China's retail sales are expected to more than double by 2013, growing from $1.22 trillion in 2007 to $3.2 trillion four years from now, according to BMI Forecast Modelling. Strong underlying economic trends, population growth and the increasing wealth of individuals are key factors behind retail market expansion. Regulatory reform after China joined the World Trade Organization has let foreign retailers make significant inroads into the market, contributing to annual retail sales growth estimated at 21%. According to Global Demographics, more than 30% of all urban households in China had yearly income above CNY40,000 (US$5,848) in 2007. The National Bureau of Statistics (NBS) estimates that urban retail sales accounted for nearly 70% of total retail sales in 2008.  - 2009 July    AD AGE


New Frontier : China

World's largest luxury market 

The Asian market analysis company CLSA says that by 2020 about 44 per cent of the customers worldwide for luxury goods will be in "Greater China."   The survey of both well-heeled consumers and luxury store managers found that the average Chinese millionaire is 39 years old -15 years younger than non-Chinese counterparts -is male, has 4.4 expensive watches and three cars, preferably BMWs.  CLSA says the global luxury goods market was worth $225 billion last year, but by 2020 will reach $515 billion.  

Abercrombie & Fitch is reportedly paying $7 mln HKD per month as rent.   Meanwhile though the group seems to be loosing its edge...    >>  MORE

China Daily reports that demand for luxury goods is driving the real estate market in China."  Brands such as Zara and H&M opened more than 20 stores in 2011, while Uniqlo had more than 120 store in China by the first half of 2012."  >> MORE

BBC has even more specific information with details that Sweden's H&M opened 32 outlets last year and now has 78 stores in China. Zara, owned by Spain's Inditex, had 92 stores in 30 cities at the end of 2011.   Forever 21, J. Crew and the Gap...   >>  MORE

  IFC Shanghai

"With an estimated 100 luxury brand malls currently being built in China and the store opening process taking around two years per store, it takes an incredible amount time and resources to cover store development alone. Most Presidents of the luxury brands in China I know often spend four or more days every week flying around China looking at new malls, negotiating leases and ensuring current stores are operating properly.  --  MAOSUIT

New shopping mall developments in China are dominated by either Hong Kong and Singapore based Property developers such as Swire Group, Sun Hong Kai, and Kerry Properties , or they are government backed and invested projects. The Hong Kong property developers have long experiences with retailing and are much more experienced in operating luxury shopping malls. Therefore they have much higher chances of success and have relative ease in bringing the luxury brands into their malls.    -- MAOSUIT

UK luxury jewellers eyeing China

Britain's luxury jewellers are opening outlets in China, where demand for jewellery is set to grow while appetite wanes in western markets.

Royal jeweller Garrard became the latest in a string of British brands to open an outlet in the Lane Crawford department store in Hong Kong last month, where brands usually test the waters for Chinese demand.

The British Jewellers' Association (BJA) held a showcase in Beijing also last month organised by designer Fei Liu and attended by Chinese actress Liu Shishi.

'The endgame is China,' Boodles managing director Michael Wainwright told Reuters. The upmarket British jeweller, founded in 1798, opened an outlet in Lane Crawford in August and plans to expand into the mainland along with an expansion of the department store.

'What appeals to us is what appeals to everyone else about the place - their appetite for luxury goods and their existing wealth and their likely wealth in the coming five, 10 years,' Mr Wainwright said.

The newcomers stand to benefit from British culture and design as they seek to tap a market that is growing rapidly and is already the world's second-largest market for gold and the biggest for platinum jewellery.

'I think there is a sense of coolness with British jewellery, something distinctive about their designs, which makes it different from other European brands,' said Angelica Cheung, editor-in-chief of Vogue China.

Demand for gold jewellery in China rose 13 per cent year-on-year in the third quarter, and platinum demand is expected to increase by 2 per cent by the end of the year. By contrast, UK and US jewellery consumption fell by 14 per cent and Italy's by 16 per cent in 2010.

Tiffany's annual report showed an increase in sales of 29 per cent in Asia-Pacific in 2010 versus 12 per cent in the Americas.

Stephen Webster, a British jeweller with outlets in Spain, Russia and the United States, opened in Lane Crawford in 2010. 'China is certainly in our sights,' founder Stephen Webster said in an e-mail.

Theo Fennell first opened in Lane Crawford in 2005, and its chairman and chief executive of the same name said earlier this year that the brand wanted to establish itself on the mainland.

'The Chinese are keen to invest in precious metals and very interested in luxury products produced by up-and-coming UK designer brands,' said Lindsey Straughton of the BJA.

But Jolene Chao, a 23-year-old financial recruitment consultant at Michael Page in Beijing, said: 'UK brands have only a few high-end stores in China. Therefore they are yet to be nationally acknowledged and admired.'

Vogue's Ms Cheung said that British jewellers need to position themselves carefully and highlight what makes their brands different.

They face local competitors such as Chow Tai Fook and established foreign players such as Tiffany and Cartier. Cartier opened its first boutique in 1997 and now boasts 36 across China.

The market is growing so rapidly, however, that newcomers do not need to take market share from established brands to succeed, said Fflur Roberts, global head of luxury at Euromonitor.

'(Chinese consumers) do like brands that have a story behind them. There has to be a lot about the heritage of that brand within the advertising,' Ms Roberts said, citing the success of British clothes brand Burberry in China.

The warrants given to British companies that are official suppliers of the royal family are 'a wonderful marketing route to take', she said.

One Hong Kong banker said an exhibition about British jewellery through the ages proved popular in Shanghai a few years ago and that 'it might be a good idea to start marketing the history and royalty of most British brands in China'. -- Reuters   2011 December 12

A report from Barclays Capital says China now accounts for 12% of global luxury goods sales. This is set to rise further as the country's market is forecast to grow a further 20-30% a year.  --  2011 GUARDIAN

China: The Biggest Opportunity for Prestige & Luxury Brands in a Generation

-- NYU Stern | George Washington study

The World Chases the Chinese Consumer

In the China Race

Made-in-China brands

Bear Stearns and GOME bet big on China retail

Bear Stearns and the founder of GOME create a $500 million fund to invest in growing businesses in China's retail sector.

US investment bank Bear Stearns and Eagle Investment Group, an investment company of the GOME group, have announced a strategic investment alliance to focus on opportunities in the retail sector in China.

Bear Stearns’ private equity arm, Bear Stearns Merchant Banking (BSMB), will work with the 50:50 joint venture. Each partner will contribute $250 million of capital to the fund, which will be deployed in retail businesses in China, helping them to expand both domestically and beyond China. Bear Stearns representatives told press typical investment size would be in the $25 million-$100 million range and further capital raising could be considered, once the initial commitment is deployed.

Eagle Investment is a closely held company chaired by Wong Kwong Yu, founder of Hong  Kong listed GOME Electrical Group. Wong is one of China’s richest men.  He is self-made, having established GOME in 1987 and building it one of China’s largest electronics retailers. GOME is today the largest retail business listed on the Hong Kong Stock Exchange and a constituent of the MSCI China Index.

BSMB manages around $5 billion of funds. Since it was founded in 1997, it has invested in more than 50 companies including Aeropostale, Balducci’s, New York & Company, Seven for All Mankind, Stuart Weitzman and Vitamin Shoppe Industries in the retail sector.

In April 2006, Wong sold $160 million of stock in GOME to meet free float requirements, reducing his stake in the company from 75.67% to 69.6%. The sale was well-timed, coinciding with a rally in the Hong Kong index to an all-time high. There was good appetite for the stock, illustrating that investors seem to share Wong's conviction that China’s retail sector is set to continue booming.

In July last year, Wong then merged China Paradise’s network of 205 stores into GOME’s 296 and created a leadership position in the retail sector. He has now committed to injecting the home appliance stores he owns into the listed entity by 2011.

“Bear Stearns Merchant Banking will contribute to Eagle’s success in China”, says Wong, drawing attention to the combination of the US private equity firm’s experience in the retail sector and his own retail China-centric experience. Wong told press he was bullish on opportunities in China’s second-tier cities and the rural market. He also clarified that the fund would not invest in GOME or in home electrical appliances companies.

China has become the world’s second largest economy in terms of purchasing power parity and is registering strong annual GDP growth. The country’s 1.3 billion strong population and growing purchasing power have made investors bullish on the retail sector. In February, Wal-Mart acquired the Trust-mart chain of 101 hypermarkets in a deal estimated to be worth $1 billion.  Other international retailers investing in China include Carrefour, Auchan, Watson, Tesco and Metro.

But simultaneously, local entrepreneurs like Wong are waking up to the opportunities that lie beyond the obvious metros and big cities. A large percentage of China's population resides in the smaller towns and cities where the opportunity for organised retail is huge. If the retail experience of Bear Stearns and Eagle gives them a competitive edge in identifying who tomorrow’s winners will be, the fund is set for success. -   By Sameera Anand    ASIA FINANCE     21 March 2007


China's e-commerce turnover to hit $9.6 billion in 2012   >> MORE 

When Chinese consumers shop for high-end and luxury branded products they often believe they have greater choice, are getting better deals, better service and the authentic product online as opposed to offline   >>  MORE

China is home to the majority of the world's most digitally powered consumers   >>  MORE

Yoxx sees China as one of its top 3 markets by 2015    >>  MORE


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