This week in the news, Chinese officials are attending lavish “training centers,” footwear serves as the perfect entry to the luxury market, Sotheby’s opens its first Asian wine store in Hong Kong, Lamborghini sees huge demand for its new model, and a new study examines China’s international tourism boom.
Faced with the government’s anti-corruption crackdown, Chinese officials are visiting “training centers” to experience the luxury treatment. Set in some of China’s most scenic areas such as Yellow Mountain in Anhui, Guilin in Guangxi, and Xiamen in Fujian, these “training centers” were built to provide employee training sessions for local governments and state-owned businesses. Instead of a quaint, isolated destination where employees can train without distraction, these training centers feature the kinds of accommodations one would find at The Four Seasons. The Futai Vista Estate near Yellow Mountain features five-star hotel accommodations and seven themed restaurants with chefs trained in France and dinner costing as much as 1,000 yuan.
Retail opportunities for footwear brands are promising in China. Although China’s yearly household income is still around $2,100 overall and $4,700 in Shanghai, the number of consumers with disposable incomes is growing, and China’s middle class along with it. Shoes often represent an entry point into the luxury market for people with money to spend. More than 3 billion pairs of shoes were sold in China last year, and international brands are at the top of China’s high-end footwear retail market. In the past five years, Stuart Weitzman, Giuseppe Zanotti, Christian Louboutin, and Jimmy Choo have all expanded their presence in the country. However, with real estate prices a concern, luxury footwear brands have been less aggressive as they expand into the Chinese market.
Sotheby’s Auction House has opened a wine store in Hong Kong to tap into the Chinese wine market. The new retail outlet in Hong Kong’s Central business district is the company’s second location. The other location, which opened in 2010, is in Sotheby’s New York headquarters. Sotheby’s has sold HK$1.4 billion (US$184 million) worth of wine over the last four years at auction in Hong Kong. Combined with a global wine surplus and a weaker demand for wine in major economies, China and other emerging markets are being heavily targeted to boost revenue. Due to the spending power of Chinese buyers and the abolishment of import duties on wine in 2008, Hong Kong is now the world’s largest wine auction market.
Lamborghini’s latest model comes out this month, and the supercar’s prospects are looking good in China. The automaker sold just 267 cars in China, including Hong Kong and Taiwan, in 2013. But the company has already has already received 300 orders for entry-level Huracan LP 610-4 from the same area, and is anticipating a profitable year. Lamborghini manufactures only two models of automobile: the 10-cylinder Huracan and the flagship 12-cylinder Aventador. The Huracan will serve as a replacement for the Gallardo, which finished its 10-year production run at the end of 2013. By the time Lamborghini stopped manufacturing the model, it had become the company’s best-selling car, with 14,022 units produced.
The World Tourism Cities Foundation (WTCF) has released a new report, and Chinese tourists spent $128.7 billion overseas last year, a 26.8 percent increase from the year before. Outbound tourists also spent a whopping 57.76 percent of their money shopping, 17.82 percent on lodging, and 10.88 percent on transportation. The number of Chinese tourists abroad is also on the rise. There were 98.19 million Chinese tourists abroad in 2013, an 18 percent year-on-year increase. Tourists’ incomes tended to be high — about 11,512 yuan ($1,872) on average, nearly three times the average income of the citizens of China’s major cities. The report also reveals that tourism is becoming markedly more family oriented.
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