This week in the news, Hong Kong protests are dampening retail sales, a new Nielsen study provides revealing insight into Chinese luxury shoppers, China in Paris helps Chinese fashion designers get on international buyers’ radar, China’s austerity measures are helping the country’s wine industry, and international footwear brands weigh in on their China strategies.
Chinese wine was once known for its strong and often unpleasantly oaky flavors, the result of winemakers’ attempts to copy the wines of Europe. Distributors catered to government officials, and many of their best wines never reached the general public in Beijing or Shanghai. Since the government’s crackdown on luxury spending, however, vineyards are focusing their efforts on creating new and more sophisticated wines for a new group of consumers. Tyney is one of many winemakers from around the world who have been recruited by local authorities in Ningxia in northwest China to develop a new array of wines with tastes that are subtly, sophisticated, and uniquely Chinese. Others from South Africa, France, and New Zealand have also joined the effort.
With Hong Kong already grappling with slower retail sales – projected to grow at 5 percent, down from 13 percent – the protests at Central are driving away any hope of a near term rebound. The timing of the protests couldn’t be worse given that this week is China’s Golden Week, a week long holiday when many mainland Chinese travel to Hong Kong and abroad for vacation and shopping. Now, Hong Kong is probably off the travel list of some mainlanders and retail sales are expected to slide further. Popular with mainland travelers, the jewelry, watches and valuable gifts sector is the hardest-hit, which ING estimated to be down by 15 percent this year so far. According to Credit Suisse, mainland Chinese travelers account for about one-third of Hong Kong’s retail sales in 2013.
As luxury brands grapple with the rapidly changing Chinese luxury consumers, any insight into the shopping habits and awareness of this group provides an edge. Results from a new Nielsen’s Mainland Chinese Luxury Shopper survey reveal the significant role of social media influence, travel retail, advertising, and e-commerce. Nielsen surveyed 1,005 respondents from tier 1-3 cities who have traveled and purchased luxury goods overseas in the past 12 months and plan to do so in the next year. The survey found that social media and online platforms heavily influence Chinese luxury shoppers, Chinese luxury shoppers prefer traveling to nearby destinations, the buzz is still about quality, design, and brand heritage, and physical retail stores are still the sales leaders.
Chinese fashion designers had the chance to show their brands to the world at Paris Fashion Week at the China in Paris showroom. The showroom, which was a PR-only affair up until this year, has attracted international retailers, such as Macy’s, Bloomingdale’s, and Opening Ceremony. China in Paris, organized by the China National Garment Association and Chinese luxury consortium Inlife, is not only building the international profile of these Chinese designers, but also improving their business at home. In addition to Wen, the other designers represented in the showroom were Jie Si, Kilin Chen, Niki Qin, Allan Qi, Ji Cheng, Lilian Wen, Kun Lu, a favorite on China’s red carpets, and Kilin Chen, known for irreverent prints.
The Chinese government’s austerity measures finally seem to be having an effect on international retailers’ enthusiasm for expanding in China, with 60 percent of companies saying they feel less welcome in China than before. Despite any hesitancy from companies in expanding in China, it is still a key market for retailers. With the e-commerce boom outside of China’s first-tier cities, a storefront in every city is not as necessary. International brands such as Burberry, Zara, and Estée Lauder have found success in opening stores on Alibaba’s Tmall, and more brands are embracing the e-commerce platform everyday. Major brands have their own take on the market, but what is clear is that Shanghai and Beijing are still the favorite Chinese cities for international footwear retailers.
image credit: cnn