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However, Chinese individuals view investments and spending from a very different lens than in the West, which requires lifestyle companies to completely rethink the way they position, market, price and build loyalty with this extremely powerful consumer base. Chinese individuals view much of luxury spending as investment driven, rather than purely for appreciation or enjoyment. And Chinese individuals invest in what they know: real estate, wine, art, watches and jewelry, leisure and luxury goods.
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KC YOON
Radio shalom 1650am
Money and business show 514 738 4100 x 200
Introduction
Money money and the rich in china
Bolstered by a $586 billion government stimulus program and a surge in lending by state-owned banks, China may be the first major economy to bounce back from the global recession. But the composition of China’s growth remains unbalanced. Aggressive increases in government spending and investment by state-owned enterprises has cushioned the impact of weak exports. But those gains have not been matched by comparable increases in private consumption. Spending by Chinese households as a percentage of GDP is roughly half the US consumption ratio and remains significantly below private spending levels in Europe and Japan. And despite rising sales of items such as automobiles and household appliances, the ratio of private spending to GDP in China today has actually fallen relative to Chinese spending levels of a decade ago.
So With the growth of China’s economy, appreciating RMB currency value, unprecedented levels of Chinese tourism, more Chinese students studying abroad than ever before and a growing desire to export money and assets, overseas investment and spending from Chinese individuals is at an all time high, and is predicted to continue to increase , and the Rich keep on spending in luxury in china ; 1.6 million of them , Chinese millionaire are typically business people , 40-45 years of age ,internet savvy and love to spend.
However, Chinese individuals view investments and spending from a very different lens than in the West, which requires lifestyle companies to completely rethink the way they position, market, price and build loyalty with this extremely powerful consumer base. Chinese individuals view much of luxury spending as investment driven, rather than purely for appreciation or enjoyment. And Chinese individuals invest in what they know: real estate, wine, art, watches and jewelry, leisure and luxury goods.My name is Samuel Ezerzer, your host to the Money & Business show on Radio Shalom, CJRS 1650 AM. Thank you for tuning in live with our Business studios headquarters in Montreal, the financial capital and the home to the greatest hockey team, the Montreal Canadians. We have another great show for you today and as always, you can call if you have any questions, comments, or criticisms on today's topic. Please call us direct at 514 738 4100 ext 200 or email me at moneyandbusinessshow@gmail.com if you have any inquiries. You can also visit our website at www.radio-shalom.ca – all our shows are archived there. I work as Financial Consultant for T.E MIRADOR or TE WEALTH. TE MIRADOR has been providing Corporate Executives, CEO ‘S, families, employers and employee with independent wealth management and Financial education services since 1972. You can visit our website for my contact information at http://www.temirador.com/,
Our topic for today ; China is set to become the second biggest consumer of luxury goods by 2015 , When will it be number 1?
BIOGRAPHY
KC YOON is a Chartered Financial Analyst, investment and strategy consulting professional, he has a masters of Engineering and economics from Cambridge in the U.K, with over 20 years experience working with top tier global consultant s global private equity funds.
KC YOON has Deep industry expertise and knowledge across the consumer/retail sector- especially in the following sub-sectors- fashion and apparel; sportswear; FMCG; beverages; food & beverage retail; healthcare and health products; beauty care; retail - B2C/C2C ecommerce; consumer-focused internet platforms/services
Published several research presentations over past 2 years on China's consumer/retail/media industry.
-Recognized for insights on China consumer/retail/media sector; He has been Invited as Keynote Speaker on China Luxury and Consumer/Retail Opportunities in Leading Conferences and we are glad to have him on the money and business show live from the early morning time in china.
-Recognized for insights on China consumer/retail/media sector; He has been Invited as Keynote Speaker on China Luxury and Consumer/Retail Opportunities in Leading Conferences and we are glad to have him on the money and business show live from the early morning time in china.
Our topic for today ; China is set to become the second biggest consumer of luxury goods by 2015 , When will it be number 1?
QUESTIONS
-Can we have a quick overview of the state of Chinese consumption?
-Private consumption accounts for only about 36 percent of China’s GDP. That’s about half of what it is in the United States and some other countries. It’s almost two-thirds of what it is in Europe. Is that too low? And why is it that low?
-I think the world faces a big challenge. The world expects Chinese consumers to pick up and to fill the void left behind by the US and European consumers. That’s not very realistic. Also, Chinese consumption will have to be different from American consumption and European consumption? Can you explain why?
I guess building on that, does more Chinese consumption mean more Chinese imports?
I don’t think it’s appropriate to say what is the right level of consumption in China. You never know. Different nations have different cultures, and the demographics are also different. The Chinese population is rapidly aging. That makes it necessary for us to save.
-Lee Wee Liat, a property analyst at Samsung Securities in Hong Kong, talks about China's real estate market. China’s home prices posted their worst performance this year with more than half of the 70 biggest cities monitored in November recording declines after the government reiterated plans to maintain property curbs. Lee also discusses Hong Kong's real estate market. Lets hear a clip from Bloomberg video
-We heard Lee Wee liat real estate analysts that home prices may fall 15% , KC , will real estate fall its impact on Chinese economy ? and KC give us predictions for the future directions in real estate investment?
-Real estate is a natural asset class for Chinese investors, and perhaps the most popular class for exporting assets overseas. To Purchase real estate what is the criteria for purchase, what are the hotspots and trends ?
-How significant is china’s wealthy consumers?
-What are the differences with the Chinese wealthy consumers vs. global rich?
-What is the size of the luxury consumption by the Chinese?
-Internet is a trusted and popular medium to understand luxury brands and also purchase?
Online shopping is taking off in china?
Social media popular media to interact?
Extra questions
-More and more wealthy Chinese individuals and business leaders are moving their assets overseas, it’s a trend that has been evolving, why are wealthy Chinese increasingly moving assets outside of China, what they are buying and how they are adapting and making purchase decisions?
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[ 24 ] A Plus
China luxury
China is set to become the second biggest consumer of luxury goods by 2015. Liana Cafolla talks to luxury brands about the bumps along the way
For luxury retail in China, the numbers on off er are nothing short of lip smacking: An estimated 300,000 millionaires and rising. A middle class of around 250 million people. A 1.3 billion population, long starved of retail opportunities, that spent US$6 billion on luxury goods last year, according to Ernst & Young estimates. And a prediction by investment bank Goldman Sachs that China’s consumption of luxury goods will rise from 12 percent to 29 percent by 2015 – making it second only to Japan – in a global luxury market worth an estimated US$80 billion a year. China has indeed come a long way. A luxury consumer market that didn’t exist 20 years ago is now on a seemingly unstoppable path to dominate top end retail. How did it happen? And is it all as good as it sounds? Continuing double-digit economic growth is fi lling pockets and encouraging consumers to move away from the savings culture of older generations. "The philosophy is ‘enjoy life today’ against the old Chinese custom of saving, saving, saving," says Lawrence Lau, management controlling director in the consumer product division at L’Oréal China.
Changing demographics also fuel the furious spending. The mainland’s one-child policy created a generation of cosseted only children, each raised by six adults. Now of consumer age, these little emperors are addicted to the novelty of acquiring the western-style trappings of wealth.
The younger generations have become more in sync with global trends, thanks to access to the Internet and foreign media, increased freedom to travel and the experience of overseas education. "They want exactly what’s happening in the rest of the world, now," says David Stewart of Jigsaw International, a lifestyle research agency in Shanghai. Their spending power has also jumped dramatically in the last five years, he says.
Rapid economic growth guarantees that the spending trend will keep going. "[China’s] luxury market is growing at a rate of 20 percent annually, until 2008 we expect," says Conway Lee, partner and industry leader of the retail and consumer products practice at Ernst & Young. This is clearly good news for the luxury goods retailers. The first to act on the potential were the older European brands who still have the biggest piece of the market and whose heritage and quality ticket resonates with status-hungry Chinese consumers. It started with a trickle of top brands cautiously opening a few outlets in the 1990s. Now the influx resembles a stampede: Luxury retailers can’t get in fast enough, and once in, they are spreading themselves around the country like wildfire.
"Luxury items didn’t really exist in China 10 to 15 years ago," says Shaun Rein, managing director of China Market Research Group in Shanghai, but Chinese consumers are more than making up for it now.
Louis Vuitton, consistently rated Asia’s favourite brand, opened in China in 1992. Unlike other brands who occasionally experiment, LV has stuck closely to the core message of its brand and the strategy ticked, says Stewart of Jigsaw: "LV is very clearly, explicitly, top-end luxury." Its publicity events are huge-scale and, in a country where top locations are difficult to pinpoint, the status of its shops is unquestionable, he says. Its Shanghai flagship, for example, is in Plaza 66, a building that now draws other top brands – Hong Kong’s Joyce recently opened its first Shanghai store there.
LV and Gucci are the best-performing brands on the mainland, according to Nick Debnam, a KPMG partner and head of consumer markets, Asia Pacific. LV has been profitable since its first year in China, with annual growth of almost 50 percent, according to Radha Chadha and Paul Husband who wrote The Cult of the Luxury Brand. Gucci, which has 16 stores on the mainland, recorded sales growth of more than 65 percent last year, Chief Executive Mark Lee said in an interview with the South China Morning Post. The mainland ranks second following Hong Kong in Gucci’s sales in Asia excluding Japan. The Italian retailer opened six stores in 2005 and last year, and will be expanding its mainland operation at a similar pace in the coming few years, according to Lee. Plenty of other famous names are investing heavily on the mainland. Like LV, Montblanc, which specializes in luxury pens, watches and jewellery, entered the China market in 1992 and now a quarter of its 350 stores worldwide are in the mainland. It is set to open its 87th store in Shanghai, which at 6,100 square feet over two levels will be its biggest anywhere in the world. + October 2007
China luxury
China is set to become the second biggest consumer of luxury goods by 2015. Liana Cafolla talks to luxury brands about the bumps along the way
For luxury retail in China, the numbers on off er are nothing short of lip smacking: An estimated 300,000 millionaires and rising. A middle class of around 250 million people. A 1.3 billion population, long starved of retail opportunities, that spent US$6 billion on luxury goods last year, according to Ernst & Young estimates. And a prediction by investment bank Goldman Sachs that China’s consumption of luxury goods will rise from 12 percent to 29 percent by 2015 – making it second only to Japan – in a global luxury market worth an estimated US$80 billion a year. China has indeed come a long way. A luxury consumer market that didn’t exist 20 years ago is now on a seemingly unstoppable path to dominate top end retail. How did it happen? And is it all as good as it sounds? Continuing double-digit economic growth is fi lling pockets and encouraging consumers to move away from the savings culture of older generations. "The philosophy is ‘enjoy life today’ against the old Chinese custom of saving, saving, saving," says Lawrence Lau, management controlling director in the consumer product division at L’Oréal China.
Changing demographics also fuel the furious spending. The mainland’s one-child policy created a generation of cosseted only children, each raised by six adults. Now of consumer age, these little emperors are addicted to the novelty of acquiring the western-style trappings of wealth.
The younger generations have become more in sync with global trends, thanks to access to the Internet and foreign media, increased freedom to travel and the experience of overseas education. "They want exactly what’s happening in the rest of the world, now," says David Stewart of Jigsaw International, a lifestyle research agency in Shanghai. Their spending power has also jumped dramatically in the last five years, he says.
Rapid economic growth guarantees that the spending trend will keep going. "[China’s] luxury market is growing at a rate of 20 percent annually, until 2008 we expect," says Conway Lee, partner and industry leader of the retail and consumer products practice at Ernst & Young. This is clearly good news for the luxury goods retailers. The first to act on the potential were the older European brands who still have the biggest piece of the market and whose heritage and quality ticket resonates with status-hungry Chinese consumers. It started with a trickle of top brands cautiously opening a few outlets in the 1990s. Now the influx resembles a stampede: Luxury retailers can’t get in fast enough, and once in, they are spreading themselves around the country like wildfire.
"Luxury items didn’t really exist in China 10 to 15 years ago," says Shaun Rein, managing director of China Market Research Group in Shanghai, but Chinese consumers are more than making up for it now.
Louis Vuitton, consistently rated Asia’s favourite brand, opened in China in 1992. Unlike other brands who occasionally experiment, LV has stuck closely to the core message of its brand and the strategy ticked, says Stewart of Jigsaw: "LV is very clearly, explicitly, top-end luxury." Its publicity events are huge-scale and, in a country where top locations are difficult to pinpoint, the status of its shops is unquestionable, he says. Its Shanghai flagship, for example, is in Plaza 66, a building that now draws other top brands – Hong Kong’s Joyce recently opened its first Shanghai store there.
LV and Gucci are the best-performing brands on the mainland, according to Nick Debnam, a KPMG partner and head of consumer markets, Asia Pacific. LV has been profitable since its first year in China, with annual growth of almost 50 percent, according to Radha Chadha and Paul Husband who wrote The Cult of the Luxury Brand. Gucci, which has 16 stores on the mainland, recorded sales growth of more than 65 percent last year, Chief Executive Mark Lee said in an interview with the South China Morning Post. The mainland ranks second following Hong Kong in Gucci’s sales in Asia excluding Japan. The Italian retailer opened six stores in 2005 and last year, and will be expanding its mainland operation at a similar pace in the coming few years, according to Lee. Plenty of other famous names are investing heavily on the mainland. Like LV, Montblanc, which specializes in luxury pens, watches and jewellery, entered the China market in 1992 and now a quarter of its 350 stores worldwide are in the mainland. It is set to open its 87th store in Shanghai, which at 6,100 square feet over two levels will be its biggest anywhere in the world. + October 2007
| Company name | Title |
| Burberry Asia Ltd. | Vice President – North Asia |
| Louis Vuitton Pacific Ltd. | Chief Financial Officer |
| Bally Hong Kong Ltd. | Regional Financial Controller |
| Prada Asia Pacific Ltd. | Regional Financial Controller |
| Hermés Greater China Ltd. | Finance Director |
| Gucci (China) Trading Co. Ltd. | Finanial Controller |
| Furla (Hong Kong) Ltd. | Finanial Controller |
Topic . luxury-hungry Chinese consumers
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