The Mythical "Ideal Golden State" In The Minds Of European Luxury Executives

In "P", "Beijing meets Seattle", Tang Wei's mainland girl is famous for her brand, but has not been respected. Until finally, she gave up the luxury life of "handbag and handbag" and finally found true love.

Chinese people have been looking up and buying crazily in luxury consumption, and now they are becoming smart. This makes international brands have to rethink their strategies in China.

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< p > China is no longer the mysterious "ideal Golden State" in the minds of European luxury executives.

This is exactly the same as other consumer markets in the world.

When there is prosperity, there is also depression.

For these luxury goods companies, it is absolutely necessary to realize that this is a great shame.

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When I attended the opening ceremony of the Louis Weedon flagship store at 66 Heng Long Plaza, Shanghai on 2005, P, I talked with many executives about China's luxury market.

Those CEO are excited by the prospect of the Chinese market: "if you get 1% of the market share here -- just 1%! Can you imagine what this means?" one of the executives said to me, "that means you will get more than 10 million new customers!" < /p >

< p > of course, they want more than 1%.

They want more and more.

Luxury brands flock to China, and brands think of China as an "ideal gold country": a continuous spring flow flows into wealth.

They have opened a dozen shops, and they have rolled out a lot of marketing activities. They are confident enough to persuade Chinese consumers that if a person does not have a few luxuries to show off, he can die.

They will get huge profits - money, money, money, dizzy money!

According to statistics, the annual sales growth of some brands has reached an astonishing 65%.

This figure is a record, and the company's share price has soared.

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< p > so imagine that when the luxury demand of Chinese people no longer maintained this growth rate in the past few years, the brand faces a surprised face.

As a matter of fact, sales growth of some brands has fallen to single digits.

There are two reasons behind this: first, the obvious impact comes from the slowdown in China's economic growth, which is exactly the same as the consequences of the western world economic crisis in 2008.

Luxury goods, no matter where you are, are the same: luxury is after all a luxury, not a necessity.

When people have less money in their hands, sales of luxury goods are bound to dive.

Another reason is that, compared to 10 years ago, Chinese people are becoming smarter and more demanding.

"Chinese consumers want quality, not just brands."

In an interview with the Wall Street journal in 2012, Thomas, CEO of Hermes, said.

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< p > in the face of changes in the Chinese market and China's economy, some brands have been caught unprepared, especially Burberry.

Before that, they made rapid overexpansion in China.

In the autumn of 2012, Burberry issued a notice declaring that Burberry's sales and profits were lower than expected due to the global economic weakness, and the company's share price plummeted.

"Although not all of our peers feel the same, we are certainly not the only ones," Stas Catlett, chief financial officer of Burberry, told reporters in an interview. "Yes, we started to slow down in the Asian market, and yes, the Chinese market is an important reason for it."

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< p > Hermes CEO Thomas believes that Chinese people will increasingly want to buy their own designed luxury goods.

Hermes therefore invested in "up and down" and hoped that "up and down" will become an engine of wealth growth in the future.

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< p > Hermes, a famous French brand with expensive handmade Kelly bags and Birkin bags, they are very cautious when they enter the Chinese market.

Moreover, the original self-restraint is now effective.

At present, the company has only opened 17 boutiques in China - less than half of Louis Weedon and GUCCI, and is 1/3 of Burberry.

Hermes's current plan is to open only eight new stores in China in the next ten years - slow and deliberate.

"We have never and never doubled the growth of new stores like other brands," Thomas said. "Unless you want to become mediocre."

There is no doubt that Hermes has prospered in the Chinese market thanks to prudent and conservative strategy.

"Sales of some luxury brands have been declining," Thomas said. "But we are not."

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At the same time, Hermes is smart enough to see that the future China will no longer be dominated by the luxury brands of "foreign households" in Europe and the United States. P

Thomas and his colleagues believe that the Chinese will increasingly want to buy their own designed luxury goods, sooner or later.

So, in 2008, Hermes became a major shareholder of a new luxury brand in China - "up and down".

The company, called "up and down", has stores in China and abroad, including Paris.

In recent years, "up and down" has been a great success. Hermes plans to catch tens of millions of euros in the next five years.

Thomas said he believed that "up and down" would be profitable before 2017, or earlier.

"We hope that" up and down "will become an engine of wealth growth in the future.

Thomas said.

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Everything in P 2012 reveals the truth that China is no longer the mythical "ideal gold country" in the minds of European luxury executives.

This is a country, a culture, a place that is exactly the same as other consumer markets in the world.

It has a prosperous time and a depression at the same time. It has a desire to come and go, and also has a rapidly changing market direction.

It is absolutely necessary for these luxury companies to realize that this is a great shame. Before that, they saw China as an endless opportunity to make money, March in the arrogant manner of colonialists, and do everything possible to get wealth and less.

Nowadays, their attitudes have become respectful and cautious.

This is good for both sides -- luxury brands and the Chinese market.

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