Customers look at watches in a Montblanc store in Hong Kong. The German luxury goods company plans to expand its sales presence in China to capitalize on the growing sector. [Bloomberg]
BEIJING - Luxury brand Montblanc expects to open more stores next year in China, especially in second and third-tier cities, to tap into rising demand for higher-priced, fine products among Chinese consumers.
"China will continue to keep its number one position in Montblanc's global market," said Jim Siano, chief executive officer of Montblanc Asia-Pacific.
The German company has opened 95 stores in more than 40 cities in China since entering the Chinese market in the 1990s, compared to 34 stores in the United States. "Since 2008, China overtook the United States to become Montblanc's largest market," he said.
Its total number of stores in China is likely to hit 130 over the next five years, said Lutz Bethge, chief executive officer of Montblanc.
A recent report from the Chinese Academy of Social Sciences said sales of luxury goods in China were about $9.4 billion last year, accounting for 27.5 percent of the global total.
The nation surpassed the US in terms of sales and occupied second place after Japan.
China will become the top market for luxury goods, with estimated annual sales of around $14.6 billion by 2015, the report said.
According to the latest Chinese luxury market report released by Bain & Company, a US-based consulting firm, 2010 will be "a prosperous year" for China's luxury market, with expectations that it will grow 23 percent in this year alone.
"Second and third-tier cities will continue to be the new battleground for luxury brands", said an analyst from the consulting firm. Consumers' attitudes in those cities towards luxury and wealth are similar to first-tier cities, the analyst said.
In order to expand its business in China next year, Montblanc will pay more attention to second and third-tier cities such as Shenyang and Taiyuan, and open five to seven new stores in those cities.
"We noticed the fast development of China's second and third-tier cities," said Siano, "Fifteen years ago, when I came to China, there was no traffic at all. But now, you can see so many cars everywhere."
He said that increased consumption and higher disposable income will drive the Chinese luxury market to become the fastest-growing market globally. The company's sales revenue has seen double-digit growth year-on-year.
A Montblanc watch costs between 30,000 yuan ($4,517) and 100,000 yuan.
Besides second and third-tier cities, Montblanc also has expansion plans for major cities. It will remodel its existing stores and expand their scale. Montblanc's Chengdu store is a 300-square-meter boutique, and it will open a new flagship store in Beijing next year, which is triple the size of its Shanghai branch.
He also said that providing a luxury shopping experience, superior product quality and customized services are key elements a luxury brand should pay attention to in the Chinese market.