Developing Luxury Fashion Clothing Products in India and China - A Business Development Professional Dissertation

Developing luxury fashion clothing products in India and China - Business Development Professional Dissertation

Short summary of contents

This essay aims at comparing the luxury clothing market in the two fastest growing countries that are India and China. I’m dressing the panorama (market characteristics, consumer behavior and segmentations, challenges and opportunities...) of both markets and then I try to find similarities and differences. Case studies and real life examples illustrate my conclusions along the essay. In addition, I also devote a part on the current issued of the luxury clothing segment in India and China. Eventually, I provide some recommendations and useful key points for brands willing to operate in India or China.

From which company (ies) did you get your information?
I have not completed this project in interaction with any specific company. I have based my researches on secondary data. The company which has helped me the most in the redaction of this report has been KPMG. Indeed, I have used their annual reports on the evolution of the luxury market in Asia and specifically China.

“Luxury is a necessity that begins where necessity ends”
Coco Chanel…

Summary

INTRODUCTION TO THE PROJECT
LITERATURE REVIEW
DEFINITION OF LUXURY
ANALYSIS OF THE CHINESE LUXURY MARKET
PANORAMA OF THE MARKET
A SKYROCKETING MARKET IN EVERY SEGMENT
CHINESE LUXURY CONSUMERS CHARACTERISTICS
THE ROLE OF HONG-KONG
THE CHINESE FASHION LUXURY SEGMENT
A CONCENTRATED MARKET CONCERNING A VERY LITTLE MINORITY
A READY NOW POTENTIAL FOR GEOGRAPHIC EXPANSION
DOMESTIC LUXURY BRANDS
THE CHALLENGES OF THE CHINESE MARKET
POSITIONING THE BRAND EFFECTIVELY
PROMOTING A CULTURE OF LUXURY
ANALYSIS OF THE INDIAN LUXURY MARKET
PANORAMA OF THE MARKET
LUXURY CUSTOMERS SEGMENTATION
INTERNATIONAL BRANDS IN INDIA : A VERY RECENT PRESENCE
CHALLENGES FOR LUXURY BRANDS IN INDIA
STRATEGIES FOR LUXURY BRANDS IN INDIA
CURRENT ISSUES AND TRENDS
LUXURY IN ASIA: A BRIGHT FUTURE LARGELY DEPENDING ON THE EVOLUTION OF CHINA AND INDIA
COUNTERFEITING
STAFFING AND INTERNAL MANAGEMENT
“LUXURY DIVERSIFICATION USING BRANDING CONCEPTS”
“OCCIDENTAL” LUXE MADE IN ASIA
APPEARANCE OF LOCAL BRANDS
STRATEGY RECOMMENDATIONS
CONCLUSION
METHOD OF RESEARCH
SOURCES AND REFERENCES

INTRODUCTION TO THE PROJECT

It seems to me very interesting to study the luxury market in India and China as it symbolizes the shifting power occurring now and caused by globalization. The two fastest emerging economies are changing the international economic order and luxury is one of the best examples of that trend.
Until the eighties, the luxury market was almost only concerning the United States and Europe.
Then, the development of Japan has considerably modified the market as all brands wanted to take their share of the booming Japanese market. They have been very successful there and thus gradually expanded in other liberalized Asian economies such as South Korea, Singapore, Hong-Kong or Taiwan.
Since a couple of years, approximately a decade, it has been the turn of China and India to be touched by luxury products. However, the proportions, the opportunities and potential of both countries are impossible to compare with any other country above mentioned.
The sudden appearance of India and China on the luxury stage has made the luxury market twice bigger. It has instantly opened a door on 2,5 billion new consumers.
Whereas sales are stagnating in the US and Europe (still representing 70% of the total market), they are progressing at a 10% pace yearly in emerging countries, India and China first.

Families now have various income sources, an increasing exposure to the outside world through travel and Internet. They are adopting a spending approach pasted on western countries rather than the old saving attitude that they used to have.
They don’t only buy necessity products, their expenditures have turned towards lifestyle and well-being items.

Moreover, China and India have a real tradition of luxury. Often when we speak about luxury, it is related to an item created in Europe but India and China have had impressive craftsmanship and unique materials for centuries. The maharajas or the Chinese emperors have been avid consumers of luxury, they were already living this lifestyle when the western civilization was not born yet. Of course, this luxury tradition has more or less disappeared over time but it is now reappearing with an incredible intensity..
However, as we will see, this is mainly a market of the future because it is not mature yet. This means that profits are not for tomorrow which is a problem when all shareholders want more and more dividend every year. Most of brands are not profitable in China and they are even losing money in India but this is the way to go. They will see the payback later.
Understanding both Chinese and Indian luxury markets, identifying similarities, pointing out differences and challenges is what interests me.


LITERATURE REVIEW

The spread of luxury products in developing countries is a growing field of interest as new markets are currently appearing. On every continent, new customers are getting attracted by luxury and they come from countries that would not be suspected to be luxury markets some days ago. For instance, there is Indonesia, Turkey, Venezuela, Malaysia, Gulf countries.. The number of markets potentially interesting for luxury brands keeps increasing.
Thus, consulting companies are frequently releasing reports detailing the evolution of the market in those countries. Luxury opportunities across the world and especially in India and China seem endless. KMPG release a report on the luxury business in China every year, Ernst Young make a focus on a different market every year…
Yet, I have not really found a comparison of both markets as India and China are studied separately almost all the time. I reckon that they should be compared as they have many similarities.
They are two gigantic countries in terms of population and geographic space, they have a long history, their population is multicultural and very diverse in terms of religions, ethnics, values and way of life. Economically speaking, they are displaying the same high growth rates and are only initiating their development. A lot of problems are still remaining from the poverty and social inequalities to the development of inland territories.
More related to the consumption of luxury products, my feeling was that they both shared this same “show-off” attitude i.e. this necessity to prove success and social status through items that the mass can’t afford. Indian and Chinese customers are in this sense very similar as this is their main reason of buying luxury. (See below the graph “Why purchasing luxury items”?)
Consequently, I have chosen to research this relatively new but booming topic.

DEFINITION OF LUXURY

At the beginning of my research, I was very ambitious at finding an universal definition of luxury. After a few readings, I realized that it would not be simple as luxury evokes different things for everyone. Then, I thought that the best was to stick to the definition of KMPG in their recent reports prepared on the Chinese market.
Thus, according to the definition given by KMPG in their 2010 analysis of luxury brands, “luxury refers to an inessential but desirable item or a state of extreme comfort or indulgence. Despite the absence of functional advantage, consumers are willing to pay the significant price difference because they have a unique set of characteristics including premium quality, craftsmanship, recognisability, exclusivity and reputation “( from “The mass marketing of luxury”).
In the case of India and China, an item perceived as luxurious can be classified as a luxury goods even though it might be more surely a premium good. As long as it gives customers a special satisfaction of owning something prestigious giving him higher status, it is something qualified as a luxury item. High tech appliances such as Iphones or Blackberry are not luxury items in industrialized nations but they can be classified as upscale products in India and China.
Consequently, in my definition premium brands such as Ralph Lauren or Tommy Hilfiger could be qualified as luxury brands in India and China. Although their marketing is destinated to the mass, owning their products confers psychological high status and maybe a sense of elitism.
I would not include premium brands if I was speaking of Europe or the US but in emerging countries, the distinction between luxury and premium is less obvious. A premium brand is a brand which is chosen for its excellent product qualities, much higher than the average goods available on the market. Customers are rational when buying a premium brand whereas they are irrational when they decide to buy a true luxury item. Premium offers a good value for money but does not make dream as luxury can do.
The few Chinese persons (See Sources and references) I questioned were including Ralph Lauren or Lacoste as a luxury brand for instance.
The table below helps to understands why luxury goods are different from regular goods. The characteristics of luxury items are also the main reason of buying them. (tradition, customization, exclusivity..)
Regular goods Luxury goods
• Standardized products. No specific service
• Elastic demand i.e. lower demand as the price rises
• Bought for functional characteristics and value for money
• Fast decision making purchase
• Any kind of promotion • Customized, limited availability. Customized and personal service
• Inelastic demand i.e. demand often augment as the price does
• Bought for tradition and heritage
• Can be an impulsive purchase, usually is a long and extensive reflected action
• Aspirational promotion, sense of exclusivity, connoisseurs channels

I will try to consider the luxury market as a whole but narrow my field of attention to the fashion apparel and accessories segment. I have chosen to explore the fashion luxury business as it is the most important luxury segment, the highest growing one in emerging countries and also the one giving social prestige for a comparatively reasonable cost. Indeed, being dressed in a Hermes dress is far more affordable than owning the latest Mercedes S.

ANALYSIS OF THE CHINESE LUXURY MARKET

PANORAMA OF THE MARKET
In 2010, the total luxury goods market in China was worth $11 billion being the second market in the world just after the US.
What’s striking is that this is only the very beginning as just a small portion of the population is exposed to luxury. Fifteen years ago, the luxury market in China was almost inexistent because foreign companies almost did not have any shops in China. Their Chinese clientele were travellers to occidental regions or to Hong-Kong.
Today, the Chinese luxury market is extremely concentrated in a few cities called the top tier cities (Shanghai, Beijing, Guangzhou, Shenzhen...) but it’s spreading very fast in all other regions from the coastal cities to inland territories. Even Urumqi at the extreme west of China is seeing the arrival of international luxury brands.
The number of Chinese billionaires in Forbes rankings is almost doubling each year. The only thing known is that there will be more and wealthier Chinese desiring luxury items. Goldman Sachs has predicted that China will account for 30% of the total luxury consumption in 2015 which is huge when we think that not even 5% of the Chinese population can afford luxury items. Another study conducted by Merrill Lynch in 2005 predicted that Chinese consumers will represent more than 25% of global luxury goods purchase in 2014.
Within Asia, all brands have switched their investments from Japan to China. For me, the best example of the growing attractivity of China is Louis Vuitton. They had 11 stores in China in 2005, in 2011, they now count 38 stores split into 29 Chinese cities.

A SKYROCKETING MARKET IN EVERY SEGMENT

The luxury frenzy is touching every segment from cars to jewels. For example, half of Switzerland‘s $8 billion annual watches exports goes to Asia. Companies as LVMH or Gucci say that over 40% of their sales are realized in Asia, China counting for the largest share.
In the coming years, many more luxury customers will appear from all over China. Companies like Gucci even have to consider a shortage of bags, they are afraid of not following the demand that they closed their shops one hour earlier late November.
The spectacular economic surge has allowed the explosion of a new middle class with yet moderate incomes but a huge envy to enjoy life. Studies have shown that India and China, two countries traditionally with the highest saving /income rates in the world are consuming more and more. This change is coming from the youngsters that see in front of them everyday products that they could only dream about a few years ago. Now Plasma TV, latest phones and touchpad’s, cars ... are not only dreams. These new generations now are tending to favor immediate purchase than savings.

CHINESE LUXURY CONSUMERS CHARACTERISTICS
Who are the current luxury consumers?
Recently, in the French economic magazine Capital, a managing director at Hermès was explaining that one of their main difficulties is to understand who their Asian customers are. As if they did not expect such a boom in sales there, they lack knowledge about their clients. Another marketing director at LV said that their business there is like a bakery with” customers going in and out with their purchase” but in the end no clear identification of who they are exactly.
Luxury consumers are found from youth elites to middle age blue collar worker and businessmen. Women are also claiming an increasing share of the total consumption.
There are now luxury consumers in every sphere of the Chinese society, there is also an enormous rising middle class, who sometimes displays monthly earnings below the price of a luxury robe but is willing to save for months in order to buy such robe.
Every day, more Chinese are gaining interest in luxury and become part of this consumer category.

The above pyramids details the market size of the super rich with at least $USD1,5 million. It is interesting to notice that the average age is around 40 years old which makes think tha most of the wealthiest Chinese are entrepreneurs.
Consumers can be divided in seven categories:
 The successful businessman or blue collar worker
The average luxury fashion consumer is a male between 30 to 45 years old. It is a unique characteristic of China, in Europe and the US, the luxury fashion markets is dominated by women. ( 65% vs. 45% sources: Luxury fashion branding report)
He is most of the time a successful businessman being either a blue collar worker holding a senior managing position or also an entrepreneur. This segment of consumers tend to be the most educated about luxury and then are the most exigent. They are living luxury in the sense that they don’t only have a luxury item but a whole collection from designer clothes to watches and including the car and leisure as tennis or golf.
They are already buying niche luxury brands and are very comfortable with trying new concepts. They are very demanding with themselves and are looking for original products, not just the same Louis Vuitton bag as everybody else.

 The old elite i.e. influential and powerful people.
They are most of time holding prestigious positions in fields such as law, politics, and arts. They are originated from privileged families and have always have access to the best products. They have already been travelling overseas for a long time, are open minded and are generally more educated and tasteful. They are also more exigent. They ask for the best in every of their purchase and are not restricted to one segment. They know what luxurious food and travels are unlike other new converted categories.

 The new-rich
It’s quite heterogeneous as it comprises self made entrepreneurs, wealthy families and of course some businessmen reaching good income positions. They are recently converted as they could not afford luxury items before.
This group is generally much younger, let’s say from 20 to 35 years old. There have very good incomes for China but are not exceptionally wealthy.
Yet, they are spending a higher proportion of their revenues on luxury purchases. They are not really saving because there are very optimistic on the future and have adopted the western philosophy of enjoying life, they dream about living a privileged lifestyle as in the American sitcom there are watching. Many of them as still mainly buying small items and middle range products but they would be definitely spending if they were richer.
They are quite well educated about luxury, they read magazines, know the brands, pay attention to the clothing styles of celebrities. They are able to make a difference with counterfeits goods, they are exigent and the fastest developing category.

 Modern women
Women are getting more important for luxury brands. One very surprising characteristic of the Chinese luxury market is that is it in the large majority a men market. Contrary to western countries where female are the biggest luxury buyers by far for clothing, it is the reverse situation in China.
However, women have gained their independence and then now own enough money on their own to spend a share of it on luxury goods. They are even spending more than men.

Among them, we have the businesswoman, the celebrities of the wealthy housewives. Sometimes, they earn more than their partner and by purchasing luxury products, they show their power status and importance. As the Chinese society will be more progressive regarding easier career advancement for women, their weight on the luxury stage will increase. So far, the only women of that kind are living in the top tier cities but the potential underlying in second zone areas is immense.
It’s interesting that eleven out of the twenty richest women in the world are Chinese as it gives an illustration to the level of importance that can reach women in the Chinese society.

 The urban youngsters
Aged between 15 and 30 years old, they have been raised with an opening to the world that no previous generation has lived. They use social network, browse the internet for many purposes and often have western role model. They dreams are not only any longer to form a family and get a job, they aspire at travelling, acceding to unknown leisure.
Material happiness is very important for them and as they don’t really share the cult of saving money, they represent a prime target for brands.
As they are quite easy to track (for instance through social networks), brands can know what their desires are.

 The aspiring middle class
They are estimated to be around four hundred million people in China but figures depends on the criteria used to qualify this class. Usually, monthly above 500 Euros are satisfactory. They often only dream of having access to the best item available but they are also very informed and know as much as the elite about luxury brands. They can put money aside for month just to buy a tiny Channel scarf of wallet.
In a word, they want to live the privileged life. They are an interesting group as their number will sharply rise in the future and a portion of them will jump to higher status.

 The little emperor
One unique market segment so specific to China is the little emperor category, consequence of the Unique child policy implemented by the communist party.
They are young Chinese who have been raised as the unique kid of the household. They are mainly living in urban areas. One very particular fact is that they have more sources of incomes than similar kids in the west. Indeed, the family links are very tight in China and the kid is supported not only by the parents but by grandparents on both family trees. To illustrate this, “studies estimates that half a typical urban Chinese family’s disposable income is spent on or by the youngest member” (KPMG report 2005). Thus, these kinds of kids have been raised in a very comfortable environment, they are often pretty aware about luxury and they of course also want to have their share of the dream. From Iphones to Ralph Lauren polos, they aspire at living well and don’t hesitate to spend. This often referred as the “me generation” is very individualistic and self-indulgent prone.
Finally, a segment jokingly called the 3C (standing for “the criminal, the corrupt and the concubines”) is said to be one the largest buyer category of luxury items. As corruptions is widespread in China, expensive items are often used to corrupt civil servants or also as gifts to mistresses (Tai-tai).

 Why purchasing luxury items?

Above a study from KPMG report on the Chinese market, 2010 ( Cf sources and references)
As we can see, there are some interesting differences between women and men. For example, women are by far buying luxury products to reward themselves, which can explain why they tend to spend more than men as we will see later.
Regarding men consumption, the answers are more balanced. The willingness to represent social wealth is not so obvious, many consumers are also following fashion trends and find through luxury ways to express their tastes and personality. Thus, the market is not easy to read as the motivations of customers are very diverse.

 Chinese consumer behavior
Their spending behavior is actually largely influenced by Confucianism. If the group and collectivity is at the middle of this theory, superiority, glory and fear of shame and losing face are also holding a good place.
I will detail Confucian values that relate to luxury purchase behavior one by one:
 Sense of collectivity and belonging to a group: It explains why Chinese consumers want to buy that they already saw on their friends or family circles. They need reassurance, they need to make sure that their investment will be worth as people around them will be aware of what they have. It illustrates why Chinese give more value to the brand rather than the item or specific collection. 90% of them will prefer a flashy Christian Dior pants than a more discrete Agnes B skirt.

 Superiority and glory: By buying luxury items, they want to impose respect, show that there not like everybody else, that they have something more; wealth and power. This is why they always prefer the most expensive, the most ostentatious and the most famous brands. They don’t want to make mistakes so they absolutely want the best. It explains grandly the amazing triumph of big names as Louis Vuitton, Armani or Prada.

 Shame of losing face: They want the most luxurious products to prove their social superiority. If they cannot afford the best products, they would feel inferior and not truly part of the group the ideally want to belong to. This volunty to keep the head up also explains why consumers are more likely to buy brands that they have seen on their close circles. It represents a formidable opportunity for brands to target entire consumer groups. Having a faithful Chinese customer is potentially an open door on all a group.

Yet originating from ancient China, these principles have been adopted because the western world did. They are demanding social recognition and prestige, not Italian artisanal costume fabrication or medieval French patterns. They would still buy them If the watches were popular because of made around Lake Ballaton in Hungary.
The two diagrams from the KPMG 2010 report illustrate this show-off and social status motivations.

Persons owning luxury products are regarded as successful, tasteful and fashionable for the large majority of respondent. The negative downsides (superficiality, nouveau riche behavior) are barely evoked by 20% of respondents.
Indeed, Chinese consumers are passing by luxury stores daily and for many of them it is like a dream to buy something inside one day. Given its rich history, China has always been exposed to luxury and the new high classes of nowadays still have in mind the lifestyle of the ancient elite and their ancestors. For instance, when Alfred Dunhill opened a store on the Bund in Shanghai, they tried to reproduce the atmosphere of the thirties in the French concessions when Shanghai was one of the places to be. It has worked as Dunhill is nowadays one of the most popular brands in China whereas it has much less notoriety in other countries. A Chinese consumer might know about Dunhill than a German or a French one.
However, they have very little overall education about the luxury market. They hardly can make a difference between premium brands and truly exclusive luxury items. They know very few brands, actually all the most popular ones and they also buy the most popular brands.
This is why having a brand reputation means having success in India and China. Chinese consumption of luxury goods is very item-driven i.e. that consumers are looking to have the latest product or collection.
They mostly purchase luxury goods to show their social status and display signs of their success. (70% of the respondents to the 2005 KMPG survey said mentioned social status as their first buying criteria). They are looking for flashy and exuberant goods, not really discrete luxury. They have money and they want everyone to see it.
The Chinese luxury clientele is having opposites attitudes than European or American. They don’t really like discreet authenticity; they don’t really buy an item for its own properties. Regarding fashion for example, it makes little sense for them to buy a niche high end creator It is like a waste of money if there is no clear and recognizable logo.
Chinese luxury buyers cannot be divided according geographical or demographical factors. They should be considered according to their generation in which they have been raised and their path to wealth (The cult of luxury brands).
THE ROLE OF HONG-KONG

Hong-Kong has always been a pillar of luxury business in Asia. In the past, luxury brands were obliged to install their Asian headquarters there as there was an important luxury customer base.
Member of the commonwealth and a British colony until 1997, Hong-Kong has always been a major trade route in the Chinese sea. Sometimes called “the New-York of Asia”, it has attracted wealth for centuries which explains the interest that luxury brands have had for this tiny peninsula.
These locals are great connoisseurs and ware spending more than European or Americans. Roughly ten years ago, when international brands first considered the Chinese pie, they based all their operations in Hong-Kong including headquarters and labor resources as doing business there was easy and time effective. Local laws, trade procedures and financial process were favorable to foreign businesses.
With the entrance of China in the WTO agreement in 2001, it became easier to operate directly in China but international brands did not transfer all their Asian operations in China. Many relocate some managerial functions in Shanghai but they wanted to keep their offices in Hong-Kong in case of downturn in China. Moreover, many are still thinking that Hong-Kong customers are just more aware Chinese and that it is a great place to test products there. According to many, what is working in Hong-Kong can work in mainland in China.
Therefore, we can qualify Hong-Kong as the “Asian laboratory”.
Now, brands are still coordinating their operations from Hong-Kong and they have a strategic interest in maintaining there a solid basis. Indeed, it is likely that some brands decide in a near future to relocate their production in China to take advantage of the lower cost and a direct step in their more important market. Most of textile factories are located in the nearby Guangdong region i.e. near Hong-Kong (see chapter on luxe made in Asia).
So, it makes a sense to keep operations in Hong-Kong even though the local Hong-Kong market is not as flourishing as it used to be.

THE CHINESE FASHION LUXURY SEGMENT
Even if only about 2% of the whole population purchases high end fashion items, it is certain that the years to come will see this figure take off. We can reasonably say that the fashion market is dominated by ten to twenty big names already well in place in Chinese consumer minds.
I prefer not to list all the luxury brands operating in China. Nearly all of the international ones are now selling their products in China. The most popular and biggest names (LV, Chanel, Dior) are often operating on their own whereas the smaller brands (Zegna, Canali..) and niche creators predominantly sell through specialized stores or within a partnership agreement such as franchising.
As we can see on the graph below, clothes are the category displaying the highest purchase intention in top but also second tier cities. Clothing is also the luxury segment the most developed in mainland provinces which certainly explains those figures.

However, they have very little information about the clothing in particular, they can’t say which materials is better than other one, can’t recognized a piece of art requiring an artisan to work for months on it… because luxury products are a new thing for them. For instance, how could a 45 years old Chengdu businessman know about cashmere and silk when he has only lived a privileged life for a couple of years… All the education is still to complete.
Angelica Cheung, the editor of Vogue China states that “Vogue China requires more educational pages than other Vogue editions elsewhere in the world”, it is necessary to explain Chinese what is the history behind clothes, make them understand that they are not just clothes”
The funny thing is that there is a demand for creative clothes in urban zones in the sense that Chinese are not afraid of expressing their personalities through clothes, they want to have something that other won’t, they like innovations.
The best example of that is the tremendous success of the TV show “Creative Sky” where top Chinese young designers are competing. The organizer of this contest likes to say that “not so long ago, everyone was wearing the same grey suit”. They are now extremely receptive to new and irreverent ideas.
This following graph expresses the idea that being fashionable is an undisputable asset, the discrete charm is not what they want.

Another particularity is that he fashion segment is dominated by male unlike in western countries but women are growing fast. We have seen in the graph on their reasons to purchase luxury that they want to show their taste and personality. In the Asian society, the view of others and the aspects of not losing face is probably making men Chinese men care more about themselves and try everything to stand out of the crowd.

A CONCENTRATED MARKET CONCERNING A VERY LITTLE MINORITY

The luxury market is dominated by two main cities that are Shanghai and Beijing. These two cities represent 35% of the total market.
But as we can see, less renowned cities such as Hangzhou (13.4) and Chengdu (11.6) are not far behind. This is not surprising as these cities are economically booming and are also known for welcoming a bevy of entrepreneur.
Another interesting thing is that a city like Guangzhou is not even mentioned. I found that wealthy Cantonese people prefer buying luxury in Hong-Kong than in their city. The experience of buying luxury items in Guangzhou is apparently not striking enough according to the commentary that I have read. Customers from this region are used to travel in Southeast Asia and especially Hong-Kong where they can enjoy an in-store experience much better. I have been to Guangzhou several times and it is true that having these luxury brands packed in one or two malls does not incite to buy as what can be found in Hong-Kong. It does not make dream and is not really conform to what we can expect from luxury.
It’s also interesting that most of the top cities are situated on the coast because they are more developed and have been the basis of the Chinese industrial development. Indeed, all these cities are home to important ports and industrial or technological zones. Around 70% of the Chinese diasporas through the world come from coastal regions of China. They often reinvest money in their homeland which also explains why there are more wealthy persons around the costal regions.
It means that there is an important work to be done inland where customers often don’t speak English and are less exposed to western standards.
Second tier cities are already mature for luxury. Hence, brands are already gaining interest in opening stores in even smaller areas. For example, Cartier has opened recently a store in Yiwu, a regional city located in the center of China.

A READY NOW POTENTIAL FOR GEOGRAPHIC EXPANSION
Geographic expansion to second zone cities. Of course there a lot to do in the four main megapoles but the potential lying in 25 to 30 middle size other agglomerations is at least as important. Putting market shares on these new cities is not doable as many of them have just had the recent opening and stores. The potential could be more evaluable in three to five years.
Usually the classic development scheme is to set up a presence in the top cities before expanding elsewhere. I think that this schema is not necessarily the only option now. Indeed, studies have shown that luxury awareness in second zone cities is not very far from the Beijing or Shanghai. All the costs associated to development in less popular zones are cheaper. I will later take some time to go through the most potential areas by mapping the territory.
Major brands such as Dolce Gabbana or Gucci among many others are already opening stores in second tier cities such as Chengdu, Wuhan, Harbin, Qingdao, and Chongqing…
The next top cities (analysis from KMPG report 2010)

Xiamen
1,78 million inhabitants, 11500 RMB millionaires
Dynamic coastal city close to Taiwan, it is a special economic zone. Luxury clientele composed in majority of businessmen. Regularly present in the top 10 most liveable Chinese cities rankings.
Zhengzhou
2,1 million inhabitants, 15200 RMB millionaires
Capital of Henan province and major transport hub of central China. Manufacturing, textiles and agriculture are important there. Again businessman clients.
Fuzhou
1,62 million inhabitants, 10200 RMB millionaires
Coastal city, chemical center. Also praised for tourism.
Suzhou
1,17 million inhabitants, 15600 RMB millionaires
Listed at the UNESCO, it is a popular tourist’s destination. Famous for the silk, it is now a high tech and pharmaceutical center.
Hangzhou
2,08 million inhabitants, 47300 RMB millionaires
Capital of Zhejiang province, a region renowned for its entrepreneurs in the entire China. Close to Shanghai, it is attractive as a major business center.
Qingdao
2,25 million inhabitants , 11100 RMB millionaires
A large harbor city close to Korea and facing China. It’s popular for its Tsingtao beer and for its sailing tradition.
Harbin
3,23 million inhabitants, 5790 RMB millionaires
Close to the border with Russia, it is a vast industrial area.

Urumqi
2,8 million inhabitants, 8300 RMB millionaires
Located extreme west of China and capital of the Xinjiang province, it is an important trade and mining city.
Shenyang
4,19 million inhabitants, 7660 RMB millionaires
Trade and logistic hub for Northeast China, it is a prime destination for automotives, aviation and energy.
Tianjin
4,55 million inhabitants, 14500 RMB millionaires
Located near Beijing, it is one the largest coastal port. The region is also home of many factories.
Nanjing
3,15 million inhabitants, 22100 RMB millionaires
A former capital of China, it is now a large business center from automotive to electronics and energies.
Chongqing
5,07 million inhabitants, 9700 millionaires Largest western city, it is the most populous Chinese agglomeration. Large transportation and manufacturing hub in central China. Many brands such as Louis Vuitton have chosen the city as their inland base. (http://www.jingdaily.com/en/luxury/louis-vuittons-big-store-strategy-spr...)
This is here the main playgrounds for international brands for the very short-term. In the long round, we could have added twenty other cities presenting an interesting potential. Besides, I have identified big cities but smaller areas are also very promising.
For instance, the Hainan Island in southern China has become the dream vacation destination and has turned into a little paradise for luxurious brands of every sector. The marina built in 2005 is now one the biggest in South-East Asia and the prices of real estate are averaging the levels of Hong-Kong.
Places like this are currently emerging and they do it rapidly. The best example is Shenzhen which was a fishing village in the late seventies until the government decided to convert it into a free trade zone.
Now the city is counting 15 million people who came from all over China and the most innovative high tech companies have research centers there.

DOMESTIC LUXURY BRANDS
Chinese local brands have been progressing a lot over the past few years.
They have taken the interesting locations and have spread up in major areas. Nevertheless, they still lack visibility and reputation explaining their difficulties to cope with big international names.
Now, they are still very far from global names but they could be soon the pride of Chinese customers as their country will have nothing to envy other developed countries.
Very few local brands have emerged in consumer minds, they are some viewed as upscale local brands but when a customer wants to buy something truly unique, no Chinese brand will come up to his mind.
They are only present domestically and have now very limited possibilities of developing outside China. They are more trying to consolidate their position and step up their game on the Chinese stage instead of expanding overseas. They have a strong support from the government, they don’t face the problems that foreign brands are when entering China. Therefore, they have the time advantage and can quickly react to market evolution and trends. They are also progressing qualitatively as design competencies are improving. Examples of these brands are Goldlion, jewelry brands Chow Tai Fook and Tse Sui Len.
Only two Chinese brands have really managed to be popular on the international luxury stage. They are LaVie and Shanghai Tang. They are different in the sense that they don’t really target their local market but more wealthy tourists and international customers who are fascinated by the oriental luxury history. These brands have stores only in megalopoles and have just the Chinese origin. All they are proposing and their working processes are very western like. Shanghai tang as well isn’t targeting Chinese customers specifically. They are mixing “old Chinese fashion and modern styles”. They have “eastern concept and western cutting” as says the designer of the brand Li Cheng. The growing emergence of such domestic brands will be analyzed later in this essay.
More than 60% of their customers are actually foreigners. They have found an international clientele but paradoxically they don’t make Chinese consumers dream and for the main reason that they are perceived as not entirely western. And now, Chinese consumers want 100% traditional handmade items.
Example of Shanghai Tang
Shanghai Tang is maybe not one of the most well-know luxury brand in the world but this is clearly one of the most prestigious. It is striking to observe that it has been founded only in 1994 by a British entrepreneur raised in Hong-Kong.
Surprisingly, Shanghai Tang does not have a rich history or old tradition of luxury. It was not originating from an old European village and cannot boast of manufacturing fashion for long decades.
Yet, they have managed to become a notorious name, from a single tiny store in Kowloon district to many of the most prestigious cities in the world, 34 in total in just fifteen years.
In 1997, they have been taken over by Richemont, a large Swiss conglomerate owning the largest luxury brand portfolio in the world. For example, Alfred Dunhill, Chloé, Cartier, Van Cleef belongs to this holding.
When they bought Shanghai Tang, they had the idea of rejuvenating Asian luxury. They had also noticed that the Asian luxury market was starting to skyrocket so they thought that the timing was ideal to capture the rich Asian clientele.
They insisted a lot on the Han ethnic identity of Shanghai Tang’s clothing line. Indeed, most of their products were inspired from the Hans, one of the greatest and largest Chinese ethnic groups.
They added the modernity and occidental shapes to their designs in order to appeal to an international target. Besides, the CEO, Raphael Le Masne says that “when it comes to China, the most important word is not luxury, it is international”.
That’s also the reason why Shanghai Tang has been doing so great over years; customers can find the brand all over the world, in a way there are reassured about the brand status and fame.
If they would be operating only in China or even in other Asian countries only they probably would not have the same sex-appeal on Chinese customers. They are now claiming themselves “a bridge between the east and the west”.
However, they kept this “Chinese touch” in the ambience of their shops to maintain a certain attachment to Asia. It has worked marvelously well as their turnover has been multiplied by five over the last ten years. Asia represents half of their revenues. There was the time when Hong-Kong was their commercial hub attracting wealthy Chinese, Hong-Kong fashion adopters and international travelers. Now the focus is clearly mainland China.
Also, Shanghai Tang has been clever at multiplying its product line. From women fashion, they have diversified to men and children products. Later, they introduced an accessories and home items line. More recently, they have launched a Shanghai Tang café.
All their stores are centrally located in the main streets of megalopolis, hub airports and sometimes four stars hotels.
Their accessory and home line is also inspired from Chinese arts and especially from Shanghai in the thirties. They are renewing their collection on a very regular basis (every three months, a figure higher than the average in the luxury market where the rule is two collections per year.) and they aim at inspiring from a different Chinese minority in their clothes at every collection. They want to make Chinese people proud of being Chinese and display it with their style.
The brand has also managed to cultivate a sense of mystery. Indeed, you won’t find any advertising in magazines or on the TV. They want to remain then most elitist as possible. It’s also funny to point out that they are one of the only brands from which counterfeit products don’t exist. In brand awareness rankings, Chinese consumers often don’t even quote Shanghai Tang when asked about their knowledge of local luxury brands.
They have managed to have two identities; the Chinese one through their product line and the international one through all other practices of the group. Even the management is very multicultural: the CEO is French, the founder British, the marketing director is Swedish, the creative director is American and more and more stylist are Chinese.
This example shows that some Chinese brand can have success on the global luxury market by proposing Chinese-inspired products with a modern touch.
THE CHALLENGES OF THE CHINESE MARKET
Let’s now take a focus on the weaknesses of the Chinese luxury market.
Most common challenges are related to intellectual property rights (IPR), development time frame and return on investment, low luxury brand awareness and still limited retail infrastructures.
IPR protection is one of the main issues for designers. How can they protect their creations as they know that once classified as a must have, their collections will be found in reproduction over the whole territory. Even domestic firms are now complaining from counterfeiting. Of course, the government has passed law to protect IPR and take fake producers to court but justice decisions are often not enforced.
It is not easy to identify the persons manufacturing fake products and as the phenomena is now anchored in the country, it is very difficult to retaliate. Many mafias are controlling this lucrative business. They prefer investing in fake production as it is more profitable than drugs or prostitution but also much less risky if they get caught.
Brands are frustrated cause no appropriate solution exists now. Many of them are paying for private detective to identify where these fake factories are located and have them destroy. It does not fix the problems as they can do it again in another area but at least it shows that they won’t be quiet at doing this business.

In addition, the cost of starting operations, finding and training staff, building brand awareness and promoting the products is high both financially and timely speaking. The demand will be very low in the beginning and reaching the elite customers will be complicated. In China, for a new brand, the customers will not come to the stores but the brand will have to work hard and make the customers come to the shop. Only big brands have this possibility. Another challenge is building the right sales force group. There is not cost issue as it the workforce cost does not represent the same proportion as in Europe. The tough part is to have employees working in the standards of luxury business. The talent pool is now important with more and more people fluent in English but not trained to be a luxury sales consultant.
Often, the brand has to provide internal training to his employees to make them following the same procedures and sales techniques as in Europe. They really need to have employees representing the brand, being ambassadors for the brand.
Another problem is that the employee turnover rate is very high. In all sectors, employees would quit their job for 5% increase on their pay. Hence, there is the risk to train employees and see them go for the competition a few months later.
That’s why it should not be believed that everything is easy when LVMH or Hermes is announcing record profits. Except these famous names, many others, yet very popular in Europe or the US, have difficulties and are barely making profit. They are more positioning themselves for the time when the market structure will be appropriate, not expecting immediate gains.
Another issue is the ineffective promotions campaigns and expensive campaigns. Most of the time, they fail at delivering their message to the right consumers. It is recommended to advertise in a very specific zone instead of trying to flood the whole country. China is a gigantic country where advertisements are everywhere and consequently consumers don’t notice many of them, they don’t pay very much attention. Unless the brand has important financial resources to advertise the whole country, it is not doable for the majority of brands. Testing ads in one or two cities is a good way to measure the efficiency and impact of promotions.
A specific characteristic is that many potential customers are living in areas where they still don’t have access to luxury shops. To cope with it, brands such as Cartier have rethink their promotions campaigns by using much more direct marketing, a thing that they are not doing in other markets. For instance, they often organize event outside their stores where they display their products, they also distribute leaflets and brochures to announce new models which is never done in Europe.
It is also very special to notice that luxury brands not only advertise on magazines as it is the case in developed countries. They also come up on television which isn’t done in Europe because there is this education requirement.
Therefore, they are quite many challenges specific to China that luxury brands have to tackle.

ESTABLISHING A STRATEGY FOR DEVELOPING LUXURY BRANDS IN CHINA
Keywords: Education, brand awareness building, right partnership, right channel of communication, a selective geographical expansion, mix show off aspect and discrete exclusivity. Have an international attractivity.
Nearly all the major brands are already well established but except the very big names, no one has taken yet a dominant position. The opportunities are exceptional but the competition is tremendous. Hence, no marketing mistakes will be allowed. Experience of other sectors has shown that no companies have been successful after messing up their first steps.
The obvious fact is that a huge part of the current consumers have very little education about luxury brands. No ideas about traditions, cultural heritage and core values. It also means very weak brand loyalty which is a good thing for new comer.
There is a huge job to do at convincing potential customers, at explaining the benefits of having such product.
Moreover, it has to be conducted nationwide and not regionally for brands who can afford that. Customers won’t value the brand if it is only present in their living area, they want to see it everywhere when they are travelling, when they go working, when they are enjoying leisure or vacation. The brand has to be “in” to make them “in” to.
Thus, the first step is brand building on the large scale i.e. the whole territory. All possible channels have to be used from print papers, TV ads, events… Then word of mouth will do the rest.
The best way for doing so is through sponsoring celebrities that will appear everywhere wearing the brand including on powerful channels such as television or the internet. People dream of having the same kind of lifestyles and will be sensitive to these kinds of campaigns.
Social networks are also a must use. It reaches the youngest i.e. the ones more potentially willing to be future customers as their revenues will soar.
Regarding distribution, some brands prefer to be distributed locally in areas that they have selected. Often they tailor their products to this particular region. The choice has to be studied case by case, each luxury brand has a different objective, know-how and way of operating.
Local manufacturing is also a solution to cut cost and be close to customers. Paul Smith and Giorgio Armani have been the first to initiate made in china luxury goods. Ermenegildo Zegna has now followed as well as Hermes or Chanel. They do it as discretely as possible but these moves show a net desire to flood the Chinese market with their products. It’s a gain on every board: money, time, reactivity… The benefits and downsides of this possibility will be detailed later in the current issues section.
Store formats and sizes are an interesting thing to study. So far, large megastores have worked wonderfully as the customers are impatient and want to enjoy the same shopping experience as westerners do. They are indeed perfect for educating customers thanks to the large number of sales people.
Nonetheless, as the market will get more mature, more private and intimate stores should be considered. Megastores could become like “museums” with crowds of people just there for looking. We could make a parallel with IKEA. When the Swedish furniture brand opened stores in China, they kept the same concepts and being very successful that attracted tons of people who were not here for buying anything but just for looking. Many of them were even taking over the furniture, sleeping for hours in the exhibitions sofas and mattresses. Same case in Dubai for instance where luxury malls have become more like leisure center, few people actually buy luxury items. They are mainly attended by families enjoying the animations and walking around a cup of coffee in the hands.
The last thing luxury brands want to see happening is something like that. On the contrary, they aim at preserving the intimacy and comfort of their privileged customers. That’s the reason why shops should have more private or VIP areas and not just look like a Zara store.
The strategy of entry differs from being an extremely well-known brand name or a small high end designer. First, international names can easily invest a larger amount and will have no issue finding a distributor or setting up a joint venture with a local partner. Small brands however will not have many other choices than resorting to a local partner. Without a partner, the installation time frame would be much longer and involve more risks.
A good example of a less known company having successfully operating in China is Ports International. It is a Canadian clothing brand and they decided to relocate their headquarters in China in the city of Xiamen. They are now a common name on the luxury clothing market in China and have managed to develop in other Asian countries such as Japan or South Korea. In 2005, they have been elected by Time magazine “best products of the years”. This planetary distinction shared with Todd’s and Chanel gave a huge push to the brand and increased even more its notoriety in mainland China
It is also interesting to use the Free trade Zones areas put in place in the eighties by Deng Xiaoping. They are located on the coastline and included Shenzhen, Guangzhou, Dalian and also Shanghai, they benefit from special tariffs and many companies in every sectors decide to set up facilities (warehouses for example) or factories in these areas as a gateway to mainland China. These areas are also very interesting for luxury brands from a customer perspective. Indeed, these free trade zones are allegedly the most developed regions of China counting a lot of potential customers, especially among businessmen. Opening stores in these zones as an entry trial is also a possible solution. From my experiences in Guangdong, I have been surprised by the number of upscale stores from fashion to French patisseries. I have also been amazed by the visible wealth.
Therefore, when establishing a strategy, most of the points covered in this chapter should be studied.

POSITIONING THE BRAND EFFECTIVELY
Chinese consumers and luxury customers in general are very demanding. From the product name, the products presentation, the packaging, the appearance of the employees, the merchandizing, the advertising campaigns, the brand ambassadors. They want the best in every of the above categories.
Then the brand has to pay attention to all of those details and build up a brand positioning. The brand has to represent values, has to have an identity and a mission.
A good thing is that Chinese customers still don’t know much about luxury brands so it’s a great chance to make a story sounding like European and give an identity to a brand. Even small designers brands could do that.
An interesting example of brand positioning is the one of Moet Hennessy.
“Following the establishment of its Beijing office in 1996, the company spent nearly five years conducting market research on consumer psychology and behavior, distribution channels and media advertising before its formal entry into the Chinese market in 2001. Heavily investing in marketing, public relations and retail networks, the company has a firm strategy of keeping balance between the enhancement of brand image and the expansion of distribution channels. Proud of its history, strong traditional values and uncompromising attitude towards quality, the company has endeavored to perfect its brand image in all aspects. By 2005, Moet Hennessy had accelerated annual growth to about 20% with stable development in 26 cities across China”. (Cf Luxury extends its reach across China, 2010 report).
Thus, being patient and spending time to apprehend local consumers is anything but a waste of time. Analyzing competitor’s mistakes is also important.

Example of Alfred Dunhill
The example of Dunhill shows all the necessary patience to have success in China as the British brand has been operating in Asia since the beginning of the sixties. This long presence explains their successes in terms of sales and also their presence in luxury brand awareness questionnaires.
Dunhill has never tried to visibly appeal new rich but has always centered its strategies on luxury as a lifestyle, on its cultural British heritage.
From their early steps in China, when liberalization was still a mirage, they have built their brand reputation little by little. They were perfectly aware and willing of taking the time to know Chinese consumers and at the same time educate them.
They have also tested out of the box marketing campaigns for this era. The biggest feature of it is the “Dunhill Home”, its flagship store created in a luxurious old villa with the French concession of Shanghai i.e. the most sought place during the golden period of the thirties and a symbolic location.
It gave them some instant credit, wealthy Chinese elite were curious of knowing who was inside this sumptuous house.
Events gathering the Shanghai high society were held regularly contributing to the expansion of the brand. Faithfull to its British elegance and discretion heritage, the brand did not use wide marketing campaigns. They preferred resorting to the word of mouth and send private invitations in their showroom.
However, it took them about twenty five years to really expand on the Chinese market. Following the deregulation, they opened stores in economic special zones in Shenzhen and Guangzhou through franchising. Only a few years later, they set up operations north in Beijing and then expanded to nearby cities of Shenyang, Harbin and Dalian ( Source: KPMG report Luxury extends its reach across China, 2010)
Now, they are leading the ranking of awareness and are present on all the Chinese territory.
PROMOTING A CULTURE OF LUXURY
We have seen that luxury consciousness is still weak in China. This is why brands should not be entirely focused on making sales, they should also participate in promoting a lifestyle of luxury. Most of the new rich don’t know much about luxury so it seems necessary to educate them to make the luxury business sustainable. Fashion shows and international events are giving more possibilities for brands to reach their potential clients.
Each brand should then give them a taste of luxury and touch their emotions, create a relationship between them and the brand. It has to start with the local kids as they will be the next generation of consumers.
Promoting a luxury lifestyle does not cost much but will provide a return in a few years as people will remember what the brand and has done. They will know about the traditions and values of a brand and this could be the difference maker at the moment of choosing a suit or a dress.

ANALYSIS OF THE INDIAN LUXURY MARKET

PANORAMA OF THE MARKET
India is a gigantic country amazingly diverse comprising a multitude of cultures, traditions. Across regions, languages, religions, colours and tastes are completely different. Indeed, it is like there were several sub-countries within India, people have different values and attitudes according to where they live in India. Although China is geographically larger, it does not offer such diversity in all possible areas, it is relatively uniform across regions.
Compared to China, the Indian luxury market is quite small and at the very beginning of the money stage but presents the same endless opportunities.
Indian luxury market is growing around 30% per year and is expected to reach $30 billion in 2025.
Currently, watches and jewellery compose the majority of the market. It is interesting to see that the market of luxury products bought in India is barely superior to the one of product bought overseas.
There is an already existing large customer base. Contrary to China, it is way easier to identify who they are as the gap between the poorest and wealthy Indians is terrific. These luxury customers are getting every year more numerous and their spending are skyrocketing. Yet, the landscape isn’t that shining as there are very limited infrastructures to meet their needs. I’m here referring to the lack of retail space, to the difficulty of advertising and selling out of the two main cities despite the existence of a solid client base.
When talking about luxury items, India does not necessarily come to our mind as a promising investment destination. Russia and China are sharing most of their headlines with their flashy billionaires whereas Indian luxury lovers are more discrete. Nevertheless, the branded luxury market is the fastest growing (It grew by four times between 2005 and 2010)
Below an example of how specific is the Indian market. It is still very traditional which does not enable brands to fully exploit the potential of Indian consumers as we will see later.

Market share by category of products, 2007
Watches and jewellery 31%
Clothing and accessories 23%
Electronics 19%
Wines and spirits 16%
( A.T Kearney’s India luxury review 2007)
Clothes are not the first category in terms of market share probably because of the small level of maturity of fashion brands which are only arriving on the market. It is predicted that they will be the first category in 2015.

LUXURY CUSTOMERS SEGMENTATION
There is an easy distinction between old money and newly wealthy consumers.
There is a proximity and almost love affair between Indian and luxury, a tradition of extravagance dating from the maharajas. They have also been exposed to luxury during the British colonial era. It diminished later until recently when Gandhi was delivering a message of abstinence.
This period is now over as India is displaying unprecedented growth rates. Forbes has forecasted that India will count more billionaires in the world than any other country including China by 2020.

The old money
Unlike China, many luxury consumers in India are coming from old industrial families and upper castes. They are very educated about luxury, have always lived in this environment and their buying motives are similar to Europeans. For them, luxury is not about showing, it is about knowing.
They are therefore looking for exclusive items and buy a large array of brands. They are the most likely to have typical Indian taste. They would be prime customers for luxury saris or other outfits adapted to the luxury market. When they buy a product, it is for its specific characteristics (gold, cashmere, silk, stones…) and traditions. Though they know a lot and appreciate international brands, they don’t buy them only.
Yet, they represent only a small fraction of the luxury consumers. Though the most profitable, the future profits will not be mainly coming from this group.

The new rich
The other main group is composed of the new rich who have taken advantage from the economic development of India. They are just behaving as Chinese or Russian new rich and opt for flashy and flamboyant products. For them the most visible it is, the better it is.
Still lacking of knowledge about luxury, they tend to buy only the main brands. Independent female customers though increasing still represent a minor part of total Indian luxury buyer. Aged between 30 to 50 years old, they are tough to categorized as they can be businessman from Mumbai, farmers from the Kerala, software genius from Bangalore… A lot of them only speak Indian which makes them even more difficult to reach.
Through wearing luxury fashion, they hope to be recognized as trendy and wealthy. They are starting to travel abroad and they like to buy luxury items when they are overseas in order to mark their trip and conserve a memory from their experience. An interesting fact is that their travel destinations are also prime destinations for purchasing luxury items. Out of their ten top travelled countries in 2006, there were the United Arab Emirates, Singapore, the United States, the United Kingdom and Hong-Kong. (Source: Ministry of tourism& culture, Indian government 2007).
On top of that, it is commonly agreed in the business that Indian customers buy 50% of luxury goods in India and 50% overseas. They are now starting to venture in Europe (Italy, France, Switzerland) which should logically reinforce their knowledge of luxury and their appetite for owning European made products. They represent the most promising group as their number keeps increasing every year.
An interesting fact is that India is very divided in distinct social group. There are a lot of people in the lower class who also aspire living a modern lifestyle. Similarly, there are many people who have the wallet to afford luxury but they don’t see the reason why. This is where brands have to resort to education operations to show them that luxury can be something emotionally intense but also an investment.
The Indian market is expected to be multiplied by four until 2020 as the number of people able to afford luxury goods will explode. Many luxury items still have almost zero market in India. It is the case of luxury wines and champagnes, furniture, gourmet food.
The typical Indian luxury client is living in one of the major cities, he owns more than $25000 per year. When it is a woman, she is at 70% a housewife. They are also particularly educated, many holding post graduate diplomas. Finally, they are travelling abroad regularly, several times per year and appreciate to buy an expensive souvenir when they are overseas.

INTERNATIONAL BRANDS IN INDIA: A VERY RECENT PRESENCE

As we can see, the presence of international brands is quite recent. Chanel and Dior have only been operating in India for five years and many other brands like Canali and Missoni are still studying the market and searching for a reliable partner. Brands are all based in two or three cities meaning that plenty others second zone megapoles are virgin to luxury products.
India is clearly as its early stage of the luxury culture. Money inflows are important and people having it want to demonstrate by owning elitist products.
A signal that India is a must be place nowadays for fashion brands is the venue of the Mumbai fashion week hold very year.
Their purchase is dictated by consumer value. They are often referred as the most discerning customers in the world. They also a high degree of influence in their purchase. They will tend to buy brands already worn by the family or friends. They are looking for brands having a real identity and if possible better emphasizing family links. For instance, in advertising, they are the most likely to be sensitive to the image of a father and his son. Advertising have to touch their emotions, they have to be very “personal”. They are searching for values of group, care, affection. These values are more important than values of power, ambition or achievements.
The middle class is also a target of luxury brands. They don’t buy the most expensive and exclusive items but they are so numerous that even a purchase of entry range products is profitable.
Still more concerned on saving than spending, they still allow themselves an indulgence once in a while. They are dreaming of upscale products but they are staying reasonable. Their decision making process is slow and want to have many information before emptying their pocket. Typically, they will search on data about the brand they like and see if their family or friend circle is having some products of the brand.
They prefer functional products that will also served at showing their status. Mainly going for premium consumer products, I think that it represents an opportunity for brands if they manage to propose clothes affordable and still luxurious.
The working women, yet much less important than in China are emerging little by little. They are more independent than before and they are just starting to buy the products of their choice. There still a little niche market but brands should pay attention to them. (targeted ads, direct marketing..)
CHALLENGES FOR LUXURY BRANDS IN INDIA

As India is still at the very early stages of the luxury spread model, the remaining challenges are numerous. It is required to enter India through a solid partnership with a local player. Market condition are still complicated as the distribution network is poor and fragmented, there very few good retail space available, the regulations and taxes are not encourage foreign businesses, the bureaucracy is terrible and corruption is widespread….
Several international names, including Louis Vuitton as its CEO Yves Carcelle recently stated, actually wanted to go first in India but they found much more favorable conditions in China. (Free trade zone, reduced taxes, joint venture…). The Indian luxury market really started to become attractive in 2006 because the Indian government decided to open the retail business by making foreign investment holding share of more than 50% possible.
Despite this progress, it is still impossible to fully own a retail space in India. Moreover, brands desiring sell clothes in India have to add taxes sometimes reaching 50% of the goods value. In these conditions, luxury brands have to be very motivated to enter India, only the most known names can actually do so. They don’t intend at making money now, they just want to establish a presence and get into the mind of local consumers.
Most analysts point out that they are currently only two luxury cities in India: New Delhi and Mumbai. Potential future luxury bases are Bangalore, Hyderabad, Chennai, Kolkata and to a lesser extent Ludhiana and Kerala.
The distribution network as said is very inappropriate and disorganized. There is no high end streets in downtown Delhi for instance as the infrastructure is not enabling it. There is still a lot of poverty and even the center of the capital city looks like a second zone less developed city. Most of the stores selling fashion clothing are traditional.(97% compared with 80% for China)
A twenty minutes walk in Delhi or Mumbai is enough to understand the difficulty of building up a suitable luxury retail network. This explains why most of the stores have been located in the lobbies of prestigious hotels and more recently in some new shopping malls. In each five stars hotel, there are a couple of shops. For example, The Oberoi in Delhi is home of Hugo Boss, Louis Vuitton, Dior and Bulgari whereas the Taj in Mumbai welcomes Burberry, Canali or Moschino.
Hence, shopping malls represent the future for luxury brands, they appear as the only viable and possible solution. Between 2004 and 2009, the number has surged from 40 to 421, Delhi and Mumbai counting for a third of the total. Two recent malls entirely dedicated to luxury and high end stores have opened in 2009; Emporio in Delhi and the UB City mall in Bangalore.
However, this luxury presence should not be durable over the long term. It is just that there is currently no other choice, Indian cities have not real center, it is too disorganized and too undeveloped to allow any other operations. Xavier Bertrand, the GM of Chanel India does not really believe in “luxury in malls”, he says that “it is a model to be proven” He estimates at fifteen to twenty years the time frame required Chanel to be fully expanded in India (New York Times, November 27th 2010).
Chanel has preferred taking more time but developing on its own to keep more control over their business. Other brands have made the inverse move. For instance, The Murjani conglomerate is in charge of developing several brands including Calvin Klein or Jimmy Choo in India by finding retail space for them and taking care of all the process.
This is problematic since we know luxury buyers are not only interested in the products they are attracted by, they are also searching for the emotions and an unforgettable experience. If everything around the product is not in conformity with luxury, the invitation to buy is reduced considerably. Brands themselves are concerned, Paolo Canali , the sales director of the same brand says that he plans to open eight boutiques by 2012 in India but may slow down the openings if the right ambience is not available.
As for many developing countries, doing business in India is not easy. Before 1973, a foreign firm could not operate in India without creating a joint venture with an Indian firm. The economic environment has progressively improved with the opening of the country but it is still not very simple. However, since 2005 significant progress are to be noticed. Customs duties on imported goods have been reduced, there has also been more flexible laws regarding foreign direct investments since it is nowadays possible to have a 51% ownership in a retail store. Still, there is a lot to improve, Indian import duties are still much higher than in China.

STRATEGIES FOR LUXURY BRANDS IN INDIA
In the end, the strategies for being successful in India are very close to the ones to use in China which makes the two countries quite similar except the specificities detailed in the next chapter.
The brand has to tell a story and have a tradition, it also needs to be expensive enough to be more elitist and justify the reward. Of course, the brand has to satisfy the needs of customers which are mainly recognition and secondly functional purposes.
The decline of a brand can be very fast in India because it the image suddenly get affected, customers will just stop buying it, they will be very fast at switching and will forget in a minute their historic with the brand. It does not mean that there is no brand loyalty, it means that the brand has to show exemplarity and avoid waves and polemics. It would probably be different in Europe as customers would tend to buy more products from a brand being perceived as rebel or against the waves. It isn’t working that way in India, luxury customers are quite conformists and want to have a preserved image.
Nonetheless, they are very proud of being Indian and they would appreciate luxury brands designing specific products focusing on the Indian culture. It could be branded saris, vivid colors. A chance is that Indian is keen on wearing many accessories with their dress, for instance much jewelry (Forehead drawings, hand ornaments, nose pins, anklets, angles and plenty of other decoration).
As many Indians who can afford luxury are unfamiliar with it, several brands included Dior have decided to keep their store simple so that they are not intimidated.
It is also important for the brand to be always recognized at top of range and unique. Regarding promotions, it involves that celebrities endorsing the brand be the most successful ones, that new collections receives the most attention in fashion fairs. In brief, it involves being the best as Indian customers are one of the most exigent on earth.
Foreign brands could also opt for “ethnic chic” by mixing global modernity with local traditions. Indians like to see a connection between their roots and history and at the same time modernity and style. As for clothing, standardization has to be avoided at any price in India. It would not be an issue in China, maybe even an advantage as customer are followers and appreciate to see someone in the same dress because it means that the dress is really in the wind. In India, however, customers would think that this isn’t exclusive enough.
Another big challenge is to initiate women on luxury clothing. As said, the clientele is mainly male for clothing. Unlike Chinese women, many elite women prefer wearing a luxurious sari than western dresses. They are much less influenced by brand than Chinese women. They will only buy what they find beautiful, a mere logo does not make the difference.
There are two options for attacking the Indian market: franchising or a joint venture with a local.

Franchising is less risky and involves fewer investments, it is a good first step to test the market. More renowned brand will prefer setting up a joint venture as it enables to penetrate the market on a larger scale and with more freedom as long as the partner is carefully chosen.
Likewise China, it is necessary to learn about Indian customers and not just propose the same products already sold in Europe. Brands also have to pay attention to local preferences and as in China develop special products fitting with Indian consumer tastes.
Customization is a necessity for India. As we have seen, jewelry and watches or accessories are very popular. I think that fashion brands should diversify their offering by adding those types of products to their clothing line. As Indian customers have been buying small luxury items such as accessories, having a side-product portfolio would be a good idea to bring customers in their clothing line. Plus, as the local luxury awareness isn’t very high, there would be no problem in such moves. A designer proposing watches or diverse flagrances would not be seen as out of his know-how. It would on the contrary increase the brand value. But as the market is moving quickly, this is now or never.
A great advantage of India on the luxury stage is that it can be a sourcing country. It is possible to find unique and beautiful raw materials in India and therefore to have a local production.
Whereas “made in China” could destroy a luxury brand reputation, “made in India” could mean superior materials and artisanal techniques. Moreover, quality furniture, high quality fabrics such as silk, diamonds, embroidery.. Find qualified workforce is pretty easy and cheap and the technical manufacturing procedures have nothing to envy European ones. They are even sometimes more artisanal and using methods found nowhere else, a good argument to justify a premium price.
India is not easy to segment in the sense that there are different class, status and a wide diversity of incomes. The poverty is largely visible and would let think that there is very marginal opportunity for luxury brands.
The challenge is to introduce the brand by understanding who the customers could be, build a relationship with them. Indian need to feel confidence and trust before buying a brand, they are not much into impulsive purchases. They need to feel connections between them and he brand.
India has the chance of counting a lot of celebrities from Bollywood stars to cricket players. These persons are the ones to endorse to promote luxury brands. They transfer their success, personality and influence to the brand. Their qualities of beauty, talent, style will be linked with the brand.
The « purchase experience in the store » is a key component in the determining choice of purchase. Stores designs have to be lavish with the highest possible degree of exclusivity and make consumers dream.
New innovative marketing techniques are particularly suitable for India. Advertising on mobiles phones, internet promotions are a must use. They can bring consumers to the stores but then, the “store experience” will make the difference.
All the points covered above are useful to design an appropriate strategy for India but once again, it ultimately depends on the brand itself, its objectives, capacities and weaknesses.

Comparing luxury fashion in India vs. China

The conclusion we can draw is that both country are very heterogeneous themselves and that a lot has still to be learned about local consumers. Brands are doing predictions about how the future will look like but most of it is based on guesswork as they have no other similar country to compare with.
A similarity is the absolute necessity to have a large brand awareness and recognition; without it a brand won’t sell. Consumers are generally not taking many risks, they don’t buy brands that they are not sure they will able to show off with. Yet, logo is much less important in India whereas this is the first asset of a brand in China.
They are two very disorganized markets. Except Louis Vuitton, Prada, Dior or Chanel, there is absolutely no fashion brand holding a little monopoly situation.
Moreover, there is no “standardized pricing”, brands are pricing as they want, they are not doing it according to competitors, sometimes the price of a dress or bag can go up to 35% in a week with no real reason behind. The worst thing is that it does not really even impact consumption. Often, it gives sales a boost. The World Luxury Association (WLA) has conducted a study in China (http://english.cri.cn/6826/2011/07/18/1781s649038.htm) showing that increasing price often has a positive result on sales as Chinese consumers interpret a price surge for a gain in exclusivity.
We often compare India and China because they are of similar sizes and are displaying approximately the same economic growth. However, there are many field in which comparison are not appropriate.
China is much more modern whereas India can still be considered as a third world country if we speak of average incomes or infrastructures. When I went there, I had troubles believing the statistics and articles about this fast developing subcontinent. To me, it was more a poor country very far from what I had experienced in China.
It is surprising to observe that China and India are described by most analysts as at the same “show-off stage” whereas there is a gap between both countries at many levels. India is now for me at the situation when China was in the early nineties. Customers were existing but there was nothing around to get them.

Even if it’s not perfect in China, the government attitudes are way more favorable for luxury brands. The corruption is still a plague but nothing compared with India. As China has opened its door much earlier to foreign companies, the entry process is far quicker in China whereas the bureaucracy discourage entrants on the Indian market because they are asked for certification, endless paperwork and decisions are taken by various diluted local administrations.
Chinese have adopted the western culture very easily which has pushed the popularity of luxury. India is still maintaining a lot of traditions and wants to preserve the Indian identity while adopting western lifestyles. Therefore, luxury brands should have different mindsets for both countries.
Indian customers are more connoisseurs of luxury products. They have a greater willingness and curiosity of learning of the brand history. They want to know what is behind the expensive price. Contrarily, Chinese want to know how they can use the image of the brand and better show off the high price they have paid. India is truly a country of “gift giving” as says Yves Carcelle, CEO of Louis Vuitton while China is more in the “reward and status attitude”

In both countries, the audience is male in a large majority but the proportion of women is yet booming (as they get more financial independence).
Nevertheless, both countries are still at the early stages. Indeed, despite all the amazing figures of sales and profits for luxury brands, China and India even more won’t be living luxury as a way of life before maybe thirty years and many brands still have to wait to be profitable.
Europe and the US fashion trends China and India fashion trends
Larger women consumption Men dominance
Major age group averaging 40 to 55 years old Main age category is 20 to 40 years old
Product focused purchase Brand centered purchase

 Distribution networks
From my visits in both countries, I have noticed a dramatic difference in terms of infrastructure. At least in the top four cities, China does not have much envy to international cities as there are many malls and pedestrian streets where luxury fashion brands have opened up superstores. Shopping is now a leisure activity and not a chore. As we can see on the graph below, products are available through distribution channels whereas in India they are mostly sold in hotel lobbies and a few shopping malls.

In its 2005 study on luxury brands in Asia, KMPG explains that Retail Asia magazine forecast that in 2020, China will count seven of the ten largest malls in the world. This will obviously be a much-sought space for luxury brands. This is very different in India where of course shopping malls exist in big cities but where the infrastructures are not yet at the level of China. An upscale mall named “Emporio” has opened in New-Delhi recently with the presence of many international clothing brands but this is almost the only example of large mall in the country.
Luxury clothing brands are still found in the lobbies of five stars hotels, there is no real modern distribution network because this is not typical of the Indian culture and also because Indian authorities have never made it easy for international brands.
Asked about the reasons of their less consequent presence in India compared with China, managers at international clothing chains first explain that everything takes more time in India. The economic climate for foreign installation is not as favorable as it is in China. They also advance the high costs of doing business there due to the endless administrative paperwork and high level of corruption.
The distribution network issue is one of the main factor explain why India cannot really catch up with China now. China has taken a large advance and it will take many years for India to beat Chinese record figures in the luxury clothing business.
Therefore, the essential to remember is that China is currently much more advanced than India for reasons explained above (infrastructures, regulations, consumer preferences, country situation..) But on the long term, both India and China have the same potential.
They are both challenging and difficult markets to apprehend but also present the most promising future.

CURRENT ISSUES AND TRENDS

LUXURY IN ASIA: A BRIGHT FUTURE LARGELY DEPENDING ON THE EVOLUTION OF CHINA AND INDIA
After what we have described through this essay, it is pretty clear that the future of luxury for the coming years is in Asia and obviously for a large part in India and China.
It is interesting to observe that all Asian fast developing countries present a significant potential for luxury brands and they are ready now for a “luxury contamination”. I’m here talking about countries such as Vietnam, Indonesia, Thailand, Malaysia.
And just thinking that only a very tiny portion of Asians are currently exposed to luxury items, let’s imagine what it could be when more and more will have better purchasing power and more luxury desires.
So, Asia is and will be the largest luxury market in the world but how will this market look like in a couple of years? What kind of trends can we expect?
Now, Japan is the only large country living luxury as a way of life (See Stage 5 of the spread of the luxury model) bringing enormous profits to all major brands such as Louis Vuitton or Hermès. Hong-Kong and Singapore are at the same level but represent a much smaller market share.
Then, countries like South Korea or Taiwan could be put in the same category as luxury has been implanted there for a long time but are still lacking something: luxury is not a way of life there. For instance, most of Korean consumers are much less interested than Japanese consumers regarding luxury, they simply did not adopt it as way of life.
If we observe the spread of luxury model, we see than the two countries with the largest potential are also the two countries lagging behind at the early stages. Indeed, not even 2% of respective Indian and Chinese populations have been reached by luxury brands. It is estimated that there will be around 90 million luxury consumers in Asia by 2016, it’s actually nearly twice if we take fake consumption into consideration.
The truly “haute couture” is expected to revive in Asia because people will gradually move from the show-off stage to the fit-in phase where they acquire a greater confidence and where they know a lot about luxury. Then, more mature, they will tend to favor hand-made wonders than show-off brands.
The need to show their social status will be less important; they will be more discerning in their choices. Their buying decisions will be more based more on who they are and what do they want to represent than who they want to look like. This will represent a huge opportunity for smaller niche luxury brands, either very traditional or completely out of the box.
Current Chinese and Indian luxury clothing market are actually quite easy to read. There are all the major international brands using their reputation to sell their clothes and accessories but smaller niche brands are not very visible. Of course, they are also there fighting to obtain some market share but they are facing a far more difficult job because they don’t have the image in India and China and now local customers only buy what they already know.
On that, the CEO of Fendi says that “as market will mature, Asian consumers will become more discriminating and the market will become more segmented, they will buy true luxury than pseudo luxury” ( See book The Future of luxury; chapter 11, page 285). This has been the case in western countries for the last few years, more and more consumers have become a bit bored of buying the same products and brands as everybody else, they feel less uniqueness and exclusivity so they have been switching to smaller brands out of knowledge for most.

COUNTERFEITING
As any industry, luxury is subject to counterfeiting but in China the proportion of fake products is huge.
As I was finalizing this essay, I heard about the discovery of two fake Apple stores in a mainland Chinese province. Everything was perfectly imitated, even the employees themselves were thinking that they were working for Apple. It was almost impossible to detect that the store was an entire fake. It is just an example to show how everything can be copied in China.
A few years ago, Chinese reproductions had very poor quality but this is not the case any longer. Nowadays, many of their fake products would even meet the European certifications requirements as they have good features. China is currently the number one fake manufacturer in the world with a fake market representing around $125 billion per year (WTO report on counterfeiting 2010).
The Chinese government is pretending to tackle this issue but it is complicated to solve it out as many locals are making a living with counterfeiting. Furthermore, small units of production making fake items are spread over the country making it tough to put in place constraints mechanisms. When a factory is discovered and destroyed, another one often opens a few kilometers away.
Counterfeiting is a major plague as it’s damaging a lot a brand value. It completely undermines it. Some authors pretend that counterfeit products are not doing anything bad to real ones, that they are even helping luxury brands as it makes more products of their brand available and in the end, the real ones will always been the desired one. According to this theory, counterfeiting is a sort of free advertising beneficial to luxury brands.
Nevertheless, brands are fighting counterfeiting as fake products are confusing consumers. It ultimately leads to doubts over products quality as fake ones have most of the time a very short lifespan. As many people in emerging countries buy luxury items only for showing the social status, they could be satisfied by just having a copy. It has also been observed that customers can mix genuine and fake purchases.
Of course, it’s arguable that counterfeiting does not aim at touching the same targets as the elite will always go for the real one sold in stores.
But in extreme cases as the one of Louis Vuitton where there are much more fakes in circulation than real ones, some wealthy consumers just don’t buy it because they fear of being accused of having a fake.
For example, one of my Hong Kong classmates was telling me that she even though she could afford buying a Louis Vuitton bags, she would never do it. Indeed, she argued that if she buys a real one from the Kowloon flagship store in Hong-Kong, most of her friends will think it’s just a fake she got from the nearby “fake paradise” in Shenzhen. Then, what’s the purpose of having it if not only you don’t differentiate yourself from the others but if on top of that you get laughed off as being a buyer of fake.
This could even be a more serious issue as consumers in China and India are not yet very well educated about luxury so a brand could have its entire brand reputation ruined because of fake if it reaches large proportions. Thus, educative communication and advertising are ways to make people more discerning about why it’s not worth buying a copy.
Another current issue close to counterfeiting is the rivalry with fast fashion. Now the “luxury style” can be easily copied thanks to affordable low cost brands like Zara or Mango for example. There is a convergence of looks toward an almost unique style making it more difficult for the elite to distinguish from the mass with clothes as it used to be.
A far more accurate idea about a person’s wealth and status by looking at her leisure and social activities than by clothing as it used to be. Of course, some clothes are unique and exceptionally exclusive but still they can be copied and worn by many for a reasonable price.
The problem is not that there is no real reason for paying the price for a unique item because the elite is thinking differently and will always buy the greatest goods and most desired brands, the problem is that the mass could be less dreaming about paying this extra money, daring this once in a lifetime purchase as they will grant less value in something that everyone can almost get a similar cheaper reproduction.
This is again why brands have to educate customers, make them understand the benefits of possessing truly luxury items.

STAFFING AND INTERNAL MANAGEMENT
Finding the right managers, the people able to network and be brand ambassadors is complicated in India and China. This is why brands prefer sending expatriates who have the know-how but also sometimes don’t have the cultural understanding of the local specificities.
Most of the time, the top managers are westerners who have accomplished their career across the world. They don’t speak Chinese but have already started from zero in another country in the past and they are networking master. They are helped with savvy locals who know their country habits very well.
There is no sign of a shift from western managers to local management. Indeed, it is always more prestigious to have a French or British CEO as it gives instant credibility. The changes are more to be found for creative positions that locals are taking over. There has always been plenty of competent local designers but they never had the chance to get credit. When luxury brands entered India and China, they first merely sold the same items as they were selling in Europe, they did not see any benefit of trusting local designers.
But now as the market gets more mature and as the competition is fierce, brands are realizing all the advantages of having local creators. They add a local touch and can understand what the westerners can’t. Indian designers like Rina Dhaka, Rohit Ball or Raja Gill are now working with international brands such as ITC, a company distributing foreign brand in India.
Often these locals creator have learned overseas in prestigious fashion schools such as in New York or San Francisco so that they are the perfect mix that brands look for: an international profile attached with the local sensitivity.
But even the Chinese government is aware of this lack of competencies as they are now creating programs for the fashion industry. For instance, two of the most prestigious universities, the Fudan University and the Tsinghua University launched fashion luxury programs often in partnership with French or Italian business schools. There is a tremendous demand for this sort of program which should mean more and more locals at high positions.
We are already seeing more exotic names in the composition of brands management. At the same time, this is not specific to luxury. Companies are now playing on a global pitch, it is not surprising that their management is global too.

“LUXURY DIVERSIFICATION USING BRANDING CONCEPTS”
Luxury branding through the creation of new products or even sometimes services is something very fashionable now as a growth strategy. It has a great future in Asian countries.
During my experiences there, I have been touched by the fact that many Chinese have a small “porte-bonheur”, something that they like to show, that represent something for them as they are quite superstitious. That’s the reason why I think that brands should explore the market of “small hand carriage luxury objects”. It’s something different from accessories; it concerns an array of diverse items fitting with the Chinese culture.
For instance, Louis Vuitton has been very succefull in diversifying its product line now selling trendy shoes and fashion watches. Dolce & Gabbana has done the same with many clothing accessories. We have seen it with those examples, we could add much more, brands don’t need a specific know-how in the area where they want to diversify, and often the sole brand name is enough. Dolce & Gabbana does not have any expertise in watches conception but is still very successful on that market.
The real value is in the brand name: a big international name can go in pretty much every direction as long as it stays in luxury or premium goods and does not break the special relationship with its core market. When you are considered prestigious, consumers tend to forget where you know-how really is, they only think in terms of brand name.
The best examples of both advantages and downsides of diversifying this way are incontestably Pierre Cardin and Yves Saint Laurent. They initiated this movement by licensing their brand in every direction. It was bringing them a significant side turnover at the beginning but this “license frenzy” caused their collapse since they did not pay attention to respecting their core values. They were even giving their name away to home appliances without any association to premium or prestige. Often, the products in questions were made in china resulting in an overall poor quality. The result was dramatic as Pierre Cardin lost its entire reputation and was not viewed any longer as a prestigious brand.
So far, diversification has concerned mainly handbags, shoes, watches, perfumes and home-care products, mobile phones.. What could be some next prospects? It seems any kind of new technology can be explored, yet it just depends on the creativity of marketers. China, India and other fast developing nations can be a great field of experiments and at a reasonable cost.
The fact that these countries are very wide makes it easier for small scale trials. If the brand manages to create “a buzz” and is able to spill it in over areas, its awareness can increase rapidly.
“OCCIDENTAL LUXE MADE IN ASIA
Western luxury brands are still producing in Europe as it gives them an argument to charge expensive amounts for their products. Production in Europe is synonymous with craftsmanship, family traditions, unique know-how… However, more and more brands are thinking of sending their production in low cost countries as it will become a competitive requirement. But it’s not an easy decision because the “artisanal European production” is a key advantage of western luxury brands.
Indeed, would customers continue to buy a Dior dress if it was made in China end even with the best quality control and trained employees? In the end, the dress would not be a French luxury item.
Would customers perceive a difference? The important question to ask is what customers really want when they purchase luxury products?
According to analysts, a change in mindset will eventually happen with time as luxury brands will be forced to relocate their production centers in low cost countries and they will try to get closer to their customers there meaning that India and China will be prime destinations. Yet, it seems like there will always be a distinction between product design and manufacturing.
The designers will remain European or American and luxury brands will try to associate designing with their brands whereas the production will be detached to another entity in Asia but still under close supervision of the brand.
The ideal would be to reproduce the Apple model with conception centers in California and the production in cheap Asian countries using subcontracting. If we look closely at the Apple model, customers buy it because of the brand name, because of the particular design and applications, they know that it is made in Asia but they don’t really care as long as it has the same quality as promised.
This example is quite interesting because Apple is an high-end brand that we could compare to several luxury fashion brands. Though they are not in the same market, they have a number of things in common.
So why not imagining the Hermès bags designed in Paris but produced in Vietnam or China? If the company is still communicating on the brand mystery and using a smart marketing, I don’t see why it would not work. That’s a fact, luxury brands are moving their production outside occidental Europe. Their major area of interest are Eastern Europe, North Africa and of course Asia where the potential, savings could be the most important.
Anyways, it seems inevitable that luxury products will be made in Asia in the future not only because it is significantly cheaper but because this is the area where they will have the most customers.

APPEARANCE OF LOCAL BRANDS
Local brands have been perceived as cheap and low quality for most of the time but this is gradually changing. Now, the elite are aware of some trendy local designers proposing unique products and are not afraid of buying them, they are even proud of it. A top executive at the Italian brand Ermenegildo Zegna recently said that the next collections presented at the great Milano fashion show may not be Italian or French any longer but Chinese or Brazilian..
We have seen along this essay that local upscale clothing brands are already appearing in China that the Hermes maison itself decided to create a Chinese brand (Shang Xia) specifically for the Asian market.
The best example used in every book on luxury fashion is Italy which used to be “the China of Europe”. A few decades ago till the beginning of the seventies, Italy was mainly a manufacturing center for luxury clothes because the workforce was cheap and efficient. Then, some designers such as Gianni Versace or Giorgio Armani emerged on the European design stage and started to make Italy a popular place for luxury fashion.
For instance, the Milan fashion show had its first edition in 1975 only which is very late in comparison with shows in Paris or London.
Italy gradually became one of the greatest destinations for luxury fashion thanks to a couple of modern and artistic designers.
China and India have the potential to imitate Italy and reproduce the same development model in bigger scales. Both countries have an enormous tradition for clothing and costumes that if a few designers spread their creativity and styles across Asia, it could literally buzz around the planet.
For instance, a much smaller country like Japan has been successful in having world class designers (Kenzo, Yohji Yamamoto) which has certainly pushed Japanese consumers to learn more about luxury fashion. Yet, it is meaningful to note that they were first popular outside Japan and once they had the recognition of the entire western world, Japan customers adopted them. It was a bit as if Japanese customers did not believe that one of them could propose that sort of upscale products. It is exactly similar with Vivienne Tang, she could not find anyone in Hong-Kong attracted by her collections so she moved to New-York. There, she was quickly recognized and considered as a great designer which opened up the door of Asia.

Asian luxury brands will develop as long as they find their own style, they can’t simply try to be like Louis Vuitton or Gucci, they have to propose something new, different and suitable to their local cultures. Indeed, they will have to build a brand reputation and confidence in their own country before going overseas. They should first focus on local clothes, sari for India, cheongsam for China as an example. They now have everything to make it work: in India, there would be tons of Bollywood celebrities willing to wear these fashionable local luxury clothes, in China there would also be movies celebrities and sports top athletes dreaming of being the icon of a Chinese upscale brand
I have found some examples of luxury Asian fashion brands that opened stores outside Asia. For instance, Taiwan’s Shiatzy Chen, often called the “channel of Asia” has been a renowned brand for thirty years. Deliberately promoting the “neo-Chinese chic”, the brand emphasizes on Chinese culture with colorful drawings reminding the old times, qipao collars, knot buckles, ancient Chinese patterns. They were the first at understanding the potential of cultural clothing and are now considered as the most luxurious qipao producers.
Qipao is the local traditional Chinese dress from which they managed to design tons of different versions by modifying the colors, the shapes, the materials...
They transformed the qipao into an everyday dress for the elite and surprisingly they attracted an international clientele.
Exclusively selling to women, the brand is now considering design clothes for men which show the greater importance of men in the luxury clothing market. They have stores in major European cities, New-York and thanks to their popular brand reputation, they have been successful also in diversification with the opening of high-end tea lounge in Taiwan.
Shiatzy Chen is according to me the best example to follow for any Chinese fashion designers.
The brand from Hong-Kong Blanc de Chine has experienced the same success with approximately the same model: using the traditional Chinese culture to inspire a luxury clothing design. In their collections, they are proposing styles belonging to their history and cultures. One collection was inspired from the Sung dynasty, another one promoted the Naxi tribe, a more recent one in 2010 was the result of a work on the Ming dynasty. The latest one was inspired of Daoism featuring silk undergarment that women and men used to wear at BC-200.
The funny thing is that many of their clients are based outside Asia. Besides, Blanc de Chine’s flagship store is located in New-York.
These two examples illustrate well how interesting it is to play on the assets of local traditions. Similar brands are expected to appear in China. This is different in India where no real upscale fashion brands exist so far.

STRATEGY RECOMMENDATIONS

This chapter will detail the main recommendations and key points that come out from the analysis of the Indian and Chinese luxury market.

A brand identity based on the core values of luxury: tradition and heritage
Local consumers are not currently buying a brand primarily for its tradition but more for the show off effect that it gives. Their goal is to have their family, acquaintances and professional circles aware of who they are and what they can afford.
However, all brands should emphasize the traditions aspects and tell a story. This will be beneficial when customers will be more educated and exposed to luxury items. For example, Japanese customers are looking for brands having an old history as they live luxury as a lifestyle and not only to impress the others.
Working on the brand identity concept can bring a lot of value but managing it is not easy as it can be dissolved rapidly if the good decisions are not taken but it is priceless if the magic operates.
Again no secret or specificities to follow, the brand identity concerns all the possible things or persons related to a brand from the employees to the customers, from the suppliers to the media.
Besides, customers often buy a specific brand because they are fascinated by its history and not only because of the products unique qualities. The key for the brand is to conserve this brand identity and recognition but nowadays, most luxury brands are listed on stock exchanges and shareholders always ask for more sales and profits. They also want the brand to develop in new geographical areas.
This phenomenon leads brands to seek new areas of growth, sometimes outside their core market. This can be very dangerous if not effectively managed as the risks are losing this brand identity and in the end moving away from traditional clients.
The first step is to know clearly where the brand stands in the market, what the name represents for consumers. Considering a brand extension can create additional value but at the same time it may lead to brand dilution and severely damage the brand name. The brand exclusivity has to be preserved but a touch of innovation should be added.
Therefore, cautious and gradual evolutions are less risky than radical moves. It can take the form of slightly cheaper entry level products to appeal less wealthy customers, it can also be some limited editions or some collaboration with other companies.
For instance, two companies can enter into an alliance and bring their expertise to create something new. For instance, clothes designers and mobile phone manufactures or luxury watches makers and car makers. It has been proved successful. (Nokia-LV, DG-Samsung..)
This type of alliance could be something interesting in India and China where we have to admit that many consumers still don’t have an awareness of luxury goods. Thus, one company could use the reputation of another company to make itself a name and vice versa. Fashion diversification is suitable for India and China as it has been observed that an important part of luxury purchases are actually small items and accessories. It represents non negligible additional incomes.
The middle class can’t afford the Dior costume but will be likely to go for a scarf or a tie. Thus, accessories and small items are a way to attract new customers and build a link with the brand. If one day they can afford the suit, they will have more chance to do so.

Get to know local customers. Introduce them to the luxury family
As we have seen throughout this essay, one of the issues faced by international brands is the very little knowledge that consumers have in general about luxury.
In the meantime, many brands have a limited understanding of these potential customers as they have not long been working in so particular countries as India or China.
Therefore, it is their mission to approach them, introduce them to their products and take them along the path of luxury arousal. By doing this, spending time understanding their motivations, brands will be more aware of their needs and dreams. The traditional vision is that consumers come to luxury and not contrary but India and China are so particular that it is a necessity to approach potential customers as they often don’t see the reasons of buying luxury. For example, if brands don’t approach the Indian farmers of Kerala province, renowned for being millionaires, there is very few chances that the farmers will one day open the store front door.
It requires an educated sales force composed of local people and also the use of the appropriate channels of communication. For instance, TV ads would be more a back-up to the work realized in events or exhibitions but not the first tool.
In China and India, families and friends circles are incredibly efficient to convey a message, brands should see in a person “ten or more other persons” behind. They should not hesitate to offer the opportunity to invite other persons to events, to give vouchers to several members of a same family and to use “parrainage”.
I think that Chinese and maybe Indians would also like the membership card concept. It is in their history to value group belonging so I guess that they would appreciate to feel part of an upscale community.
In addition, I heard recently of a design store concept in Shanghai where consumers have to pay a yearly fee to be let in the store. Only members can actually shop in the store and all others can only dream of getting the card one day. It is working wonders as the store can’t accept all the demands of registration despite the high initial fee.

Being “European or American” is not enough any longer
There was a time when playing on the French or Italian origin of luxury items was the main advantage in China. They had a very low representation and quality perception of their home made products. They did not think their countries good enough to produce such wonders.
It was the ultimate sign of success to have an American or European brand at home and not only for clothes. Asians were like in awe of foreign products because they did not have access to them in their country but it has evolved.
Now, with their economic development, they are much more confident in their home countries capacities. In confidences index measured by the UN on world youngsters, Chinese and Indian teenagers are among the most confident in the future (rank 4th in 2008 for Indians).
Asians are also travelling more and more; luxury products are available to them everywhere every time. They won’t buy anything where there is a logo as it was the case before, they will be more selective and will only buy a foreign brand in case of proven superiority.
Secondly, they are very nationalist and could favor local brands as a local luxury segment emerges or at least brands valuing their home country.
That’s why brands should add a local touch in their approach (endorsing local celebrities for instance, having a Chinese slogan...).
Of course, they will still appreciate a lot the European origin of goods but being French or Swiss won’t give a similar advantage as before. Then, European brands will have to use different cards to keep being attractive and make young Indians and Chinese dream.

Customization and regionalization
The chance is that both India and China are enormously diverse culturally. It’s like if there was several countries within each of them. A consumer in New-Delhi will be very different from another consumer in Bangalore and still at the opposite of a third one based in Hyderabad.
This is a great chance for creativity. Why not imagining different clothes creation for every targeted region? The only thing that brands have to pay attention to is to preserve their international image.

Ethnic clothing: a segment worth more investigations
Given that the pride that Indian and Chinese have in their traditions, ethnic chic concepts could work well in these markets, probably slightly more in India as it is already developed.
It is to be noted that this is clearly more a segment for women which represents a great opportunity to educate them about luxury. Why not after having shown them a traditional Indian wrap dress convert them to a Christian Dior one?
Many designers, not all belonging to the high end clothes group, are proposing Indian tunics, long dresses, wrap skirts, scarves, kaftans, kurta and plenty other clothes made with cashmere or silk. It has found its customers and there seem to be a demand from elite consumers to have this typical clothes proposed by luxury brands. This is something to consider in India where many women are still reluctant to buy western-looking clothes despite the fact that they could afford it.
Similarly, opportunities exist in China but finding the clientele is maybe more difficult. It only concerns the old elite bored with current luxury proposals and desiring a return in the old times or the young fashionistas.

Give more attention to the women
It is in the mind of many that women are mainly receiving luxury gifts from their husband but this is partly false. Now more and more women have executive positions and they want to reward themselves and live a lavish lifestyle. In that sense, they are getting closer to the Japanese women consumers. They now spend as much as men but the interesting fact is that they spend generally more often than men. This is not surprising that women luxury brands such as Chloe and Burberry are among the most successful in China.
As they are now living more independently financially speaking, we can expect a more balanced consumption between men and women. Besides, my local friends recognized this trend and told me that it was true for every goods and services. Entire markets are emerging because of the new role of women in the society.
It does not mean that men should be neglected, it is the contrary as Chinese men and Indian men are also very interesting as they have a sense of fashion and like to use their clothing style to mean who they really are.
The shopping experience: an aspect to highlight
Considerably improve the shopping experience: we have seen that both Indian and Chinese are the largest luxury customer outside their country, they currently can’t find at home the same purchase experience as they can live overseas. This represents a significant loose for brands, they have to improve their store designs, train their staff and better understand what customers want.
My acquaintances told me that one of the advantages between shopping in Europe and their countries is the service quality. Here in France for instance, they have the feeling to be treated properly; they know that there will always be someone for some tips and advices whereas in China or India, they are left alone. Even when staff persons propose their help, there is such a gap in tastes and products knowledge that they don’t follow staff advices.
Giving customers a unique feeling is essential. As we can see with the survey below from the KPMG 2011 report, Chinese customers desire this luxury experience at least in the top-tier cities. It is less obvious in top tier cities but the recent opening of luxury stores across Chinese second zones areas should change it.

Insist on the traveler clientele
Insist on the “traveler clientele”. When Chinese and to a lesser extent Indian travel somewhere, they always want to take back home a prestigious item.
They are also doing it when they travel inside their country. For instance, I read that many Indians from Northern provinces like to get something when they travel to Mumbai. Often, they are business customers.
In 2010, Chinese consumers have spent $50 billion overseas on luxury goods. Just imagine what it would be if brands improve the store experience and make them also spend money in their country. Thus, new travel destination as the Hainan Island or Goa in India could maybe become areas of interest for luxury brand. In addition, stores could be developed more in second zone airports for business destination.
Regarding international travels, many Chinese just organize trips to Europe especially for buying luxury products. The irony is that they can find the same products at home. They are 100% sure to buy genuine products when they are outside China. The second reason is financial as luxury items in mainland China are charged with special duties and taxes making them up to 50% more expensive. Chinese travelers have now overcome the American and Japanese in terms of luxury purchases in France. When we know that the number of Chinese and Indian travelers is nearly doubling every two years, the potential seems priceless.
The World Trade Organization expects a number of 100 million Chinese people travelling outside mainland China in 2020. If only 10% of them are making a stop at a luxury store counter….

Standardization but with a degree of local adaptation
Young Chinese and Indian have to dream about the western role models, about these prestigious international brands. But at the same time, brands need to make them proud of their culture, of their traditions.
Luxury brands often just reproduce what is successful in the western world but India and China are so culturally different from any other country that it seems that taking into account local specificities and differences is compulsory. Givenchy for instance has wanted to have Chinese model only for its 2011 collection presentation.
Brands should mix their celebrity endorsements keeping the western role models but also adding a touch of orient with increasing local celebrities. For instance, the actress Shu Qi is representing Armani in south-east Asia which is I think a good move.
Go now in the E-commerce business
Luxury brands would be silly not to get into the online commerce. China is potentially the biggest e-commerce market in the world with 840 million internet users in 2013.
There are some social popular social networks like Renren, Kaixin001 which are similar to Facebook and known in the whole China. Young urban Chinese are also stuck on QQ Messenger and like to do shopping on Taobao platform, the eBay equivalent named in the top five favorite website of Chinese in February 2010.
Interestingly, they are favored by the same consumer base as luxury brands: young, urban and generally with a high disposable income.
India, however, is not an addressable online market for now except for advertising. My researches have shown that online commerce is quite inexistent in India although it’s rising little by little.
It’s not profitable to set up online stores as very few people actually buy online. Plus, there is no efficient network in place to send orders. Yet, it is essential to be online and intensively use advertising and promotions campaigns (organizing events, create a first contact with potential customers to through social networks).

In China, e-commerce is widespread and just as normal as in western countries for luxury products aficionados. Studies have demonstrated that they use the web a lot in their quest of information, to check about the reputation of a brand and about future collections.
This is also a place of dialogue, they go on specialized forums, they use social network to see what their friends are doing and of course which brands are in their wardrobe.
Just the fact that Groupon is investing millions and hiring an impressive workforce right now in Shanghai to develop the concept there is a serious clue of what the future of the Chinese internet will be.
Of course, all top brands have been proposing WebPages in Chinese but most of the time, these pages only provide basic information and are not techniques of advertisement. It does not create real direct connection with Chinese consumers.
It’s just like “we are here, we are thinking of you, please come see us”.
The cosmetic brand Estée Lauder has bet on the success of Internet commerce with the launch of a website selling most of their brand. It is also a place to give Chinese consumers recommendations about products, send free sample and show them that Estée Lauder products are carefully made for Asian skin.
Take the case of Sina Shepin, this website offering designers to sell their fabrication directly to customers through a unique website. More than 80 brands are now referenced and international brands like Burberry or Dior have accepted to be there too.
Sina Shepin is not the only player, the competition is terrible, Netease Shangping is another big name on this online segment but new comers are coming every month. These local brands are not only known by a few updated, with the word of mouth and the media, even people with very low revenues know them.
The consulting firm Huicong DB has conducted a study on this online market which has shown that purchases are generally for smaller items but that nearly 70% of traditional luxury consumers use the web for their purchase. Despite absence of true unforgettable experience and still doubts about genuinely products, they are interested in buying online.
(http://www.exclusivebrands.fr/2011/08/sina-nouvel-acteur-dans-l%E2%80%99... http://www.shangpin.com/login/login.html?ReturnUrl=%2findex.html )
Last November, Giorgio Armani has launched the first high end online store in China. The CEO John Hooks is targeting the young urban Chinese comfortable with the online world.
Therefore, all brands should fight to get visibility on the web.

Mix the product portfolio: both exuberant and elegant
Unlike Europe where the consumption of fashion luxury is much less centered on show-off, luxury brands should mix their product lines with still a large range of “M’as tu vu?” products destinated to meet the current demand on sophisticated and ultra exuberant products.
But in the same time, they should prepare the future with lower profile luxury items when customers will search some other purposes than showing off. As a result, why not imagining two distinct products lines: one centered on the discrete charm and another one on the attraction power.

Operational strategy
Regarding the presence modes, 100% owned stores are probably the most suitable in China but not recommended in India. They have proved their operational effectively in major Chinese cities as they give more control to brands and favor a more aggressive development strategy. It is possible to deploy a sales force around the store, to held event as desired inside the store. However it requires a substantial investment and is maybe out of reach for modest designers. In India, this eventuality is to be forgotten even in large developing malls. It is better to operate with a local who will handle all the inherent difficulties to the business.
In addition, the local partner will be more likely to possess the good information about consumer’s preferences and habits.
This solution of using a local distributor or franchise network is also an eventuality for China. Actually, even big names as Louis Vuitton and Lacoste begun this way on the Chinese market.
The operations strategy is something difficult to evaluate as there is not wrong or right choices, there is only more adapted choices for every company.

Be aware that profits won’t come overnight
Despite the promising opportunities of Indian and Chinese luxury markets, profits are still not a reality for many brands. The market is currently not big enough to allow the coexistence of many brands. Not even a fourth of foreign players are said to be displaying green accounts.
But, the fact that both countries will be the two largest markets in a very near future justify all the costs and temporal loose of money. Brands have to build their presence, get to apprehend consumers and create connections and emotions. Brands should try to focus on niche segments and not try to sell anything to anyone.
Patience is highly regarded in Confucianism theories, it has to be equally considered by international luxury brands.

CONCLUSION

The main conclusion of this report is that both China and India represents the future of the luxury market as they should account for 45% of the global market in 2020. For the first time in the history of luxury marketing, brands are forced to adapt their offers and ways of working to local specificities.
For instance, Hermes has created the brand Shang Xia especially for the Chinese market in order to give a local touch and boast the nationalism pride of Chinese customers. Similarly, Givenchy has presented his latest worldwide collection with Asian model only. The time when brands used the same methods to market their products in any country is over.
Thus, both countries are revolutionizing the luxury market as they bring 2,5 billion more potential customers in the game. These customers possess unique characteristics that are completely new for luxury brands. Indeed, the little emperors consumers or the Bangalore software executives don’t resemble any other European or American customers.
Many brands though they knew quite well the Asian markets because of their successes in countries as Japan or Singapore but India and China are both so unique that all their experiences in Japan can’t really be a great use. The geographic proportions, the consumer diversity, the motives of purchase are all very different.
Another major observation is that both India and China are not mature markets, they are only at the first stages of the spread of luxury model. Customers lack of knowledge about brands histories, products features and materials and even in many cases the ways of using the products. Their level of distinction between brands is very low and they often only know the major names.
China is clearly the more advanced country, the top tier cities are already well served forcing many brands to expand in less targeted cities. Clear segments of consumers can be defined, the emergence of women is redefining the business especially in the fashion segment, and local brands are appearing and also new channels such as the e-commerce. The country is gradually moving from the show-off stage to the fit-in stage.
Compared to China, India is still lagging behind and seems to be a more difficult market to tackle. Indeed, India considerably lacks of infrastructure and retail space, brands have had for a long time the unique options of selling in hotel lobbies. Now, they have access to shopping malls but is it not the best modes of operations.
The market is concentrated in New-Delhi and Mumbai; brands have not ventured much yet in other cities as they are already having issues in the two main cities mentioned. In addition, the environment (high taxes, complicated and time consuming bureaucracy..) is not helping.
However, the Indian market is growing 20% annually despite all those difficulties which illustrates the potential when the market structures will be in place.
There is no magic recipe bringing successes and immediate profits in these countries, it is on the contrary about being patient and learning.
There is no unique mode of development to follow but they are some key points to have in mind: knowing precisely who their customers are, taking into account local specificities within the country, remember all the local codes.
The biggest possible mistake is to try to reach everyone; it is simply not doable for most of brands given the geographic immensity. On the opposite, they should identify the high potential niche either geographically or according to groups.
Eventually, the global fashion industry will become very dependant of what Chinese and Indian want. As India and China have a large tradition of exceptional craftsmanship and unique materials, they could become a source of inspiration for international brands.
Why not in twenty years see people on the streets of Paris or London wearing clothes inspired from Chinese or local traditions and creativity.
What if these clothes were signed from an Indian brand….
What if the model promoting the clothes was Indian…
METHOD OF RESEARCH

My work is largely based on secondary data. I have read the books listed in the reference section and paid attention to the release of reports throughout the year on the luxury sector. For instance, I have used the two last reports of KPMG on luxury brands in China and the evolution of the Chinese luxury market.
Regarding India, it has been more difficult to find appropriate information but I have used press reports mainly from French magazines (Capital special India, Challenges: India vs. China ...) and internet sources.
In addition, I have also collected primary information by interviewing some locals. They were acquaintances from school and from my previous experiences in India and China. They have given me their opinion and their perception of their countries specifications was always interesting. For instance, one person from China explained about the danger of counterfeiting and the loss of interest in having a LV bag that other would perceive as a fake.
Regarding the division of the workload, the larger part has been devoted to the gathering of information (7 months) and then the redaction took me about a month and half.
I will be pleased to add precisions and details if required.

SOURCES AND REFERENCES

I have based most of my researches on four books, two of them kindly provided by my tutor Thomas Gonon. I have also read diverse annual reports on the luxury market in general and those focusing on China and India.
• “Luxury China: market opportunities and potential” written by Michel Chevalier and Pierre Lu. The book is from 2009 and has been foreword by Sidney Toledano, CEO of Dior.
It gives an overview of opportunities for luxury brands in China. Though it is a must read, it is a bit too general as it does not really give information segments by segments.
• “The cult of luxury brand: Inside Asia’s love affair with luxury” written by Radha Chadha and Paul Husband in 2006. Very complete, it gave me information about the whole picture of the luxury business in Asia.
• “India by design, the pursuit of luxury and fashion” written in 2006 by Michael Boroian and Alix de Poix’s. Sometimes too specific, it gave me an understanding of the fashion business in India, explained me about eh retail situation and also tastes of Indian consumers.
• “Luxury fashion branding” written by Uché Okonkwo in 2007. Even if it is not written specifically on India or China, it gives solid basis on the way of marketing luxury brands and it is specific to fashion. I got the idea of comparing mass-brands such as Zara to luxury brands from this book.
http://www.guardian.co.uk/world/2011/apr/26/china-super-rich-demand-luxu... Article from The Guardian, 26th April 2011 describing the frenzy for high-end fashion products in China.
http://madame.lefigaro.fr/style/shang-xia-lautre-hermes-made-in-china-17... Presentation of the launch of Shang Xia

http://red-luxury.com/2011/03/04/is-china-thirsty-for-creativity/ Website dedicated to luxury in China. This article evokes the growing desire for creativity.
http://www.nytimes.com/2007/11/27/style/27iht-remerge.1.8498149.html An article written in 2007 in The New York Times analyzing India as a next paradise for luxury products.
http://www.kpmg.com.cn/en/virtual_library/Consumer_markets/CM_Luxury_bra...
• (http://www.exclusivebrands.fr/2011/08/sina-nouvel-acteur-dans-l%E2%80%99... http://www.shangpin.com/login/login.html?ReturnUrl=%2findex.html

http://audreymagazine.com/the-dao-of-style-blanc-de-chine/ Explanation on Blanc de Chine, local styles inspiring from Chinese traditions.

http://www.nytimes.com/2007/11/27/style/27iht-remerge.1.8498149.html