中国の贅沢なブランド: 部IV
前方の挑戦
ニックDebnam及びジョージSvinos著、KPMG
中国で小売りする贅沢ははっきり途方もない機会、また危険および挑戦を示す。 競争を高めることに加えて新興市場間で共通であるように、贅沢なブランドのための挑戦の最も重要のそして関連したの投資に対するリターンのための知的財産権(IPR)の規則、時間枠、低く贅沢なブランド認知、活気づく中国の観光事業および限られた小売りの下部組織にかかわる。
• IPRの規則
米国に従って。 北京の大使館は世界に中国の海賊行為率最も高いのの1つに残り、平均すると、消費者製品の20%偽造である。 国内会社は分る情報産業の大臣による最近の調査の海賊行為によって、ことをそのような問題に苦しむ中国の会社の37%悩む。 (51)
中国の政府はIPRの保護に関する有効で、完全な法律システムの確立の侵害をそのような法律の施行、監督および点検を増強するためにした。 但し、IPRに関する深刻な問題はローカルレベルに施行および罰に司法権が多くの政府関係機関およびオフィス中拡散するのである。 (52)
中国の会社は今IPRの保護を必要とする、その結果、またよりよい施行を要求しているブランドを造り上げ始めて。 最近の偽造の場合はブランドの信用の重要性のある中国の消費者間の意識の上昇で助けた。 中国の裁判所は贅沢な商品を偽造している会社の下の追跡使用中である。 In 2005 alone, over 13,000 cases were filed, a fifth more than the previous year, including many launched by foreign firms. (53)
• Longer-term returns
Despite the fact that luxury sales in China are on the rise, luxury brands should not expect a quick return on their investment. The costs of setting up, training staff and building brand awareness can be high, while demand remains limited in the short term. High import duties and consumption taxes will make it difficult to target market segments beyond the economic elite. (54) As a result, many luxury brand companies can expect to wait five to ten years to see a return on their Chinese investment. Thus far, only a hand full of luxury brands, including LVMH and Prada, have reported making significant returns on the Chinese mainland.
• Shortage of services providers
Finding the right location poses a problem, as does the process of applying and being approved for a retail license. This is because China has yet to streamline such processes. (55) As with other sectors, the pace of change in China’s retail industry has created bottlenecks and the need for new and professional services. There are still few credible local specialist developers of retail property on the mainland. More commonly developers have adopted easy solutions, either leasing property long term to a department store or hypermarket, or selling it in small units to investors and entrepreneurs. And, although this leads to a satisfactory outcome for the developer, it brings monotony for the shopper and a growing number of ailing retail centres. Chinese developers need to be able to work with retailers to create a much more attractive shopping experience for consumers. (56)
• Ineffective advertising and media
While luxury brands have been placing advertisements in internationally renowned magazines, they often find the message is lost. This can be attributed to Chinese newsstands, which are overflowing with advertisements to the extent that most readers barely notice a luxury newcomer. A breakdown in advertising messages is also a result of the size of the country. While a marketing effort in one city may yield results there, it will have little to no impact elsewhere. Many cities outside of the main commercial centres may have potential customers, but reaching them means doing something that they can see directly. This has led some high-end brands such as Cartier to break with their standard practices and advertise and promote their products more directly than they would in other markets. Cartier has not only gone to print, but also to television as the best choice for developing the Chinese market. (57) Media costs in China can however be very expensive, particularly in Beijing, Shanghai, Guangzhou and Shenzhen. Complemented by heavy clutter and difficulty in reaching targeted audiences, building brand equity can be a costly exercise. (58)
• Staff shortages
Some luxury retailers, initially attracted by the low cost of labour in China, have struggled because of a lack of local management talent. A good strategy here is to find trained staff or to train and develop staff once employed within an organisation. However, in some cities, there is also a clear shortage of trained staff in sales and service positions related to luxury goods. Luxury brands in China need to empower their employees to become brand ambassadors.
• Brand positioning
For those eager to expand in China, it is critical to take note that success in the Chinese market requires far more than opening many retail outlets. Product, presentation, packaging, promotion, distribution, merchandising and advertising should all contribute toward an essentially simple, unified purpose- delivering genuine brand value to customers. The most successful luxury brand firms began the process of building their brands long before they entered the market. This is a very important consideration for the Chinese market where consumers know little about luxury brands.
Moët Hennessy, one of the most successful luxury wines and spirits brands in China, and part of the LVMH group, is a prime example. Following the establishment of its Beijing office in 1996, the company spent nearly five years conducting market research on consumer psychology and behaviour, distribution channels and media advertising before its formal entry into the Chinese market in 2001. Heavily investing in marketing, public relations and retail networks, the company has a firm strategy of keeping balance between the enhancement of brand image and the expansion of distribution channels. Proud of its history, strong traditional values and uncompromising attitude towards quality, the company has endeavoured to perfect its brand image in all aspects. By 2005, Moët Hennessy had accelerated annual growth to about 15 to 20 percent, with stable development in 26 cities across China. (59)
• Managing risks
In an effort to leverage better distribution channels and the market knowledge of local dealers, as well as to lower operating costs, many foreign luxury companies choose to license to Chinese retailers. Unfortunately, this strategy has led to failure for many who subsequently found that distribution channels are not being adequately controlled, particularly with retailers selling counterfeit goods alongside genuine products. As such, more luxury brands in China are choosing to build dedicated retail outlets of their own, eliminating the concern for inappropriate licences, and focusing on the main stores. However, for smaller luxury brands this may not be feasible and using an intermediary maybe essential. If this is the case, then it is important to monitor the franchisee closely so that the brand is protected and uncompromised at all times.
• Promoting a culture of luxury
For luxury brands in China, the focus should not just be on selling products. Luxury brands need to seed their success through establishing a luxury culture in the Chinese market. Such culture will define the context in which luxury brands operate. Many Chinese customers have little sense of luxury culture with much of the nation still living in relative poverty, and while there is a growing cohort of rich Chinese most are yet to have a full understanding of and appreciation for the “luxury lifestyle”. While the sudden jump in wealth among Chinese has resulted in a short-term boom in luxury buying, only through the cultivation of a luxury culture can luxury brands look forward to sustainable, healthy development in China over the long term. As has been evidenced, fashion shows, special events and other public relations efforts by luxury companies create a luxury culture environment, giving ample opportunities to Chinese customers to practice their taste for a luxury lifestyle and build emotional connections with the brands.
Nick Debnam & George Svinos, KPMG
This is part IV of a KPMG Retail Report. Next week we will publish part V.
Read Part I, Part II and Part III
