- RT @beyondbrics: China property buyers head for London http://t.co/oaMTH5yAe7 ->
- RT @melissakchan: …The Economist: China’s growing empire of ports. http://t.co/axTzUo1TEe ->
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We are pleased to announce that we will be co-hosting, and speaking at, the China Edge Symposium: Hospitality and Service for High Net Worth Chinese, in London on 3 July in London.
With the Chinese consumer being in the headlines almost every time a major brand issues its results, it is no wonder that luxury retail brands want to get a better understanding of how to attract, engage, serve…and sell to…Chinese buyers.
The China Dividend:
“Luxury fashion retailer Burberry posts 14% profits rise as Chinese sales surge” (Retail Week)
“Armani…said revenue for 2012 rose 16%…The strong numbers, in particular in Armani’s Far East region of China, Hong Kong and Japan, are motivating the company to aggressively expand…” (The Wall Street Journal)
A key point for brands to understand is that 60% of Chinese luxury spending happens outside of mainland China. Hong Kong is a big beneficiary.
But shopping destinations such as London also have an opportunity to attract these high-spending “global consumers”
With many brands and retailers cautious about international expansion, or with limited resources, in the current economic climate it makes sense to bring the Chinese market a little closer.
UK business groups, including the China UK Visa Alliance (“UKCVA”), which have lobbied the UK Government for reform of the visa system, recognise the importance of the opportunity that Chinese shoppers present:
“The UKCVA estimates that Britain misses out on around £1.2 billion of spending from Chinese tourists because we underperform in attracting them…New West End Company, the Business Improvement District for London’s West End, estimates that Chinese visitors spend nearly three times as much in the West End than the average overseas visitor – £1,688 compared with £567.”
Businesses need to take a long-term, strategic approach, localise their messaging and offers, engage online and through Chinese social media, target key travelling groups, be culturally aware, and know how to serve their Chinese visitors once they arrive in-store.
Burberry is an example of a brand that has successfully adopted some of these approaches, as reported in Jing Daily:
“Digital Strategy And Targeted Expansion Lead To Profit Turnaround”
“…After initially issuing its September profit warning and then reporting a dramatic turnaround last month, Burberry…reported 20 percent sales growth for the year ending March 31, as well as record-breaking profit numbers…Burberry’s digital strategy, which has been highly cognizant of e-commerce and social media, has paid off greatly, as a company spokesperson reported that the Chinese website’s traffic is up 70 percent…The brand has also not ignored Chinese tourists outside the mainland, installing Mandarin-speaking staff in its European stores.”
With these issues in mind, together with our specialist partners, we are delighted to launch the China Edge initiative, with our conference on 3 July: Hospitality and Service for High Net Worth Chinese.
China Edge is a collaboration of sector experts with a wealth of experience in China that brings you the knowledge of how to target, engage and retain wealthy customers from China.
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http://t.co/U83G9EhbTp via @guardian ->
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Urbanisation and consumption in China come together in this week’s post.
The former is said by the Hong Kong Trade Development Council to be an “irresistible force” and a key plank of China’s development plan. They note that:
The “National Plan for Promoting Healthy Urbanisation (2011-2020) has been reportedly formulated. Under this, over 20 city clusters will be built across the country…It’s expected that comprehensive support measures for urbanisation reform, covering land, household registration and social, healthcare and education services, will also be introduced successively in 2013.”
The infrastructure and construction side of urbanisation was covered in our recent post China’s Urban Billion(s). Here we’ll look at some recent news on the consumer side – because urbanising, means consumer spending…
While many of the big international consumer goods companies are already targeting the Chinese middle class in a widening variety of cities (hundreds of which will not be familiar to most outside of China – see our post here), there are also significant sales opportunities closer to home. This is because much of the spending on luxury items (some 60%) happens outside China, HSBC’s new report on luxury retail trends, also highlighted by HKTDC, addresses this point:
“HSBC’s new report on luxury retail trends looks at the influence of Chinese travellers on luxury consumption globally. The Bling Dynasty found that mainland residents, now able to travel abroad more freely, are already dominating in many luxury markets, particularly in Hong Kong, the luxury capital on the mainland’s doorstep.
The report found that, on average, Chinese travellers spend more than one-third of their travel budget on shopping, compared to only 11 per cent on food and accommodation. This contrasts with Americans and Germans, who are likely to spend more on accommodation. Given this propensity and the increasing wealth of Chinese travellers, the report noted that they are likely to increase their spending substantially.”
Amazingly “75 per cent of watches sold in Hong Kong, and close to 60 per cent of handbags and accessories, are bought by visiting mainland tourists”.
But are other shopping destinations such as London taking note? Perhaps it is surprising that only around a third of watch brands in a recently-visited major London department store have any Chinese branding or literature, and that less than half of the high-end stores on Bond Street advertise China UnionPay payment facilities.
Jing Daily makes the point that, even when retailers and brands are aware of the opportunity, many are unable to capitalise on it effectively:
“Chinese tourists are on track to take more than 155 million overseas trips by 2020 and will make 1.7 million arrivals in the United States in 2013.
With luxury brands like Hermès receiving as much as 30 percent of global sales from Chinese customers, it is no wonder that they are one of the most pursued customer segments by luxury brands and hospitality providers…But despite aggressive courting of Chinese travelers in key gateway cities around the world, few luxury providers actually understand what they want.”
As more Chinese tourists travel further afield in search of special experiences and exclusive offers, more international brands have an opportunity to adapt their offering and proactively (and profitably) engage – without even having had to set up shop in a far-away city cluster.
We’ll be exploring the issues with our specialist partners on our new China Edge LinkedIn Group.
(But for brands that wasn’t more practical support, check out our China Edge event on July 3, in London: Service and Hospitality for High Net Worth Chinese, London, Wednesday, July 3, 2013)
- RT @ChinaDailyEU: China Economy by Numbers: Find latest statistics data about China economy, major figures… http://t.co/tr2PdszsPU ->
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- China's future: Xi Jinping and the Chinese dream @TheEconomist http://t.co/vh4vQWnDlo ->
- http://t.co/wjhRARVrhT Another bad food day. And the bottled water is a fail too (Chinese… ->
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It’s 22 years since I was last in Kunming (on my way to Dali – which now, of course, has an airport). A lot has changed…and a lot of the changes are relevant to today’s China story – urban development, consumption, leisure, an entrepreneurial private sector, and concern over the environment.
The City of Eternal Spring has become a city of constant construction. Cleared land, construction sites and new buildings are everywhere. No doubt this urban boom helped the city achieve its 14.1% growth in 2012. Perhaps more amazing is that the air is still clear, and Dianchi Lake is, we are told, getting cleaner.
Clear too is the fact that this is a city with big plans, aiming to double GDP and incomes by 2017. A drive around Chenggong District, which is huge, gives an idea of the scale of development. This picture is taken from the new Howard Johnson hotel (and near a not-yet-open metro station), but similar scenes can be found for miles.
Downtown has a lot of construction too, including a big development by Red Star Macalline – who you might know as a major furniture retailer, but which is now also a developer.
These apartments were flying out of the door, mainly to people in their 30s-50s buying their first or second home. Aspirational? The top-end duplex, comes with a wine cellar, as well as mahjong and yoga rooms!
The sights (Stone Forest and West Hill) are a big draw for the city, but the main event in April was the China Entrepreneur Club’s Green Companies Summit – and the super-celebrity entrepreneurs themselves – among them Liu Chuanzhi (Legend), Jack Ma (Alibaba), Wang Shi (Vanke), Wang Jianlin (Wanda), Charles Chao (Sina), Guo Guangchang (Fosun), and Michael Yu (New Oriental).
There was obviously a focus on sustainable issues, but there also some strong voices calling for more SME and private sector development:
• Liu Chuanzhi (or Legend / Lenovo fame) noted the need reform from the top, for rule of law, and equality before the law.
• XU Xiaonian (CEIBS) added that reform needs institutional change, not just efficiency gains, and referenced Deng Xiaoping, saying “those who do not reform should get off the stage!”
• Long Yongtu (the former WTO negotiator) aligned with a current theme when he said that “we have a lot to learn about the Chinese Dream” from entrepreneurs”, highlighting the importance to the economy of thriving private sector and SME companies.
He also called on the government to treat all companies equally, no matter what the ownership structure, including private and foreign, and instead to focus on issues such contributions from employment, tax & social responsibility. (A important point given the recent attacks on Apple http://www.chinabusinessservices.com/consumer-brand-discrimination-crisis/).
• Ronald Coase (economist and co-author of How China Became Capitalist, appearing via video) left us with the double entendre of the day – to loud applause: “I hope Beijing can be as clean as Kunming…”
Almost as interesting as the conference was the venue, the aqua, one-and-a-half hours from downtown, set in agricultural, rural Yunnan, surrounded by fields.
The development (by CITIC and Shining Star Group), partially finished and in soft-launch mode, includes a Ramada hotel, a conference centre, golf and fishing clubs, sports and equestrian centres, shops, a wetland park, orchards, and rows and rows holiday homes. Oddly there is also a castle, and at least a couple of windmills…
A lot of money (RMB3.5 billion according to one account) has been invested, and that some serious people think that domestic tourism needs a high-end rural retreat. It will be interesting to see how it works out. And whether urban Kunming will swallow it up before it is finished!
It is no wonder cities like Kunming are getting more attention from international businesses – just don’t wait 22 years before your next visit!
Construction Worker – Keeping an eye on developments…
And its not just Kunming that is seeing strong growth – Yunnan Province as a whole managed 12.6% on Q1:
But, as the latest news shows, not everything in Kunming / Yunnan is green and good. There have been protests in Kunming by residents who want to block a chemical plant (http://bit.ly/105JAqv – similar demonstations have been seen elsewhere, including Chengdu http://bloom.bg/18LnDhr). Also in the news is the Nu river in Yunnan, where the New York Times reports that “The Chinese government stunned environmentalists this year by reviving plans to build a series of hydropower dams” (http://nyti.ms/12atGtL). Power for the city, or power to the people? Sustainable development and the environment continue to be critical issues.
Follow this and other issues on our LinkedIn Group.
- The China Business Blog Daily is out! http://t.co/pFZ4rq7M9Y ▸ Top stories today via @Bkerrychina @chinalabour @CHINICT ->
- RT @CBR_Magazine: RT @bw: China's economic slowdown is very real. Here's what you need to know | http://t.co/U702SCcQWM ->
- RT @ChinaDailyEU: China's CAS to buy 60 Airbus planes: China Aviation Supplies Holding Company … http://t.co/wzrWC2Yh0O ->
- RT @JingDaily: Strategy Note: Chinese Summer Tourism is Crucial for Luxury Brands http://t.co/vCT33HWVMj ->
- RT @USChinaBusiness: USCBC Report: US Exports to China Total Nearly $109 Billion in 2012 http://t.co/gBneScKS5Z ->
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- RT @TheEconomist: Chinese investors love Europe's companies but hate its bureaucracy http://t.co/GrvAGUDPFd ->
- The China Business Blog Daily is out! http://t.co/pFZ4rq7M9Y ▸ Top stories today via @zhongnanhai @GreenLeapFwd @ChinaVitae ->
- Some tweets to follow from China Entrepreneur Club's Green Companies Summit in Kunming… ->
- Long Yongtu (LY) "we have a lot to learn about the Chinese Dream" from entrepreneurs". China needs thriving private & SME co's… ->
- LY – Government should treat all companies equally, no matter what ownership, including private & foreign. Focus on employment, tax & CSR ->
- Local gov: Kunming GDP +14.1%, energy intensity down 3.9%, in 2012. GDP & income to double by 2017. Lot of focus on environment in speeches ->
- …XU Xiaonian, CEIBS – reform needs institutional change. Ref Deng "those who do not reform should get off the stage!" (big applause!) ->
- …Message from Ronald Coase, incl: "I hope Beijing can be as clean as Kunming". (Biggest applause of the day so far…) ->
- One view of Chenggong district in Kunming (similar views in every direction) http://t.co/6RDCOVy890 ->
- Liu Chuanzhi at CEC forum in Kunming: need reform from the top, need rule of law & equality before the law ->
- The China Business Blog Daily is out! http://t.co/pFZ4rq7M9Y ▸ Top stories today via @chinacontact @B2BChinaNews @EUSMECentre ->