Artworks

7%

2$1$5M

5$1$10M

Jets

1%

12% Handbags

Luxury Cars

22%

16%

2% Jewelries

13%

Luxury Watches$

35%

039


Top(3(Categories(of(the(Most(Expensive(Luxury(Goods(Purchased(by(HighV Asset(Class(Consumers(are:(Luxury(Cars,Luxury(Watches(and(Artworks

Artworks

6%

10% 9% 8%

Handbags

23%

8%

Jewelry& Accessories

15%

35%

19% 31%

Luxury Watches

35%

Luxury Cars

9%

Yachts

11%

38% 38%

3% Over?50?million?RMB

Private Jets

2%

10?G?50?million?RMB Less?than?10?million?RMB

4.(Luxury(consumption(deflected(abroad,(primary(composed(by( future(cultural(experience(and(overseas(brand(sales

040


Average'Consumers Cheaper'than mainland'China Sales'through'tour'guide Quality'guarenteed Wider'range'of'style

35%

Wealthy'Consumers

3% 21%

17%

20%

19%

17%

Souvenir'from'business'trip or'traveling

6% 5%

15%

Long:term'living'abroad For'the'personalized'service'& experience

8%

2%

32%

1)( With( the( shift( from( mainland( China( to( overseas,( the( “1+1+1�rule( of( luxury(consumption(is(being(broken

39%(of(Consumers(Who(Bought(Luxury( Goods(Overseas(in(the(Past(12(Months

Shanghai(is(the(Preferred(Mainland City(for(Chinese(Luxury(Consumers

49%

041


Higher(Asset(Groups(Have(a(Higher(Tendency(of(Buying(Luxury( Goods(Overseas

Over'100'million RMB

27%

26%

47%

50'<'100'million RMB

31%

24%

45%

10'<'50'million RMB

40%

Less'than'10'million RMB

44%

0%

10%

28% 25%

32% 31%

20% 30% 40% 50% 60% 70% 80% 90% 100% Mainland'China Hong'Kong'&'Macau Other

2)(Chinese(consumers(prefer(overseas(spending(of(luxury(products(in( brand(stores(and(DFS

042


Average(Asset(Class(Consumers(are(PriceVSensitive(and(Prefer(to(Buy( Luxury(Goods(at(DFS High(Asset(Class(Consumers(Purchase(Top(and(Rare(Goods(in( Overseas(Stores

9% 11%

Mainland'Malls Oversea Storefronts

16% 26%

32%

Duty'Free'Shops

31% Professional Agencies

4% 5%

7%

Other

4%

36%

10%

Events'&'Expos Online

38%

30%

11% 10%

7% 8%

2% 1% 2%

Over'50'million'RMB 10'D'50'million'RMB Less'than'million'RMB

3)(Leather(goods,(watches(and(jewelry(from(luxury(brands(are(primary( targets(for(Chinese(consumers

043


Average(Consumers

Perfumes(& Cosmetics( Leather(Goods Clothing

Watches

Jewelry Others

Wealthy(Consumers

32%

11%

30%

21%

28%

16% 7%

20% 1%

2%

27% 5%

4)(Luxury(consumption(deflected(to(overseas(will(soon(abate

044


Outbound(Chinese(Visitors(Increase(Every(Year(and(Booming(of(Tourism

25%

9000 22.0%

8000

20.4% 18.6%

7000

4000

20%

5738.65

6000 5000

7700

7025

4584.44 11.3%

4095.4

15%

4765.63

11.9%

3452.36

10%

9.6%

3000 2000

5%

4.0%

1000 0

0% 2006

2007

2008

2009

2010

2011

Tourism( and( cultural( experiential( purchasing( will( become( the( main( trend(for(future(overseas(luxury(consumption

045

2012


Main(channel(of(overseas(luxury(consumption(will(be(through(overseas( manufacturers

5.Maturating( of( tastes( for( luxury( brands:( from( purchasing( to( fulfill(other's(needs(to(prioritize(personal(needsZ(from(following( others(to(generating(individual(needs(for(luxury(purchasing

Do(you(love(logo? Billionaires#and#cultured#individuals Usually#over#45#in#age Focus#on#consumption#quality,#like#to#collect#and# invest,especially#in#artwork Focus#on#individuality#and#high#quality#service, Mainly#assets#at#around#billions Have#inGdepth#knowledge#of#brands,#like#limited editions#and#customized#products# Mostly#"60s#and#70s#generation"#millionaires# Value#brand#recognition Have#inGdepth#knowledge#of#luxury#products Like#to#attend#social#events#and#network Spend#a#lot#on#luxury#gifts White#collars#around#25G30 Buy#secondGline#luxury#products#or#fashion#brands,#love# logos Like#to#shop#online Desire#to#be#approved Pursue#fashion#and#luxury Mainly#under#25,#low#spending#power Brand#conscious#and#tend#to#follow#trends Like#to#shop#online Buy#knockGoffs

No#logo

Less#logo

Serious#with logo Love#for#logo

Eager#for#logo

Donâ&#x20AC;&#x2122;t understand logo

Low#income,#priceGsensitve Don't#care#about#brands,#focus#on#product#functions#

046


1)(Shifting(from(purchasing(to(meet(other(purchases(to(purchasing(for( private(usage

Mediaâ&#x20AC;&#x2122;s(View(over(Chinese(Luxury(Consumersâ&#x20AC;&#x2122;(Consumption

2011 Rich,%but%classless Rich,%don't%know%how to%live,but%learning%how%to Rich,%tasteless%but%content Rich,%but%don't%know how%to%live,content Poor%but%pretends to%have%class

2012

46%

48% 24%

27% 10%

8%

6% 10%

5% 6%

Rich%and%know%how%to%live

2%

3%

Rich%and%tasteful

2%

3%

047


Media(Thinks(the(Value(of(Luxury(Goods(to(Wealthy(Population( is(Mainly(Statement(of(Status(and(Improvement(of(Life(Quality

30%

28%

30%

25%

22%

20%

16%

Status&Symbol

15%

Improving&Quality&of&&Life

10%

4%

5%

Retain&and&Increase&Value Hobbies&&&Interest Other

0% Status&Symbol

Improving& Quality& of&Life

Retain&and& Increase& Value

Hobbies &&Interest

Other

2)(From(following(consumption(trends(to(forming(individuality(in(consumption

048


The(Higher(the(Asset(Group,(The(Easier(to(Be(Influenced(by(Sales( Personnel,(and(the(More(Enthusiastic(for(Limited(Editions(and( Customized(Products

50%

48%

45% Less(than(10(million(RMB(

40% 35%

10(750(million(RMB( Over(50(million(RMB(

32% 28%

30% 25%

20%

20% 17%

20%

16%

15% 10%

6%

5%

25%

9%

9%8%

17% 16%

5%

8% 5% 3%

3% 3% 2%

0% Product(design

Sales(personnel

Limited(editions

Customized

Discount

Environment (

Friendâ&#x20AC;&#x2122;s recommendation

049


3)( Higher( demand( for( customizationZ( wider( range( for( customization( offerings

The(Preference(of(Customized(Products(for(The(Chinese(Wealthy(are:( Clothing,(Jewelry,(Home(Furnishing(and(HighVend(Gifts Billionaires(Have(Their(Entire(Lifestyle(Customized

... High; end recreations Travel Luxury real estate Private jets Luxury yachts Luxury cars

Luxury cars

Watches

Watches

Leather goods

Leather goods

Leather goods

High;end gifts

High;end gifts

High;end gifts

High;end gifts

Home furnishing

Home furnishing

Home furnishing

Home furnishing

Jewelry

Jewelry

Jewelry

Jewelry

Clothing

Clothing

Clothing

Clothing

Less than 10 million RMB

10;50 million RMB

50;100 million RMB

Over 100 million RMB

050


051


6.( Social( functions( of( luxury( products( being( highlightedZ( Wealthy( Chinese( tend( to( collect( luxury( goods( with( value( for( investment

Wealthy(Chinese(Population(Prefers(Luxury(Goods(with(Collecting(and( Investing(Values(

70% 60%

61% 51%

50%

46% 42%

40% 30%

29%

26%

25%

20% 10%

9% 6% 5%

12% 13% 8%

2%

3%

20% 16% 17% 5%

4%

0% Less-than-10-million Personal-use-

10-6-50-million Business-gifts

Hobbies

50-6-100-million Retain&incresase-value

Over-100-million Other

052


High(Asset(Luxury(Consumers(Tend(to(Have(Luxury(Watches,( Jewelries(and(Artworks(for(Business(gifting

26%

25%

23%

23%

20% 17%

16%

15%

12% 9%

Cigarettes) &)Liquor))

22%

15%

13% 11%

10% 8%

Handbags

9% 7%

Watches

Jewelry

Cosmetics) &)Perfume)

8% 6%

5%

Clothing

Artwork

Top)3)under)10)million)RMB:)perfume)&)cosmetics,)handbags),)cigarette)&)liquor Top)3)10)I)50)million)RMB:)watches,)perfume)&)cosmetics),)handbags Top)3)over)50)million)RMB:)watches,)jewelry),artwork

053


Top(3(InvestmentVworthy(Luxury(Goods(in(the(Eyes(of(Chinese(Wealthy:( Real(Estate,(Artworks(and(Precious(Metals

Antiques

4%

Precious Metals&

15% Real&Estate

Luxury&products&

7%

Other

40%

15%

Diamonds

6% Artwork

26%

Stock&&&Bonds 1% Other 1%

054


Top(3(Luxury(Goods(that(Retain(the(Most(Values(to(Chinese( Consumers:(Watches,(Luxury(Cars(and(Jewelries

34%

Watches

Luxury-Cars

19%

Jewelry

17%

Leather Goods-

Fine-Wine

Yachts

Other

055

11%

4% 3%

12%


Consumers(from(Different(Asset(Classes(Have(Different(Views(over(Luxury( Goods(that(Retain(the(Most(Value(

32% 27%

26%

22%

21% 21% 16% 13% 11%

11%

13%

15%

Luxury$Cars

15%

11% 6% 3% 4% Jewelry$

Leather$Goods$

12%

10%

8%

6% 5%

Watches

24%

Real$Estate

7% 7% 5% 4% 3% Fine$Wine

Yacht

13% 10% 11% 8%

Other

Top$3$under$10$million$RMB:$leather$goods,jewelry$,$watches Top$3$10$>$50$million$RMB:$$jewelry,$leather$goods$,$watches Top$3$50$>$100$million$RMB:$watches,$jewelry$,$leather$goods Top$3$Over$100$million$RMB:$real$estate,watches$,$luxury$cars$

056


057


!

058


Lack( of( development( of( domestic( perfumes(and(cosmetic(brands

059


Main(reasons:

060


061


Future( trends( in( the( art( market( here(include:

062


Chapter Four

Distribution Channels of Luxury Brands in China

063


Section(One:(EVluxury(market(in(China

1.(Main(characteristics(of(Chinese(consumers(who(shop(luxuries(online 1)( Online( shopping( attitude:( most( consumers( hold( a( positive( view( regarding(online(shopping(for(luxury(products

Chinese(Consumers(Hold(a(Relatively(Positive(View(over(Online(Luxury(Shopping

Completely) confident)

2% Fairly confident)

10%

Will)not) shop)online)

33% Willing)to)try)

55%

064


Comparing( to( Male( Consumers,( Female( Consumers( are( More( Inclined( to( Purchase(Luxury(Goods(Online

2% 8%

1% 7%

Completely)confident Fairly)confident

53%

44%

Will)not)shop)online

48% 37% Female

065

Willing)to)try

Male


The(Higher(the(Consumersâ&#x20AC;&#x2122;(Educational(Backgrounds(are,(the(More(Inclined( They(are(to(Purchase(Luxury(Goods(Online

55%

54%

43%

Below&Undergraduate

41%

Undergraduate& Graduate&(MBA,&EMBA,&Ph.D)&

33% 25%

13% 10% 8% 4% Will&not&shop&online

Willing&to&try

Fairly&confident

6% 8%

Completely&confident

Consumers( in( TierV1( Cities( are( More( Inclined( to( Purchase( Luxury( Goods( Online(than(Those(in(Tier(2/3(Cities Will$not$shop$online Willing$to$try Fairly$confident$ Completely$confident$

Tier$1$Cities

52%

34%

26%

Tier$2$/$3$Cities

0%

10%

49%

20%

30%

40%

50%

8% 6%

16%

60%

70%

80%

9%

90%

100%

066


Consumers( Born( After( the( 80â&#x20AC;&#x2122;s( are( More( Inclined( to( Purchase( Luxury(

The( HigherVAsset( Consumers( are( Less( Inclined(to(Purchase(Luxury(Goods(Online

Goods(Online 100%

7%

6%

90% 80%

23%

19%

5%

4%

15%

12%

100%

8% 90% 80%

70%

43%

13%

48%

2% 11%

55%

40%

45%

56%

50%

30%

58%

30%

20%

0%

14%

60%

41%

50%

10%

4%

70%

38%

60%

40%

18%

5%

32%

39%

46%

15% 30$yo

40$yo

50$yo

50$and$above

Will$not$shop$online Willing$to$try Fairly$confident$ Completely$confident$

20% 10% 0%

35% 16% 10M$and below$

! 2)(Advantages(of(online(shopping:(most(important(benefit(is(convenience

067

42%

25% 10$E$50M 50$E$100M 100$and$above

Will$not$shop$online Willing$to$try Fairly$confident$ Completely$confident$


Consumers(Highlight(Time(Efficiency(When(Shop(Luxury(Goods(Online

Time%Efficiency

24.7% 20.4%

Cheap%Price Deliver Straight%to Door

17.2% 16.1%

Variety Guaranteed Quality

11.8%

Instant Availability%of New%Product

7.5% 2.3%

Others

Male( Online( Luxury( Consumers( Concern( about( Efficiency( Whereas( Female( Consumers(Pay(More(Attention(to(Prices

34% 31% 28% Female

Male

22% 19% 15% 12% 11%

9% 8%

7% 3%

Cheap&Price

Deliver&Straight& to&Door

Variety

Time&Efficiency

Guaranteed& Quality

Instant&Availability of&New& Products&

3%

1%

Others

068


Online( Luxury( Consumers( Born( after( the( 80â&#x20AC;&#x2122;s( are( More( Concerned( with( Product(Variety(and(Prices

51,and above

4%

29%

13%

8%

41,-,50,yo

38%

21,-,30,yo

10%

20%

Cheap,,Price Time,Efficiency Others

31%

26%

30%

40%

4% 8% 4%

35%

12%

12%

19% 0%

8%

29%

10%

31,-,40,yo

38%

15% 50%

Deliver, Straight,to,Door Guaranteed,Quality

60%

11% 70%

80%

3% 5%

3%

10% 6%

2%

14%

3%

90%

100%

Variety Instant,,Availability,of,,New,Products

Online( Luxury( Consumers( in( Tier( 2/3( Cities( are( More( Concerned( with( Efficiency(Whereas(Those(in(Tier(1(Cities(Pay(More(Attention(to(Prices

45%

43%

40%

37%

Tier-1-cities

Tier-2/3- cities

35% 30%

28%

26%

25%

18%

20%

14%

15%

8%

10%

8% 6%

5%

2%

4% 3%

0% Cheap-Price Deliver-Straight to-Door-

069

Variety

TimeEfficiency

2% 1%

GuaranteedInstantOthers Quality Availabilityof-New-Products


1% 6% 11% 23%

19% 18% 22% 10M$and$below

2%

4%

3%

7% 4%

9% 5%

10% 2%

37%

42%

Others

29%

16% 10$-$50M

Guaranteed$Quality Time$Efficiency

18%

24%

Instant$Availability$of$New Products$

10%

8%

Variety

25%

26%

Deliver$Straight$to$Door

10%

9%

50$-$100M

Cheap$Price Unitďź&#x161;RMB

100M$and$above

3)( Authenticity( is( the( main( concern( of( Chinese( consumers( buying( luxury(products(online

070


TOP(3(Concerns(of((Online(Luxury(Consumers:( Product((Authenticity,(Product(Quality,(AfterVsales(Service Return( Policy

6.7%

Others

0.1%

After(4(sales Service

10.1% Payment( Security

Product( Authenticity(

9.0%

48.3%

Product( Quality

25.8%

Male(Online(Consumers(are(More(Concerned(with(Product(Authenticity( than(Female

38%

Product Authenticity

23% 21%

Product Quality

17% 18%

Payment Security

Female

After*3*sales Service

10% 6% 7%

Return*Policy

Others

071

43%

2% 1%

14%

Male


Elder(Online(Luxury(Consumers(are(More(Concerned(about(Product(Authenticity

Product Authenticity

31%

35%

31% 30% 28% 27%

Product Quality 12% 13%

Payment Security 6%

After*3*sales Service

51*and*above 16% 17%

41*3*50*yo 31*3*40*yo

8% 9% 10%

6% 7%

Return*Policy

Others

43% 41%

9%

21*3*30*yo

11%

2% 1% 3% 4%

The(Higher(the(Net(Worth(of(Online(Luxury(Consumers,(the(More( Concerns(There(are(for(Product(Authenticity

3% 16% 11% 10% 24%

2%

1%

1%

9%

8%

6%

15%

16%

17%

5%

4%

28%

29%

9%

27%

Others Return$Policy After$-$sales Service Payment$Security$

36%

38%

42%

43%

Product$Quality Product$Authenticity$ Unitďź&#x161;RMB

10M$and$below

10$-$50M

50$-$100M

100M$and$above

072


2.(Issues(with(eVluxury(market(in(China

The(Pressures(to(Local(EVLuxury(Companies((Unit:(Point)

Unstable)resource

3.3% 3.5

3

3 2.5

Difficulty)with)capital)raising

2

1.8%

1.5

Lack)in)customer)feedback) and)poor)after5sales)service

3.1%

1 0

2.1%

2.8%

High)promotion)expenses

Inefficient)logistics

2.5% Low)customer)loyalty

073


1)(Hard(to(maintain(a(steady(supply(of(goods

Main%Methods

Approach

1.%Regular%purchase

Purchase%directly%from%the%brand

2.%Procurement%of leftover%inventory

Procure%leftover%inventory%directly%from%the brand%or%purchase%discounted%or%past=season models%from%resellers

3.%Smuggling

Illegally%taking%goods%from%OEM%factories

4.%Pass%as%genuine

Misrepresenting%fake%goods%as%authentic%and overcharging

5.%Joint%development

E=commerce%vendors%jointly%develop%products with%a%brand

2)(Lack(of(customer(experiences(and(afterVsales(services

074


3)(Lacking(of(customer(loyalty

5)(High(operational(costs

4)( Lacking( of( premium( logistics( services

075


Section(Two:( SecondVhand(luxury(market(in(China

1.(Three(trends(in(2012(of(the(secondVhand(luxury(market(in(China 1)(Continuous(expansion(of(market(capacity

600

Number1of1Stores

Growth1rate

568

512 500

16%

466

14%

425 400

10.2%

9.6%

18%

9.9%

10.9%

12% 10%

300 8% 200

6% 4%

100 2% 0

2009

2010

2011

2012

0%

076


2)( More( diversified( products( with( investment( value( are( becoming( increasingly(critical

The$most$popular$luxury brands$in$second$5$hand luxury$market

y

Top(3(Products(in(SecondVhand( Luxury(Market:(

Others

3%

Apparel

Leather(Goods,(Apparel(and(Watches

30%

Leather Goods

36%

Jewelry

12%

Watches

19%

3)(Top(niche(brands(are(encountering(a(chilly(reception(in(the(secondV hand(market

077


2.(Four(characteristics(of(the(secondVhand(luxury(market(consumers 1)(Youth(generationV(mainly(composed(of(“the(postV(80s”

21V30(Years(Old(are(the(Main(Consumers(of(the(SecondVhand(Luxury(Goods

50%

46%

Sold

Bought

45%

43%

40% 35% 30%

27%

25% 20% 15% 10%

21%

14% 13%

14% 13%

5%

5% 4%

0% 20(and(below

211 30(yo

31 1 40(yo

411 50(yo

51(and(above

2)(Consumers(who(are(“rich(aspirants”

078


Assets(are(the(Key(Factor(that(Affects(SecondVhand(Luxury(Goods( Transactions: Consumers(with(Assets(from(RMB(10M(to(50M(are(the(Active(Group(for( SecondVhand(Luxury(Goods(Purchasing(

Bought

Sold

Unit:RMB 10M$and below

37%

39%

10-50M

50$-$100M

10%

100-500M

7%

500M$and above

44%

41%

3%

10%

6%

3%

3)(Consumers(with(a(bachelorâ&#x20AC;&#x2122;s(degree(are(more(willing(to(buy(secondV hand(luxury(products

079


Consumers(with(Undergraduate(Degree(are(the(Most(Willing(for(SecondV hand(luxury(Goods(Purchasing

Below&undergraduate

Undergraduate

Graduate(Master/MBA/EMBA)

Bought

16%

43%

41%

Sold

17%

45%

38%

4)(SecondVhand(luxury(market(is(mainly(composed(of(female(consumers

Male

33% Bought Female

67% Male

29% Sold

Women are the most willing to transact in the second2 hand luxury goods market, they are the major consum2 ers of scarves, accesso2 ries, handbags, backpacks, etc.; Male consumers on the other hand, mostly purchase upscale station2 ery, lighters, small leather goods, briefcases, travel bags and small accesso2 ries. 21230 year olds mainly comprise this market.

Female1

71%

080


3.(Developing(trends(of(secondVhand(luxury(market(in(China

1)(From(“dealers”(to(“service(providers”

2)(Increasing(brand(innovation

3)(Integration(of(online(and(offline(channels

Others

4.5%

Online&shop

19.3% Brick&and&Mortar

76.2%

081


4)(Authentication(and(appraisal(of(

5)( FirstVtier( cities( have( the( highest(

luxury(products(will(become(more(

demand( for( secondVhand( luxury(

standardized

trading

The(Prosperity(of(SecondVHand(Luxury(Market(is(Correlated(to( Economic(Development(of(the(Region

Willingness7to7buy

Willingness7to7sell7

19%

Beijing

18% 37%

Shanghai

33%

13%

Eastern7China

16%

14%

South7China

11%

10%

West7China

13% 7%

5%

Northeast7China North7China

1%

1%

Cental7China

1%

1%

082


Reasons(include:

083


Section(Three:( Chinaâ&#x20AC;&#x2122;s(outlet(market

Well$known) Luxury)Brands

Converges)well$known)luxury)brands) that)are)high$grade)and)excellent)in)quality

Discounted)Price

Authentic)products)at)40$90%)off

Shopping) Environment

Away)from)the)city,)has)convenient)public)transportation) and)has)a)comfortable)shopping)environment.

1.(The(current(status(of(Chinaâ&#x20AC;&#x2122;s(outlets Development(speed(VVVVV(surpassing(US(in(10(years

084


Country

Scale (Unit:Store)

Development Time

Average9Annual9Outlet 9Growth (Unit:Store/Year)

424

10 years

42

300

100 years

3

China

US

Market(positioning(VVVVV(primarily(mid(to(lowVendZ(limited(highVend(outlets

Overflow(of(Domestic(Outlets(with(Lack(of(HighVEnd(Outlets

Low%&%end

45% High%&%end

25%

Middle%&%end

30%

085


Business(situation(VVV(“collapsing”(and(“expanding”(at(the(same(time

Closed'down'

7% On'construction

21% Existing

72%

Business(capacity(VVVVVranging(from(10,000(to(50,000(square(meters

086


10,000$sq.m$and below

4% 100,000$sq.m$and above

19%

10,000$0$50,000 sq.m$

48% 50,000$0$100,000 sq.m

29%

Operational( model( VVVVV( department( store,( real( estate( developer,( and( outlets(are(â&#x20AC;&#x153;the(three(tripartiteâ&#x20AC;?

Department'Stores'

32% Real'Estate'Businesses''

29% Outlets

27% Others''

12%

087


Main(Products(Sold(at(Shanghai(Qingpu(Outlet(and(Beijing(Yansha(are(Clothing

Shanghai(Qingpu

Beijing(Yansha

%

Clothing

Gift(items

Bags

Shoes(& Hats

Childrenâ&#x20AC;&#x2122;s apparel(& supplies

Dining

Bedclothes

Culture(/(Sports(/(Tech

Product(focus(VVVVV(mostly(apparels(but(product(categories(are(enriching

088


Storefront( brands( VVVVV( mainly( composed( of( fashion( brands( with( insufficient(luxury(brands

International(Luxury(Brands(Have(Low(Occupancy(Rates(in(Outlets(

Other(Brands 100% 90%

83%

80%

17%(

20%

80%

Luxury(Brands

85%

88%

15%

12%

70% 60% 50% 40% 30% 20% 10% 0% Shanghai(Qingpu Beijing(Yansha Tianjin(FlorentiaVillage( Beijing(Scitech

089


Beijing(Scitech(â&#x20AC;&#x201C;(Mostly(Fashion(Brands( Tianjin(Florentia(Village(â&#x20AC;&#x201C;(Mostly(Domestic(Brands 45

42

Tianjin/Florentia/Village

40 Beijing/Scitech 35

29

30 25 20

28

26 22

23

22 21

19

21 14

15

10

10

10

14

6

5

5 1

0 Luxury/ Brand

Women's/ Apparel

Men's/ Apparel

Sports/&/ Leisure

Home/ Children's/ Furnishing Clothes &/Underwear/ &/Toys/

Leather/ Shoes/& Bags/

Make/K/up

Others

2.(Problems(of(outlets 1)(Absence(of(top(luxury(brands

2)(Difficulty(in(maintaining(stable(supply

090


3)(Concerns(about(complementary(accommodations

4)(Varied(in(quality(with(frequent(occurrences(of(damaged(and(shoddy( products(replacing(good(ones

5)(High(operation(costs

6)(Inadequate(afterVsales(services

091


3.(The(development(of(outlet(markets(in(China Development(speed(VVVV(continuously(fast(growth

092


093


Chapter Five

Promotion of Luxury Brands in China

094


Types(of(Media(that(Participated(in(the(Survey 2% 5%

Broadcasting

6% 15%

Other.New. 10% Media New.Media

17%

Mobile. Media

Traditional Media

23%

83%

TV Outdoor Advertisement Internet

7%

Newspaper 32%

Magazine

Section(One:( Media(supports(to(luxury(brands(in(China 1.(The(resource(for(Chinese(consumers(to(obtain(luxury(product(information 1)(Traditional(channels(are(still(critical Friend(referral(shares(similar(importance(as(advertisements

095


Product#Brochure

Others

7%

3%

PR#Events

17%

Store

13% Media# Advertisements

30%

Friends

30%

Storefront(as(the(main(information(resource

HighVasset(Class(Consumers(Prefer(to(Get(Information(about(Luxury( Goods(from(Product(Brochures Magazine Unitďź&#x161;RMB

Internet

Product$Brochure

TV

Outdoor$Advertisement

35%

30%

9%

10$2$50M

43%

18%

17%

50$2100M

44%

10%

45%

7%

10M$and$below

100M$and$above

24%

27%

9%

Newspaper

10% 7%

7%

9%

6%

7%

9%

6%

5% 10% 6%

Consumers$with$assets$less$than$RMB$10M$prefer$to$receive$luxury$ information$from$magazines,$internet$and$outdoor$advertisements.$ Those$with$RMB$100M$and$above$on$the$other$hand,$favor$high$2$end$ magazines,$products$brochures$and$use$less$of$the$internet.$

096


Magazines(and(product(brochures(are(highly(popular

The(PostV80s(Generation(Consumers(Prefer(Online(Channels( Consumers(over(50(Prefer(Product(Brochures 45%

41%

38%

35%

34%

33%

21% 17% 15%

16% 13%

8%

8%

7%

9%

7%

5%

30#and#below TV

6%

30,40#yo Magazine

8% 9%

40,50#yo

Newspaper

Outdoor#Advertisement

10% 9%

6%

3% 50#and#above

Internet

Product#Brochure

Male(Consumers(Prefer(to(Receive(Luxury((Information(from(Magazines( Whereas(Female(Consumers(Prefer(Online(Sources Male

40%

Magazine

36% 18%

Product8Brochure

15% 18%

Internet

TV

Outdoor8 Advertisements

Newspaper

097

Female

8%

7% 7% 6%

9%

11%

25%


Internet(is(helping(viral(marketing

42%

E3A3commerce platform

10% 23%

20%

5%

Magazine TV

! Social networks

5%

12%

Search engines

5%

Newspaper Outdoor3Advertisement

13%

Brand website

65%

Product3Brochure Online

2)(The(spotlight(of(social(media Independent(media(are(becoming(opinion(leaders

098


Fast(growth(in(social(media(applications

From(passive(information(reception(to( proactive(attention(to(personal(creation

The(era(of(personalized(consumption( has(arrived

Luxury(media(becomes(popularized

099


2.(The(current(situation(of(luxury(brandsâ&#x20AC;&#x2122;(investment(on(Chinese(media 1)( Main( promotional( efforts( of( luxury( brands( in( China( are( through( advertisements,(supplemented(by(PR(events(in(China

Advertising( and( PR( Events( are( Two( Major( Marketing(Approaches( for( International(Luxury(Brands Advertising 45% 40%

45%

35% 30% 25% 20%

Others

15%

34%

10%

5%

PR4Events

5% 0%

7%

Event4Marketing

9%

Database4Marketing

2)( Main( media( types( that( luxury( brands( invest( in:( magazines,( internet( and(radio

100


Broadcasting

18%

Magazine

25%

Internet

20%

Newspaper

12%

Outdoor2 Advertisement

Mobile2Media2

4%

TV

15%

6%

3)(Inconsistent(of(media(placement(of(luxury(brands

34%(Luxury(Brands(Set(Media(Placements(Every(6(Months 34%$Luxury$Brands$Set$Media$Placements$Every$6$Months 1(Month 40% 35% 30% 25% 20% 15%

3(Months

10%

10%

5%

23%

5% 0%

28% 6(Months

101

34% 1(Year

Uncertain


4)( Factors( affecting( choice( of( media( for( luxury( brands:( focusing( on( target(audience(quality(and(content(positioning

Luxury(Brands(Select(Media(Based(On:( Readers'(Quality,(Content(Positioning(and(Capability(of((PR(Events

Readers')Quality

34%

Content) Positioning

27%

Capability)of)PR Events

13%

Circulation

11%

Readers')Stickiness Advertising Environment Interview)Capacity

6% 5% 4%

102


3 . ( Tr e n d ( a n a l y s i s ( f o r ( m e d i a( placements(of(luxury(brand(in(2013 1)(Shifting(to(popular(media

Fashion( magazines( equal( highV end(magazines

A(magazine(with(highVprofile(contents( means(it(is(a(highVend(magazine

2)(Media(budget(shifting(to(second( and(thirdVtier(cities

103


4.( 2013( Outlook:(Luxury( brandsâ&#x20AC;&#x2122;( Advertisement(Budget(in(China

Uncertain

42%

Decrease

26%

Increase(

32%

104


Section(Two:( PR(events(for(luxury(brands(in(China 1.(Reasons(why(Chinese(consumers(participate(in(luxury(brand( PR(events

TOP( 3( Reasons( For( Consumers( to( Participate( in( PR( Events:( Social( Networking,(Business(Purposes,(Recreation Networking 30%

30%

25% 20%

Service4and4Souvenirs

Business4Purposes

15%

28% 10%

1%

5% 0%

8% 19%

Organizers4are4Well EConnected

Recreation

14%

! Broaden4Horizons4& Experience4New4Things4

105


impulse(purchases

2.( The( current( situation( of(luxury( brandsâ&#x20AC;&#x2122;(PR(events(in(China 1)(Reasons(for(luxury(brandsâ&#x20AC;&#x2122;(PR(events

106


2)(Most(common(formats(for(PR(events(for(luxury(brands(in(China

Consumers

Brands( Private(Event( 22%

Experiential(Event 31% Networking(Event( 24%

New(Product(Launch 20% Sale 15%

New(Product(Launch( 20%

Charity(Event 14%

Sale( 11% Charity(Event( 6%

Experiential(Event 12% Networking(Event 8%

Grand(Event( 5%

Grand(Event 6%

Private(Event( (2%

Finance(&(Economics(Forum( 3%

Finance(&(Economics(Forum( 1%

3)(Formats(of(luxury(brandsâ&#x20AC;&#x2122;(PR(events(in(China

Independently'Host

13%

Co')'host'with' Other'Brands'

22%

107

Sponsor'or' Co')'sponsor

65%


Analysis(

3.(Value(analysis(of(PR(events(to(luxury(brands

Value#Analysis#of#PR#Activities#Held#by#Luxury#Brand PR#Activity#Type

Advantage Good#for#promoting#brand

Forum#and#Lecture

and#service#to#lower?level customers Good#for#promoting#brand

Banquet

and#service#to#old customers

Disadvantage Limited#to#kind#of customer#as#it's#not suitable#for#selling#and

selling#brand#and#service#to

ones No#sales#at#actual event

Sales#Activity

Best#combination#of branding#and#marketing Only#suitable#for#sales

Large#number#of#participantsE generally#has#a#specific#theme#and is#usually#sponsored#by#watch#brands

brands Moderate#number#of#participantsE Limited#capacity

old#customers Experiential#Activity

Large#number#of#participants

servicing#high?end#ones

Good#for#marketing#and Cocktail#Party

Notes

relaxed#environment#(conference is#the#most#widely#used#form)

High#in#cost

Very#limited

Has#a#lot#of#space#and#environment requirements Usually#conducted#in?store promotions

108


1)(Brand(Promotion

2)(Product(Sales

3)(Customer(Service

advertisements

109


4.( 2013( outlook:(Luxury(Brandsâ&#x20AC;&#x2122;( PR(Budget(in(China

Decrease Don't(Know(Yet

17%

Unbiased

32%

host(their(own(events(at(a(lower(cost Increase(

42%

110

9%


Chapter Six

Customer Relationship Management for Luxury Brands in China

111


Section(One:( Chinese(consumers'(brand(loyalty( comparing(to(foreigners

Higher(Asset(Consumers(Have(Higher(Brand(Loyalty

Unit:RMB less%than%10%million 10%@%50%million 50%@%100%million 100%@%500%million Over%500%million

Have%you%bought%over 5%items%from%the%same% luxury%brand?%

3% 17% 21%

28% 32%

112


Female(Luxury(Consumers(are(Less(Loyal(than(Male(Consumers((

90% 74% Female

Male

26% 10%

Have%bought%more%than%5%items%from% the%same%luxury%brand

Have%never%bought%more%than%5%items% from%the%same%luxury%brand

Products)and)brands)that)friends)are using)and)recommending)

Other

40% 35% 30% 25% 20% 15% 10% 5% 6% 0%

45%

22%

27% Products)and)brands)that have)high)media)exposure and)brand)recognition))

113

Products)and)brands)that have)personally)used)and experienced))


Section(Two:( Reasons(for(low(loyalty(among( Chinese(consumers 1.(Cultural(factors

Chinese( Luxury( Consumers( are( Enthusiastic( in( Understanding( and( Experiencing(New(Luxury(Brands(and(Products(

Very$interested More$willing, wouldn't$reject$ $ Occasionally ! interested 15%

57%

27%

Not$interested 1%

114


Have(You(Bought(Over(5(Items(from(the(Same(Luxury(Brands?( Which(Brand?

Clearly&stated&4 brands&

Clearly&stated&1&=&3 brands

46%

21%

Clearly&stated&5 brands

24%

2.(Economic(factors

3.(Service(factors

115

Did&not&fill&out&

9%

Luxury&Brands&with&the& Highest&Rate&of&Repurchase


Over(90%(of(Consumers(are(Satisfied(with(AfterVSales(Services(in(China

Not%Satisfied

7% Very%Satisfied

32%

Mostly%Satisfied

30%

Relatively%Satisfied

31%

Consumers(with(Higher(Assets(are(More(Satisfied(with(the(AfterVSales( Services(from(Luxury(Brands

Very/Satisfied

Unit:/RMB

29%

30%

10/5/50M

13% 10%

28%

30%

15%

31%

42% 40%

50%

60%

70%

3%

4%

34%

35% 20%

Not/Satisfied

26%

36%

50/5/100M

0%

Relatively/Satisfied

56%

Over/100M

Less/than/10M/

Mostly/Satisfied

8%

10% 80%

90%

100%

116


Male(Consumers(are(More(Likely(to(be(Satisfied(than(Female(Consumers((

Female

20%

Very Satisfied

Male

38%

35%

Mostly Satisfied

28%

32%

Relatively Satisfied

26%

13%

Not Satisfied

8%

The("PostV80s"(Have(the(Lowest(Satisfaction(Level(for(AfterVSales( Service(of(Luxury(Brands 5% 23%

4%

3%

20%

19%

32%

33%

Not#Satisfied

39% 37% 30% 33%

Mostly#Satisfied

44%

45% Very#Satisfied

26% 7% 20#$#30#yo

117

30#$#40#yo

Relatively#Satisfied

40#$#50#yo

Above#50


Consumers(in(Tier(2/3(Cities(are(More(Satisfied(with(AfterVSales(Service( from(Luxury(Brands(

60% 50%

Tier-1-cities

51% 45% 38%

40% 30%

25%

20% 10%

Tier-2/3-cities

21% 10%

7%

3%

0% Very-Satisfied

Mostly-Satisfied

Relatively-Satisfied

Not-Satisfied

118


4.(Channel(factors

Over(90%(Consumers(have(Expressed(that(They(Would(Not(Purchase( Luxury(Goods(with(Lots(of(Counterfeits(on(the(Market(

No Will$you$buy luxury$goods with$lots$of counterfeits?$$$

!

Higher(Asset(Consumers(Have(Stronger(Feelings(against(Buying( Luxury(Brand(with(a(Lot(of(Counterfeits(on(the(Market( 100%

80%

89%

85%

90%

93%

77%

70%

Would/not/ buy/ products/ with/a/lot/of/counterfeits

60%

Would/buy/ products/ with/a/lot/of/counterfeits

50% 40% 30%

23% 15%

20%

11%

10%

7%

0% Less/than/10M

10/5/50M

50/5/100M

Over/100M Unit:/RMB

119


Visibility(Ranking(of(Counterfeit(Luxury(Brands

★★★★★ ★★★★ ★★★★ ★★★ ★★★

5.(Advertisement(factors !!!!!!!!!

120


Section(Three:( Main(complaints(among(Chinese(consumers( about(the(services(from(luxury(brands(in(China

After,sales0center 30% 25% 20%

Other

24% 22%

28% Repairment0time

15%

20%

10%

9%

2012 5%

2011

3%

0%

14% 15% Product0&0material information

8% 12%

20% 25%

Service0attitude

Complaint(No.(1:(the(missing(of(discount(sales(seasons !!!

121

Repairment0price


Complaint( No.2:( limited( access( to( maintenance(locations

Complaint(No.(5:(long(maintenance(time

Complaint(No.(8:(unequal(treatment Complaint( No.( 3:( lack( of( product( return(guarantee

Complaint( No.( 6:( incomprehensible( product(description

Complaint(No.(4:(high(and(unbearable( maintenance(costs Complaint(No.(7:(unfulfilled(promises

122


Chapter Seven

A Long Way to Go for Chinese Local Luxury Brands

123


1.(Chinese(consumersâ&#x20AC;&#x2122;(confidence(in(Chinese(local(luxury(brands

48%(Chinese(Consumers(Believe(that(China(can(Bring(Up(Local( Luxury(Brands(

Cannot

52%

Can

48%

124


2011 12%

2012 Unique'mamufacture'skill'and process'

19%

23%

Established'brand'history'and culture'

31%

20% 18%

Large'market

5% 2% 7% 10% 14%

13%

Export'of'international'talent Chinese'university/trained professionals''

8%

Excellent'design'skills

8%

First'/'class'quality

8%

Cultural'influence

5%

2.(Competitive(advantages(for(Chinese(local(luxury(brands

125


!

3.( Opportunities( to( develop( Chinese(local(luxury(brand

126


25%

Jewelry Fashion1& Accessories

22% 18%

White1Spirits

12%

High171end1Tea

8%

Porcelain Perfume1& Cosmetics

5% 4%

Watches Cigarettes Others

2% 4%

1)(Jewelries

2)(Apparels(and(accessories !

127


3)(White(spirits

5)(Porcelains

4)(Tea

128


Most(Potential(Chinese(Luxury(Brands

129


Appendix

130


Appendix(1:( Research(Audience–(3,754(Chinese(Consumers

Assets(Distribution(in(2012(–(China(Luxury(Report((((Unit:RMB)

10&*&50M

33%

Over&50M

35% Under&10M

32%

131

13%

50&*&100M

12%

100&*&500M

10%

Over&500M


Consumers(with(assets(less(than(10(million(RMB( 1% Ph.D%

3% 16%

EMBA

MBA

Master

2% 60% 50% 40% 30% 20% 10% 0%

50% 34% 14% 2% 20B30%yo

30B40%yo

40B50%yo

58%

Above%50

64%

Bachelor

36% Male

Junior% college

49%

Female%

51%

15% Under%junior% college

5%

FirstBtier%cities

SecondBtier%cities

132


Research(targets(V(V(luxury(goods(consumers(owning(high(personal(assets( (RMB(10(million(to(RMB(50(million)

Consumers(with(assets(between(10(V(50(million(RMB(

Ph.D(

1% 7% 11%

EMBA

13% MBA

50%

42%

43%

40% 30% 20%

12% 3%

10% 0% 20 &30(yo

Master

30 &40(yo

47%

40 &50(yo

47%

Above(50

53%

Bachelor Female

29%

Junior(college Male

Under(junior( college

133

15% 6%

71% First&tier(cities

Second&tier(cities


Research(targets(V(V(luxury(goods(consumers(owning(ultraVhigh(personal( assets((RMB(50(million(or(above)

Consumers(with(assets(over(50(million(RMB(

Ph.D%

3% 14%

EMBA

MBA

12% 7%

60% 50% 40% 30% 20% 10% 0%

54% 24% 3% 20B30%yo

Master

19%

38%

30B40%yo

40B50%yo

50%

Above%50

50%

Bachelor Female

Junior%college

Male

16% Under%junior% college

33%

67%

10%

FirstBtier%cities

SecondBtier%cities

Data(Source:Fortune(Character(Group Appendix(4(Characteristics(of(Luxury(Consumers(with(Hyper(Assets

134


Appendix(2:(Research(targets(â&#x20AC;&#x201C;(236(managers(of(Luxury(Brands

Less$than$ Undergraduate Undergraduate

Graduate$ (Masters/MBA/ EMBA/Phd)

12%

75% Male

68%

44% 56%

20% FirstCtier$cities

60%

Female

25%

SecondCtier$cities 60%

52%

51%

50%

50% 40%

31%

40%

32%

30%

30%

17%

20%

20%

10%

Unit:RMB

10%

9%

8%

0%

0% 10M$and$below

10C50$M

50M$and$above

Appendix5(Characteristics(of(236(Brand(Heads

135

20C30$yo

30C40$yo

40C50$yo 50$and$above


Appendix( 3:( Research( targets( â&#x20AC;&#x201C;( 217( directors( of( media( and( advertising(companies

Graduate(Master/MB A/EMBA/Phd)

35%

56% 44% Male

Undergraduate

52%

54%

Female

48%

Less6than6 undergraduate

11% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

First-tier cities

44%

Second- tier cities 60%

36%

49%

50% 40%

20%

20% Unit:RMB

31%

30%

10%

12%

8%

0% 10M6and6below

10B506M

50M6and6above

20B306yo

30B406yo

40B506yo 506and6above

136


Fortune(Character(Group

Fortune(Character(Institute

2013(Fortune(Character(Report(Lists

137


Fortune(Character(Media

138


Yao(Ke(Network(Service((in(building)

Brief(Introductions(about(Founders

139



Fortune Character China Luxury Report 2012