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Contents


i Introduction ii Infographic 1 iii Article iv Statistics v Infographic 2 vi Conclusion vii Index


Introduction


This is the third booklet in a series of five. It is an insight into how the West has influenced the East in China and identifying the key reigons targeted by luxury brands. The infographics featured within this booklet include a set of maps; one displaying the population density of China and the other, where the millionaires live. Another infographic depicts the sales locations of selected retailers in China.


Population Density of China

Persons per sq mile

0

2.6

26

260

520


Where do Chinese millionaires live?

RMB 1 Billion

Bejing 830

RMB = Renminbi (Currency in China)

Hohhot 20

Xian 30 Erdos 120

Qingdao 50

Wenzhou 180

Chengdu 150 Xiamen 80 Wuhan 60

Dongguan 50 Guangzhou 280 Shenzhen 820


Led by China, New Markets to Continue to Drive Luxury Growth, Says Report The European luxury goods sector will continue to expand over the next five years at 6-7 percent, with the majority of growth driven by consumers from new markets, revealing just how dependent the sector has become on emerging economies. According to an analyst report to be released tomorrow by Mario Ortelli, a senior research analyst at Sanford C. Bernstein, the European luxury goods sector will continue to grow over the next five years at an estimated average of 6-7 percent, about double the rate of GDP growth. It’s not surprising that much of this growth is being driven by consumers from emerging markets, but the numbers in aggregate are staggering, revealing just how dependent the European luxury goods sector has become on these new markets to sustain the heady growth of recent years. According to the Bernstein report, 38 percent of growth is expected to come from emerging markets, notably China, which continues to expand at a double-digit rate. But when

including purchases made by consumers from these markets while travelling (mostly to Europe and North America), the emerging economies of the world account for a staggering 60 percent of all projected European luxury sector growth. However, what about those persistent reports of a slowdown in China? According to Mr Ortelli, sustained Chinese luxury market growth will be fuelled in particular by new customers joining the growing ranks of individuals with the disposable income required to purchase high-end goods, a trend that compensates for the recent decelaration of the country’s overall growth. “Despite the softness of China’s economic growth in the last two quarters of 2012, luxury brands [still] posted incredible results in Europe, due largely to purchases by tourists from Asia.” More than 50 percent of these tourists came from China. Chinese consumers make more than 60 percent of their luxury goods purchases abroad in order to exploit the price differential between China and other countries. “To give you an example,” explained Ortelli, “on a Prada bag


Image: Prada Real Fantasies SS13

a consumer from Beijing saves 40 percent if he buys it in Paris compared to what it would cost him at home.” The vast discrepancy is due to high import duties and taxes in China, but also to luxury brands seeking higher margins. In fact, Ortelli attributed a recent increase in luxury good prices in Europe to precisely that gap between the cost of luxury goods in Asian and European cities, a conclusion backed by the report: “Louis Vuitton has raised its prices in Europe by as much as 8 percent in October 2012 to partially bridge the gap between European and Asian prices. To reduce retaliation risk of domestic European customers, some luxury brands have selectively increased prices on products mainly bought by Asian tourists e.g. male leather bags, small leather goods.” The report goes on to identify Prada and Richemont as set to outperform expectation in part because of their high exposure to emerging markets in Asia.


Overall China accounted for 26 percent of total Tax Free Shopping between April and November 2012. Tax Free Shopping by Chinese global shoppers rose by 58 percent in the third quarter of 2012 (July-September) in comparison to the same period in 2011.

Source: Global Blue


A1 - Aquascutum A2 - Armani B1 - Burberry C1 - Chanel D1 - Dunhill G1 - Gianni Versace G2 - Gieves &Hawkes G3 - Givenchy G4 - Gucci H1 - Hermes L1 - Louis Vuitton P1 - Prada S1 - Salvatore Ferragamo Sales locations of selected luxury retailers in China


Rank

City

A1

A2

B1

C1

D1

G1

G2

G3

G4

H1

L1

P1

S1

1

Shanghai

8

11

4

5

8

2

9

3

5

3

3

3

6

2

Beijing

8

10

9

2

13

4

8

3

6

4

3

3

7

3

Guangzhou

5

3

2

1

2

1

3

2

2

1

3

4

Tianjin

3

1

1

2

2

2

1

1

3

5

Dalian

1

1

2

1

1

1

2

6

Changsha

3

7

Hangzhou

1

3

2

8

Qingdao

2

2

1

9

Suzhou

3

1

2

1

1

10

Shenyang

3

2

3

3

1

11

Wuxi

1

1

12

Nanjin

1

2

1

2

13

Wuhan

3

1

2

3

14

Ningbo

1

1

1

15

Xiamen

3

1

2

1

1

1 1

1 1

3

1

1

2 1

2

2

1

1

3

2

1

1

1

1

2

1

1

1

1

1 1

1

2 1 1 1

1

1 2

1

3

1

1

1 2

1 3

2

1

1

1

1

1

1

1

1

1

1

1

1

1 1


Conclusion


The sales location infographic indicates that the top 3 ranked cities have many luxury retailers with numerous stores within the reigons. From the 4th to the 15th rank however, there is a steady decrease. The two maps are useful for comparison. After identifying the cities with the most people, you can then see if these are the areas where millionaires can be found. This shows why brands target the areas they do and where the consumers live.


Index


Article http://www.businessoffashion. com/2012/08/global-briefingchinese-fashion-brands-lookwest.html Infographic Visual Design Luella Del Basso Infographic 1 Data http://www.kpmg.com/ CN/en/IssuesAndInsights/ ArticlesPublications/ Documents/Global-ReachChina-Luxury-201301.pdf Infographic 2 Data http://www.funggroup.com/ eng/knowledge/research/china_ dis_issue95.pdf Layout Design Luella Del Basso Scans Luella Del Basso


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