These are tough times for the global luxury market and last year saw a pretty deep contraction in sales in China and southeast Asian markets, which gave global luxury brands the shivers.
Things appear to be bouncing back. The luxury brand Burberry said its European business was flat in the last quarter of this year, while the US ticked up just 2 per cent. Compare this to a 15 per cent rise in the Asia-Pacific market, with Hong Kong and China standing out, and you can see why the big brands are trying to crack the Asian markets for future growth.
Chinese sales rebounded in the fourth quarter of last year,with much of the pick-up down to male fashionistas who crave Gucci and Burberry man bags. Burberry saw sales of men’s clothing rise more than 50 per cent over the final three months of 2012, while men’s accessories such as handbags rose nearly 40 per cent. That’s a lot of man bags.
Men account for about 55 per cent of China’s luxury goods market, well above the global average of 40 per cent, according to research from the brokerage CLSA. Consultants Bain Co say Chinese shoppers account for one quarter of all luxury purchases globally and last year surpassed US consumers to become the world’s top spenders on luxury goods. A lot of this is because business partners like to give each other “face-y” expensive gifts, and also need high-end gifts to woo government officials or potential partners.
It’s not just high-end clothes. Daimler last week agreed to buy a stake in the car unit of its Chinese partner Beijing Automotive Group to help its Mercedes-Benz unit catch up with rivals BMW and Audi.
Meanwhile, Volkswagen’s Porsche unit is starting to sell Macan compact SUVs and hopes to come up with a €1.6 million super-car in China next year as part of its expansion plans in the world’s largest car market. Porsche’s Cayenne SUV is a ubiquitous sight on Chinese streets these days, so the car maker plans to double its dealerships to 95 in 2014 from 49 now.
There is also a sense that people are having a blowout after the austerity ahead of the Communist Party’s congress in November, which saw Xi Jinping elected party secretary and head of the army. He is already talking about corruption crackdowns; there are signs that this may see a slowdown in watches or expensive baijiu, the white spirit drunk at banquets here. Nothing about man bags though.
