PROJECT LUXURY & ART 134
THE LUXURY MARKET
IN ASIA
WE CANNOT THINK ABOUT LUXURY IN ASIA WITHOUT TALKING ABOUT LUXURY OVERALL: A CONCEPT THAT HAS EXISTED THROUGHOUT THE HISTORY OF MANKIND. TODAY, WE EXAMINE THE EXCEPTIONAL GROWTH OF THE LUXURY MARKET IN ASIA. by Francis Gouten
OPENING OF CHINA The exceptional growth of real estate in China brought with it massive construction of shopping malls and an associated flow of corruption. Money was suddenly available to buy everything. Hong Kong was the first market to benefit from mainland Chinese visitors. Price differences existed because of non-uniform taxes between China and the rest of the world (the different level of taxes in China sometimes made the price 30 per cent to 45 per cent higher than in Hong Kong or Europe). Hong Kong was the first shop window in Asia. Consequently, its economy was concentrated on major real estate groups who controlled shopping malls to serve this new clientele. At this time, Hong Kong started offering mega-flagship store space to luxury brands. At that time, if you had a small shop, you were a small brand. However, this would soon change. In those days, in some districts, you could see queues of mainland Chinese in front of luxury shops. The motto was “queue up and shut up”. Many of us present in the early years of the booming Asian luxury market remember those images vividly. It was the era of golden profits for these brands, who started boasting about double digit growth every year. For the landlords, these times meant large increases of rent. Major luxury brands at this time were managed by financial people, although at times these luxury companies beefed up their headquarters with some fairly weak people—each department hired consultants and training companies to justify their existence.
© Ferli Achirulli, estherpoon/123RF
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ntil the 1960s and 1970s, luxury was the exclusive reserve of a very wealthy part of the world’s population. In terms of product, luxury items used to be produced by a family business that specialised in one industry with an exclusive quality of know-how and very few points of sales (e.g. Louis Vuitton, Gucci). This has changed a great deal since the end of the 1980s and has accelerated with the fast development of technology as the world became one single global market. The love for luxury is not something new in Asia. Contrary to the Judeo-Christian culture, wealth and success is popular in Asia—everybody likes it and wants to reach the same goal. In Asia you are what you wear! I arrived in Asia in 1981 to take care of Cartier at a time when there were a few strong markets, such as Hong Kong, Singapore, Taiwan and Japan. China was not yet on the business map! Then suddenly, around 2002, the Chinese market was ready to wake up and open its doors to foreign luxury brands. Cartier and Louis Vuitton were among the first to enter, followed by watch brands, and then fashion and accessories names. This movement was supported by a strong peak in 2008 as the flow of money coming from China accelerated. It certainly was a rush! The Chinese market, which had been closed for so many years, now had a large part of its population who were eager to embrace the world, including its luxury brands. The era of bling bling was beginning.