China taps luxury heritage

02 May 2012

BEIJING: Chinese companies are set to focus on the nation's traditions and heritage in their branding as they aim to grow sales in the luxury sector.

China Daily reports that alcoholic drinks, beverages and porcelain have been identified as luxury categories for the future, as advertisers aim to meet rising demand from the nation's rapidly-expanding middle class.

The report cited research from Beijing's University of International Business and Economics (UIBE), which earmarked brands including Zhuyequing, a tea, Moutai, a Chinese liquor, and fashion line NE-Tiger, as potential major future players in the luxury sector.

These brand owners' associations with Chinese history could also attract domestic investors attempting to tap growth in the luxury market.

Speaking to China Daily, Yang Quingshan, a UIBE researcher, said: "Many traditional Chinese products already have a feature of luxury because of their heritage."

He added: "Purchasing a luxury brand is a shortcut for Chinese enterprises by instantly acquiring a brand's heritage, which can span hundreds of years."

Recent data from McKinsey has suggested that China would account for over 20% of the global luxury market by 2015, with a national spend equivalent to $27bn a year.

Separate figures from PricewaterhouseCoopers reported that the sector grew by 25% in China in 2011, with sales reaching $15bn.

However, aspiring Chinese luxury brand owners face obstacles to growing market share, with Yang emphasising the fact that it can take "at least 30 years" to build a luxury marque that consumers are willing to pay extra for.

There is also growing local competition from foreign companies. High-end firms including Hermès have entered the market, with the fashion house having released a bespoke branded product line especially for Chinese consumers.

Also speaking to China Daily, UIBE researcher Zhou Ting pointed out that domestic firms were generally lacking in luxury growth strategegies that tapped national heritage.

"Chinese companies only make products, and none of them link their products to culture," he said.

Data sourced from China Daily/McKinsey/Warc; additional content by Warc staff