Tuesday, 13 July 2010

China decorates our table, funny how the cracks don't seem to show

pardon the seemingly random title, but it's a line from one of my favourite tori amos song "china", from what i feel is her best album to date, "little earthquakes". however china is the theme, as 'the business of fashion' points us to a rather interesting read: "China: The Biggest Opportunity for Luxury Brands in a Generation."

pic credit: reuters pictures

the article talks about the depegging of the chinese currency (CNY), and provided some statistics about the chinese consumer and the luxury market. without using too many financial jargons, here's how the change in the chinese government's policy on it's currency will affect the global retail industry:

china previously tagged it's currency against the USD. it's an economic tool which allows china and other developing nations to suppress the value of it's currency, thereby making goods cheaper to the outside world, boosting exports and stimulating domestic growth. hence we've been seeing a mass influx of "made in china" garments. manufacturers said "labour and materials is cheap in china", that's because china made it so.

with the fast growth experienced in recent years and the chinese yuan suppressed at low values, the depegging will make the yuan appreciate in value. which means 1 CNY will now buy more USD (and other currencies) as compared to periods before depegging. this means more power to the chinese consumer. imports would appear cheaper so foreign companies are more than happy to sell. the stronger currency would also further encourage travels. europe, with it's economic mess and weakening currencies, will stand to benefit from (even more) chinese tourists.

amazing how the policies of one country could have such far reaching effects on the global economy.

louis vuitton spring summer 2011 / louisvuitton.com

everyone knows, and everyone is talking about how china will be, or is the next big thing. i am always intrigued how the luxury goods industry would react. do you subtly introduce more oriental motifs or eastern flavours into your collections? louis vuitton's recent spring 2011 collections "imagined a digital bohemian traveling the world, composing an eclectic personal style with no boundaries, luxe clothes for the well-heeled contemporary traveler." a very open interpretation which sees the vuitton traveller heading east, accessorised with orientally inspired silk scarves and bags.

left: bag from louis vuitton spring 2011
right: gucci shanghai bag 2009/2010

i've always wondered, should designers do an obvious shift in designs to suit the far east market, or is it actually the challenges of the PR/marketing/distribution team to sell the designers' vision to a new market (what designers want, what companies need). of course, most tread somewhere in the middle. but i see the above reinterpreted louis vuitton keepall as a very obvious attempt to win over the chinese market. inspired by gucci's previous attempt with their 'boston' bag created specially for their shanghai store opening? gucci's 'boston' was limited to shanghai (and i really do love the design), but vuitton's new keepall will be a global affair. will it alienate shoppers from other regions?

for the record, i desire that silk scarf, but i find that keepall to be mildly patronising.

hermès to launch "shang xia 上下" in china / shang-xia.com

i previously wrote about my thoughts on hermès launching a new company called "shang xia 上下" (please read/re-read, shameless but i thought it's rather good!) . it's first shop due to open in shanghai in september this year, the collections will feature chinese artisanal know-hows and the use of exquisite chinese materials. as mentioned by hermès to a french newspaper, the objective of "shang xia 上下" is to offer cheaper products, as well as capitalising on the growth of the luxury market in the country in 2010. the new brand will be tailored for the chinese market where hermès lags behind its competitors. i am actually really intrigued, and keen to see what it has to offer.

with the exploding population and restrictive one-child policy, families now have rising disposable incomes (less mouths to feed). with the sole child standing to also inherit previous generation's assets (both parent's savings), it is indeed more power to the chinese consumer.

at a dinner party last month, i was brushed off for mentioning the russians and their new-found wealth. is this new found wealth for the chinese? there don't seem to be a point in this article, but i am honestly intrigued and fascinated about the roaring tiger (no longer a sleeping giant). it is this part of fashion/business that excites me. with me based in london but roots tracing back to china, this just adds another dimension to my fascination.

"china, all the way to new york, maybe you got lost in mexico. i can feel the distance, i can feel the distance getting close." ~ tori amos 'china'



  1. This is quite a post.

    Everybody, everywhere, are talking about China. How powerful they are, how dangerous they could be.
    Well, by the fashion side, u already talk about Gucci, Hermès (i'm impatient to see what would be Shang Xia items), and LV(even if i didn't notice that the new collection could targeted the eastern customers).

    I don't think that designers will design only items specially for the China market. The customer need dream and a part of foreign land.

    But they will have to produce well and quickly, like Burberry which immediately proposes items after the show.

    The years to come will be decisive on the chess-board of the marks of luxury in China.

    We all stay tuned.

    PS: I really, really, like ur blog.

  2. the world is getting smaller indeed and the fashion world is no exception. it's not only china that's booming but the whole asean region. soon, the asean free trade area will commence and the exchange of goods will be rabid. that's why a lot of western companies are tapping on the eastern market. but it's a double edge sword. i find it sad when you look at a coat's tag and see made in china or philippines. it diminishes luxury for me.

  3. For the time being, luxury brands which go the route of creating "China-relevant" aesthetics may indeed be a sound business decision.

    A large component of the Chinese snatching up luxury goods seem to very well be what you mentioned, those who have "new-found wealth" acquired in this lifetime. They aren't exactly educated in regards to the allure of luxury goods beyond its price-tag and perceived value to others (via visual cues such as logos).

    But that's not to say that for the next generation who are better educated about the world of luxury fashion thanks to parents who have accrued their fair share of designer goods won't see things in a different light.

    For the time-being, conspicuous design and the Chinese market seem to carry bond, but I find breaking this relationship easier said than done. I can't speak for China, but in Hong Kong, there still lies a segment that are more worried about projecting wealth with their outfits than style.

  4. I was at Bicester village last weekend and i have never seen that amount of Chinese people in one place. They were coming in by the coach load. The Burberry store was packed full. I spent the most time in the Zegna Store and there wasn't a single Chinese person there.

  5. This post is flawless.An amazing piece of work.I have not read or seen any commentaries/reports/essays/editorials of late as excellent as this to-date.Those out there who call themselves editors,writer,journalist and whats-not should cover their heads with brown paper-bags now because there is such a darn bloody good writer called Joe..

  6. It's beyond patronizing - it's insulting and borderline exploitative. Quite frankly if Chinese wanted handbags decorated with long dead Gods and historical art, we would do it ourselves.

    The appeal that Hermes, LV, and Dior have for many Chinese, is that they're European prestige items. The idea is that these are the world's best items, the world's best handbags, the world's best leather goods. It doesn't matter if it's true or not - it's the reputation that the items carry in the eyes of our peers.

    The best thing that these brands can do is keep doing what they're doing, and make their bids in China's market subtle.

  7. China, Russia...and Brazil...the new emerging luxury market. I don´t think that the industry is gonna produce/creat products specially for this or that country but special pieces that celebrate the opening or some special ocasion could work not only in that country but to promote the brand in everywhere else. For example,Louis Vuitton, a pioneer, opened its first unit in Brazil 20 years ago and now operates six stores, including the new Iguatemi Brasilia unit. To commemorate both events, Louis Vuitton commissioned artist Vik Muniz to reinterpret the iconic LV logo for a scarf. Called “Individuals — Pictures of People 2009,” the scarf is being sold in Brasilia and then across Brazil, for $633.
    Meanwhile, Diane von Furstenberg unveiled her first store in Latin America at Iguatemi São Paulo. Von Furstenberg created a collection called My Name is Rio for the store. Iguatemi and the city of São Paulo are sponsoring an exhibition at the shopping center, “Diane von Furstenberg: Journey of a Dress,” which spans the designer’s life and career.
    The luxury market might be having it rough globally. But not in Brazil, where a booming economy is making the sector skyrocket -- to the glee of fashion labels.
    Let them come! Loving it!

  8. wow love the detail & design! come follow me http://www.fashioniceice.blogspot.com xoxo

  9. I can see where Hermes is coming from. A Chinese friend told me that imported items are a pain to pay for.

  10. very nice... i can sense your deep love for fashion. you tackle and knows every facets of the industry.

    the appreciation of value of yuan would also mean increase in china's labor cost... if this happen, these luxury brands may no longer have their products manufactured in china (and in my opinion, would somehow resolve the issue of counterfeited luxury items...)>>> just a thought



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