Wednesday, 9 May 2012

Fact of the Day: Locusts Go Global

Louis Vuitton's latest ad campaign
Luxury conglomerates LVMH, (Louis Vuitton, Givenchy, Dior, Celine, Marc Jacobs, DKNY and Fendi), Richemont (Cartier, Van Cleef & Arpels, Piaget, Chloe), and PPR (Gucci, Yves Saint Laurent, Stella McCartney, Bottega Veneta and Boucheron), can be rest assured business will be good in the next few years.

That's because the consumer and gaming research firm CLSA Asia-Pacific Markets projects the global luxury-goods market will grow 10 percent annually in the next three years thanks to emerging markets like China.

Last year the luxury market grew a record 14 percent to HK$2.5 trillion.

"Mainland Chinese contribute about 33 percent of the sales of some of the brands, which include Gucci and Prada," said Aaron Fischer, head of CLSA Asia-Pacific Markets.

And these emerging market consumers aren't buying at home -- they are going abroad. "That is really an important part," Fischer said.

More than half of the sales in key European cities, New York and Hong Kong were mainland Chinese visitors, he said.

World Luxury Association statistics show that during Chinese New Year, mainlanders spent $7.2 billion overseas, with Europe being the biggest beneficiary attracting 46 percent, while 35 percent was spent in Hong Kong, Macau and Taiwan.

Another interesting fact is that mainlanders are the biggest group of duty-free shoppers in the world, accounting for 19 percent of total sales, according to the CLSA report entitled Dipped in Gold.

While there are indications of China's economy slowing down, Fischer doesn't think it will dent the luxury purchases by wealthy Chinese consumers.

This means for the most part France's economy will continue to be propped up by mainlanders' penchant for mostly French luxury goods.

And every other shop assistant from Paris to New York, Hong Kong and Macau must learn to speak Putonghua to cater to the market.

Now that's soft power.

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