SHANGHAI: Luxury brands are following a longstanding strategy used by casino operators in China, and flying customers on all-inclusive trips from the mainland to Hong Kong to buy their goods.
Analysts have noted an increase recently in the number of upmarket brands holding private events in Beijing or Shanghai for an exclusive clientele, where they can pay a deposit before being taken to Hong Kong to complete the purchase.
"For their real VIP customers, they do whatever they think is necessary," Torsten Stocker, head of Monitor Deloitte's China consumer section, told The Business of Fashion. "You see the same with high-end gambling where people get flown to the casinos in Macau or Singapore."
One example is Piaget, a Swiss luxury watch brand owned by Richemont, which stages two all-inclusive trips each year for 50 VIP customers. "This is the best way to talk about the brand and its heritage and its legitimacy," said chief executive Philippe Leopold-Metzger.
Stocker also observed that luxury brands were having to reconsider their strategies."They are thinking less about 'Where do I open my next few stores', 'How can I speed up my expansion' but more, 'What role do the stores in China play, what roles do the stores overseas play and how many stores in China do I really need?'" he said.
For others, the answers were clear. "Their real stores are in Hong Kong or Paris," declared Renee Hartmann, co-founder of consultancy China Luxury Advisors, adding "Their Chinese stores are just store fronts."
Hartmann's views were echoed by Christine Lu, chief executive of luxury experience company Affinity China. "When they travel overseas, maybe two or three times a year, they [Chinese consumers] are influenced by what they see in China," she said.
"There are probably many luxury companies who aren't making any money from those ridiculously high rents in Shanghai or Beijing but it's a sunk marketing cost."
Data sourced from The Business of Fashion; additional content by Warc staff