Challenges rise for luxury brands

(China Daily)
Updated: 2008-06-20 14:56

Over the past decade, income and retail spending have continued to rise strongly in China. In 2007, retail sales in China topped 8.9 trillion yuan, up more than 17 percent year-on-year, which amounts to a doubling of China's retail spending in the space of just six years.

Income levels have also risen strongly, but remained low compared to more developed economies. Yearly disposable income per capita among urban households rose by 18 percent to 13,876 yuan in 2007, while per capita consumption expenditure stood at 12,667 yuan, a year-on-year increase of 14.7 percent, according to the National Bureau of Statistics.

The economic realities facing Chinese consumers also dictate which product categories have been most successful, with many executives commenting that the market for accessories and jewelry has grown more strongly than apparel.

Within apparel, several executives observed that brands need to carefully position themselves, citing examples where companies have been successful in the sales of premium casual wear, but struggled to retain the connection to their origins in more high-end couture and ready-to-ware.

China is not a single, homogenous market for luxury goods and is showing increasing signs of segmentation and differentiation, with consumers motivated by more diverse factors and seeking satisfaction in different ways.

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