chinaâ€™s love affair with luxury: adapting to a changing landscape

China’s Love Affair with Luxury:Adapting to a changing landscape

by Jebsen and Company Limited

14 Jun 2012

14/06/2012 www.jebsen.com

Jebsen and Company Limited

Luxury Products Include….

Greater China-focused, Marketing and Distribution

14/06/2012 www.jebsen.com 2

� Drivers of Luxury Consumption

� “Fashion, Speculation, Interest”

� Wine

� Yachting

� Motor

� Digitalization

� Takeaways

Contents


Drivers of Luxury Consumption

GDP 2010, $bn


Availability

AvailabilityExclusivity &Experientialism

Exclusivity &Experientialism

Source: The Economist, EIU, CEIC, TWO

� Information growth

� Focus on Bordeaux

Consequences

Fashion, Speculation, Interest

� Awareness

� Lifestyle

� Scarcity

� Status

� China dominates Grand Cru market

� High prices

� Fakes

Consequences

� Gift-giving

� Investment

� Brand focused

� Grand Cru price realignment

� Investment in production

� Value for money consumption

� Greater acceptance of alternatives to Bordeaux

Consequences

� Broader acceptance of wine

� Less focus on premium

� Wider distribution

� Changing consumption patterns

SpeculationFashion Interest



� Lagging behind market growth expectations

Consequences

� Large interest in the concept of yachting

� Unfamiliar with the requirements

� Lack of “software”

� Residential style marina investment

� Overseas market more interesting than domestic one

Consequences

� Investments in marinas

� Investment in yacht brands

� Long-term play

Consequences

� Acquiring yachts outside of China

� Government encouraging development of Hainan as yachting hub



� Information growth

Consequences


� Awareness of smaller brands

� Me too

� Status

� High premium paid for dealerships

Consequences

� High interest in certain brands and models

� Investors’ interest in dealerships

� Greater diversity of brands

� Investment in facilities & service required by customers

Consequences

� Brand awareness

� Heritage awareness

� Value for money



Digitalization

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� Digitalization covers a wide spectrum:

� Internet

� Official website

� Online shopping/SEM/SEO

� Facebook/Weibo

� Forum seeding/Blogger sponsorship

� Email

� Social Media: Facebook/ Weibo…

� Mobile applications

� From Jebsen’s perspective, for luxury business at this stage:

� Digitalization is more about brand building, increasing mindshare, customer education and interactive CRM system

� not online retailing/sales generation

� Monitoring blogs


� Luxury suppliers need to provide both availability and exclusivity to new and existing customers, in order to fulfill different groups’ expectations.

� Customers’ interest in luxury products evolve rapidly and we allocate those different interests into the categories of fashion, speculation and interest. Brand owners need to define their strategies to cater for the differing needs, as all three can exist simultaneously.

� Due to China’s fast adaptation of new technologies, using the opportunities afforded by digitalization become tools for brand building and customer interaction, but they need careful monitoring to understand perceptions.

Takeaways


Thank You

chinaâ€™s love affair with luxury: adapting to a changing landscape

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