Luxury brands in China

The above report has been created by Adriaan Brits.

 

Executive summary:

Luxury branded consumer goods in China

This report analyses the market for Luxury branded goods in China. It acknowledges that whilst experts do not find Chinese consumer data reliable, by analysing the recent progress of major US and European luxury brands with a duty to report on investors, a clearer picture of this specific sector emerges.  Store counts and performance of brands such as OMEGA, LVMH, PRADA, Hermes and Burberry are taken into consideration. By considering the performance of these brands alongside economic indicators, the report finds that significant opportunities exist in China. However, a broad range of geopolitical factors and conflicting reports on political risk affirm the need to enter the market cautiously.

By analysing further trends such as internal growth and migration patterns together with technological factors, the report ascertains that in Coastal China and Tier 1 cities, the market is becoming saturated, yet Mainland China offers in excess of 100 Tier 2 cities which can be exploited either through supply chain innovation linked to technology and ecommerce, through physical store space or a combination of these methods. Market entry strategies of the abovementioned luxury brands are analysed indicating that a varying range of pragmatic and strategy rules is being applied. It is learned that many brands have partnered with the Chinese government in order to seize the supply chain as first movers. Some brands have issued licenses and franchises and finally, most brands are now confident in the Chinese market to the effect that these franchises are now being bought back.

In discussing the entry strategies, the report suggests a different approach for corporations with significant capital and points out that smaller companies will have to give up more control in order to access the full scale of the Chinese market.

The report then highlights 7 areas of the marketing mix where suitable adaptations can be made for the Chinese market.

This report was written by Adriaan Brits, MSC Marketing report: Global Marketing, Entry strategies, Risk considerations considering geopolitical impacts.