The Rise of Chinese Luxury Brands

The consumption of luxury goods in China had reached $10.7 billion as of the end of March 2011, the amount of luxury brand purchsing not include luxyry jets,yachts and cars which account for a quarter of global consumption.

China's luxury retail market is dominated by foreign luxury marketers, who have been fighting for growth in the mainland. Now, Chinese companies like Shang Xia are starting to produce local luxury brands, and looking overseas for growth.

Are westerners ready to accept a "made in China" luxury brand and can local luxury brands provide the status that Chinese shoppers want?also, how can foreign luxury companies build up their own "luxury china brand"?? Hermès Chief Executive Patrick Thomas of Shang Xia provied the answers.

Marking its first anniverary, Shang Xia, the Chinese luxury brand developed and launched by Hermès, announced it will expand to Paris and Beijing.

“A second shop and a third shop should open in Paris and Beijing, probably next September,” said Hermès Chief Executive Patrick Thomas.

Hermès has always intended to make Shang Xia a global Chinese luxury brand, although it was launched specifically for the Chinese market.

“The idea is to bring the Hermès philosophy to China, to create a Chinese Hermès,” said

Thomas,“Instead of buying another company, ‘Why not create a brand from the ground up that shares our philosophy — outstanding quality, creativity, and strong style?’”

Sales have exceeded expectations, but Shang Xia is not yet profitable.

Thomas expects Hermès China sales to increase by 40 percent this year. This market “has huge potential for growth… which will stay above 25 percent in the coming years,” Thomas said.

Shang Xia's has targeted those consumers who look for different types of luxury brand combined with specific element or cultural.

However, Industry experts and competitors are following Shang Xia closely to see how successful Hermès is in its strategy to grow a local brand either as an early participant in the emerging movement of “home-grown” luxury brands or as a strategy to capture a larger share of China’s coveted luxury market without compromising Hermès’ exclusivity.

Moreover, there is a level of difficulty for luxury companies to develop brand in China. Because china is such a mass market for luxury goods, and companies are targeting a huge population with growing economy. Also, the test of western and eastern is quite different.

The luxury brand can be operated by horizontal and vertical dimension. In western style, the brand is about how unique the product is; be yourself. The brand needs to be personal style, ugly can be beautiful, strange style can be elegance. That is horizontal dimension which means the creativity

But in China, the test does not just about knowing you, but it also requires proving yourself. Spending on luxury in China is also including the value, cultural, and knowledge. And this is the vertical dimension.

Hence, the future trend for foreign companies who want to build up China luxury brand is how they can provide their western and eastern value to customers. And that is why so difficult that the luxury brand to be accepted by Chinese or ester countries.