Strategies for luxury brands

By Nick Debnam & George Svinos, KPMG

For certain luxury brands, China has already outstripped both Japan and Hong Kong as the largest single market in Asia Pacific. (37) But the growing presence of luxury brands in China is bringing with it greater competition. The country’s busiest streets, such as Nanjing Road in Shanghai, are witnessing fierce competition among the world’s luxury brands. While some have warned that the China market is becoming saturated, (38) for the time being the environment is still a positive one for potential entrants.

• Marketing

As most Chinese consumers have low levels of brand awareness, they also have low levels of brand loyalty. However this also means that sales staff can be an extremely powerful tool –with the ability to not only inform consumers of the benefits of their brand, but sway them towards making a purchase.

Read the rest of “Luxury Brands in China: Part III” or post a comment

Profiling the Chinese consumer

By Nick Debnam & George Svinos, KPMG

While hard work and plain living have been revered virtues of the Chinese people for generations, there has been a growth in demand for foreign-branded or imported goods.(19) But running counter to the growing habit of consumption in China is the traditional propensity to save. Though luxury consumption is growing, for most the dominant social idea is still prudent consumption and undertaking no more than you can perform. (20)

Research suggests that while the emerging middle class will continue to save heavily, they will also spend increasing amounts of money. (21) This is consistent with trends that suggest that China’s younger generation of teenagers and twenty-somethings show less of the caution of their parents and grandparents, and far more inclination to spend than to save. Read the rest of “Luxury Brands in China, Part II” or post a comment

It took Bill Gates twelve years and billions of missed revenue, profit and market share opportunities to learn how to do business in China … the Chinese Way.

Microsoft came to China in 1992. Eleven years later, with global revenues of $35 billion US, in China the second largest PC market in the world, Microsoft-China revenue was $300 million, and it was operating at a loss.

Read the rest of “Microsoft and Wal-Mart in China” or post a comment >>

Part I: Luxury brands and the retail sector in China

By Nick Debnam & George Svinos, KPMG

Foreign companies share a growing interest in tapping into China’s luxury market. Statistics show not only that the number of wealthy people is growing fast in China, but that their willingness to spend on big-ticket items is also on the rise, driven by an appetite for status as well as the comforts and trappings of luxury products.

China’s economy grew 10.3 percent in the first quarter of 2006 from the year earlier, overtaking the United Kingdom to become the world’s fourth largest economy. According to a preliminary estimation by the National Bureau of Statistics in China, the GDP of China in the first half of 2006 was RMB 9.144 trillion, a year-on-year increase of 10.9 percent. Total retail sales of consumer goods for the first half of 2006 also experienced significant growth, reaching RMB 3.644 trillion, a year-on-year rise of 13.3 percent. Overall, China’s retail sales have been rising at their fastest pace as increasing incomes spur spending on cars, furniture and electronics.(4) Read the rest of “Luxury Brands in China” or post a comment

By Ernie Tadla

The Bora launch was the most successful new car launch in China’s automotive history. FAW/VW couldn’t make them fast enough.

The Germans, still hurting over not getting their advertising agency, were really smarting because DMG was not following their global policy for advertising and marketing style and format. Yet, sales were phenomenal. VW hired a world-class market research Hong Kong firm to investigate the reason for the amazing launch results.

The conclusion: although DMG didn’t follow the global VW policy, the market place responded because the Chinese react to someone who markets to them the Chinese way. Read the rest of “An outstanding successful executive in North America, not in China” or post a comment