You May Have Been Mocked In The Past. But Asia, Your Having The Last Laugh.

I have always found it fascinating how perspectives and ideas change over time, especially when these changes lead to role reversals. This is particularly evident with the way the world now views Asia. Before the 'opening of China' and other Asian power-houses, that saw an increasingly open trading environment with the West, there was a great divide between the 'Western mentality' and the 'Eastern mentality'. The mentalities were so contrasting that it was as if they viewed the other as 'aliens from a different planet'. However, slowly but surely, there has been a development in the relationship between these two philosophies. It seems that each side has acknowledged that there are positives to be taken from the opposing side. The 'West' has taken on several aspects such as the experimentation with various herbal health remedies that have supposedly worked better than many technologically advanced health procedures in the 'West'. It has also become 'fashionable' to eat Asian cuisine and in many of Europe's major cities these restaurants are amongst the most expensive and trendy. Yoga has become relatively main-stream and continues to grow in popularity.

There are also many predominantly 'Western' traits that are now being exposed to this up-and-coming Asian market. The 'Luxury Brands' certainly aren't complaining. Gone are the days when it was only Westerners that indulged in luxuries such as fancy sports cars, premium fashion brands and expensive liquors. It is progressively becoming just as likely to see a decadently dressed woman strolling down the streets of Beijing with a 'LV handbag' as it would be in Milan or Paris.

Designer Brands Battle For Slice of Booming Asian Market

During such economically uncertain times, it is in some ways surprising to see many 'Luxury Brands' expanding their presence in new regions. However, it does seem 'just as good a time as any' to take advantage of this lucrative opportunity. An article by 'SouthAsianPost' highlights the importance of this new market to these fashionable heavy-weights. It reveals that, "Major designer brands, including Christian Dior and Gucci, spent more than 60 million dollars on advertising in Hong Kong last year, 23% more than 2006." That is a tremendous increase that is made all the more significant considering that most companies are scaling back on divisions such as advertising. It seems that these companies have 'both eyes' on the region. The article boldly states, "With Asia being the world's biggest market for Western luxury goods, international brands are shifting their focus from Paris, New York and London to the fast-growing emerging markets in the region." This seems a far cry from the days where Westerners would make fun of 'those Asians with the gowns and silk cloths, and the Asians would mock 'those Western big-noses with the silly hats'. Whilst I think overall globalisation is a good thing and there is nothing wrong with cultures merging and taking the benefits from each, it is also important to maintain a sense of identity and tradition and not let these fade away into distant memories. This seems to be a distinct possibility, "The reason why Asians buy so many luxury brands is that in Asia, you are, what you wear. A luxury brand is a symbol that defines who you are and your social status. People judge each other by what brand of handbag they are carrying." It appears that there is now less emphasis on familial values and more on the notoriously superficial ideals of the West.

Whilst I am not surprised that these Asian economies are lucrative new target-markets for these companies, I was slightly taken-aback about how readily it appears that they are willing to neglect their European markets for the Asia. This is was embodied as Vincent Shaw, Chanel's president for Asia Pacific, claimed, "Hong Kong was carefully chosen as the best place to launch the exhibition before it tours other fashion capitals around the world, including London and New York." He continues by explaining the reasons behind this decision, "Asia has a huge population and an incredible liquidity. We believe that there's a huge opportunity and that Asia will be extremely successful." This view is given some credibility by Radha Chadha, author of the 'The Cult of the Luxury Brand', who adds in, "Asian consumers account for more than 50% of the annual 80 billion dollar sector, more than the U.S. and Europe combined." This willingness to try cash in on this market even during unstable times seems to remain true across the board. Louis Vuitton has seen similar opportunities in Asia as it steps up its battle for a bigger slice of the market with the re-opening of its massive store after a year of renovation. The new store is double the size of the previous one and is the company's second largest after its flagship building on the Champs Elysees in Paris.

China seems to be starting to take a leadership role in this rapidly growing movement. It is estimated that the country will overtake Japan as Asia's biggest luxury market within the next 7 years. Louis Vuitton already has 18 stores in the country, with 6 more expected to open this year. Jean-Baptiste Debains, Louis Vuitton's president for Asia Pacific, underlined the company's ambitious plans, "There are a lot of cities in China where we can have stores, maybe not today, but in three years." Such growth potential is not limited to China. The company also plans on opening stores this year in Indonesia, South Korea and Taiwan. Whilst Radha Chadha maintained a sense of caution that due to the economic slowdown in the United States, this was likely to hit the luxury goods consumption, Louis Vuitton's Debains seemed adamant that growth in Asia "was unstoppable". From current reflections, it seems that fortunately for Louis Vuitton and the other premium brands, he seems to be proven right.

Battered Luxury Brands Eye Chinese Market For Growth

An expose by 'ChinaDaily', starts off with the use of a little 'tongue-in cheek', "while people in the developed world tighten their belts and focus on daily necessities, the big luxury companies are looking to China's new rich to buy their jewellery, clothes and bags." This is a slightly exaggerated remark with the use of 'focus on daily necessities'. It makes out as if the whole of the "developed world" is on the bread-line. I think that this illustrates some remnants from the past cultural clashes and the author is taking her opportunity in offering a 'slight dig' at the former adversaries. Being a local journalist, for a Chinese paper, this bias is rather expected. It seems that the sources used were carefully planned out and each quotation appears to have atleast a little hint of nationalistic pride. This can be seen with comments made from Guo Zuli, director of the World Luxury Research Center, whom emphasizes, "The Chinese market shows remarkable resilience in the financial crisis because it has an increasing number of people able and willing to buy luxury goods. Unlike the mature traditional markets, demand in China is far from saturated either materially or psychologically."

The depressing reality of how the economic downturn has affected 'Luxury Brands' is reflected with the use of statistical figures. A study by the consultants at 'Bain and Company' illustrates the severity of the situation, "sales growth in the luxury goods sales were estimated to have slowed significantly to 3% during 2008. The slower growth rate stood in sharp contrast with 6.5% in 2007 and 9% growth in 2006." There appears to be further setbacks this year with Deutsche Bank indicating the market will contract between 5 to 10% in 2009. Similarly to the first article, there seems to be joint argreement that China can provide its 'saving grace'. Experts agree that the Chinese luxury goods market remains "resilient", due to the country's stable economic growth and rising number of rich with a steadily increasing purchasing power. It is estimated that during 2007, 415,000 Chinese had more than $1 million in disposable assets, more than any other country in the world.

The information provided in the first article is verified as 'ChinaDaily' similarly mentions the same luxury brands that are excited by the growth opportunities in China. Gucci is reported to have opened their flagship store in Shanghai during May of this year. Louis Vuitton is also mentioned, with profits estimated to have experienced a growth of 2.1% from 2008's figures. This is in stark contrast from its performance in other markets, "sales in the United States fell 4.03% and in Japan 5.16% last year." These poor financial results were mentioned in jest, as the company chose to focus on its successes in China which reflected, "strong and solid" growth.

The article uses Bain & Company repeatedly to reflect market predictions and reflections. Their consultants estimate that, "the Chinese luxury market would see a growth of 20 to 25% in the next 5 years." The Chinese Ministry of Commerce chimes in proudly, "China will become the world's largest luxury market by 2014, accounting for 23% of global business." I am sincerely shocked at the rapid speed in which the Chinese market has taken to these traditionally Western 'luxury brands'. Whilst I was never in doubt that it was only a matter of time before these luxuries were adopted by the East, I would be very surprised if anyone could have anticipated the tremendous growing demand during such an uncertain economic period.

Whilst I'm sure that the mentioned 'luxury brands' wouldn't agree with me, I feel as though this sudden and drastic 'adoption' of the Western lifestyle is a little unfortunate. The reason I am against this transition, is that it has come at the cost of local customs and traditions. In a growing population where nearly 13% of the people can now afford to buy luxury brands, there is going to be those who consequently suffer. This growth will come at the expense of the local fashion designers and even 'the man on the street selling hand-made bags' whose lively-hood now remains in the balance. After all, as Asia embraces such a superficial mentality, who is going to turn down the latest designer LV bag to help out the local street vendor by buying his?

Websites Read:

http://www.southasianpost.com/portal2/c1ee8c4418e1e94f011905dc070602db_Designer_brands_battle_for_slice_of_booming_Asia_market.do.

http://www.chinadaily.com.cn/bizchina/2009-04/11/content_7669126.htm