High-end audio-video equipment maker Bang & Olufsen has its sights firmly set on expansion on the Chinese mainland and is bullish on market prospects there.

Amid robust demand across most markets, including key ones in Europe and in China, the Danish upmarket electronics producer swung to a net profit of Danish krone 17.3 million ($2.6 million) in its fiscal third-quarter last year, from a loss of Danish krone 31.9 million in the year-ago period.

Chinese mainland took over the lead in the company's B2C (business-to-consumer) business growth for the reporting period, with an increase of 37 percent, compared with 12 percent in Europe and 27 percent in BRIC market.

Lars Hardboe Galsgaard, managing director for Greater China and South Korea, portrayed Bang & Olufsen's target audience on the Chinese mainland as people in whatever profession who really appreciate the quality of life and keep leaning forward every day.

This is where Bang & Olufsen comes in, by helping them lean backwards to take some time off for relaxation, said Galsgaard, who always cautiously avoids defining the company's target audience simply by age group or occupation.

He believes such target audiences do come in tidy numbers on the mainland, as the nation's luxury consumers, who are switching focus from face-giving to personal pleasure and self-indulgence, become increasingly sophisticated and mature.

And the beauty of Bang & Olufsen never lies in showing off the brand but in enjoying the high quality of sound with family or friends at home, Galsgaard told China Daily.

Founded in Denmark in 1925, Bang & Olufsen just marked its 90th year this March. The luxury stereo and television maker dabbled in the mainland market through distributor channels in 2004, before moving its Asia headquarters from Singapore to Shanghai in 2011 and joining the fray all-out one year later.

In 2012, the Danish group entered into a deal with luxury goods company Sparkle Roll and private equity group A Capital to expand its presence in the Chinese market.

However, brand awareness is a real issue in the mainland market, where Bang & Olufsen is trying to beef up its presence by pumping investment into marketing, distribution, staff training and development of new stores.

The Danish Hi-Fi company changed its distributorship model in earlier 2012 and directly operates its stores on the mainland, in Hong Kong and Macao, rather than operating through franchises

According to Galsgaard, Bang & Olufsen follows a pyramid business model on the mainland, and sitting at the top are 35 flagship stores located in luxury malls like Shanghai's Plaza 66 and exclusively selling the Bang & Olufsen luxury product line. The middle is made up of 40 premier stores in premier malls, selling its lower-priced B&O Play range - aimed at a younger market.

And at the base are 3,200 third-party multi-brand retailers including Apple stores, where consumers can easily find Bang & Olufsen's uber-trendy and stylish loudspeakers.

Compared with the lower brand awareness and weak business foundation that Bang & Olufsen has struggled with on the mainland, business in the Hong Kong market is a whole different story.

Bang & Olufsen, noted Galsgaard, enjoys a fruitful partnership with its reputable dealer, the Dutch-based technology company Philips, which built on its local business for almost three decades. The Danish group took over Philips' business after it pulled out of this sector earlier in the decade and Galsgaard believes that laid a solid foundation for Bang & Olufsen to gain a foothold in the SAR, where it now has five stores - plus one in Macao.

sophia@chinadailyhk.com

Lars Hardboe Galsgaard, managing director for Greater China and South Korea of Bang & Olufsen, says the luxury stereo and television maker is beefing up brand awareness in the mainland market. Parker Zheng / China Daily

(HK Edition 06/12/2015 page10)