This week in the news, smaller e-retailers may be fleeing Taobao, luxury conglomerate Kering has announced a Chinese executive program, luxury watches remained popular in China, the new Chinese middle class is transforming the country’s consumer culture, and Stuart Weitzman announced big e-commerce plans for China.
Taobao is the go-to Chinese online retailer for just about everything. Run by the Alibaba Group, the site has millions of independent e-retailers who sell clothes, electronics, beauty products, and more. While Taobao may prove to be a successful endeavor for some, stiff competition among e-retailers is leading smaller sellers to other online venues, or to stop selling completely. Data collected by the China e-Business Research Center shows that the number of individual e-retailers in China was at 11.22 million at the end of 2013, down a marked 17.8 percent from 2012. While this decrease can’t be directly correlated with e-retailers moving from Taobao to smaller marketplaces, the center does say that Taobao’s numbers do count for 96.5 percent of China’s consumer-to-consumer commerce.
Luxury conglomerate Kering, a big advocate of talent development, has decided to launch its own executive training program in China to ensure it has a deep pool of high-quality talent. In collaboration with Tsinghua University in Beijing and HEC Business School in Paris, Kering has designed an 18-month program that will provide tailor-made executive education to high-potential managers at Kering and its brands operating in Greater China, including Gucci, Bottega Veneta, Balenciaga, Saint Laurent, Boucheron, Pomellato, and Stella McCartney. This is Kering’s first training program targeting mid-level managers in China. The goal is to improve managerial skills “to address challenges arising from the changing dynamics of Asian markets,” according to the company.
China’s demand for luxury Swiss watches remains the highest in the world, a recent study reports. Last year, China showed the greatest year-on-year growth in demand for luxury watches, according to the latest edition of WorldWatchReport from Digital Luxury. The rate was 59.4 percent, over 10 times the 5.7 percent average worldwide. Mainland China now represents the third largest market in the world for Swiss watches, after Hong Kong and the United States, according to a report by the Federation of the Swiss Watch Industry released last month. Although the industry’s exports to China decreased by 12.5 percent year-on-year to 1.45 billion Swiss francs (HK$12.7 billion), the market remains stable.
A new, young middle class is emerging in China, and their buying power is dramatically shaping the country’s commerce. Most members of this demographic are the only child in their families, and often also the children of only children. This so-called “4-2-1″ family dynamic means that the savings of two parents and four grandparents are passed on to one child. As a result, the new middle class is less sensitive to prices, eager to show its affluence, loyal to brands, and prefers to purchase niche products over mass-market ones. This family model, along with increasing per capita household incomes, is changing the way that Chinese consumers view wealth. Spending by urban Chinese households is expected to rise from 10 trillion yuan (HK$12.49 trillion) in 2012 to almost 27 trillion yuan in 2022.
The brand is especially keen on e-commerce, noting that it is the biggest growth engine for the company, and it represents about 35 percent of total business in the US. The company launched an e-commerce site in Hong Kong this week and will follow with a site in China this September. A new Stuart Weitzman Hong Kong concept store designed by architect Zaha Hadid opened in March. The company will open another seven stores in China this year, including a store in Mongolia later this month and a Beijing concept store in Shin Kong Place at the end of year, and about 15 more stores in 2015. The brand will open seven concept stores designed by Hadid in the “key fashion epicenters of the world.”
image source: luxuo