Fashion has designs on China's rich

[ 2008-08-08 ]


EURIPEAN and American fashion designers feeling the pinch from the credit crisis can look to the growing ranks of China's nouveau riche to boost sales.

On China's mainland, the millionaires' club is expanding rapidly. And many are women who don't even blink when asked US$10,000 for a cocktail dress from a top international designer.

"The Chinese are the newcomers to the global market," said Sebastian Suhl, Asia-Pacific chief executive of Italian fashion house Prada, which has nine stores on the mainland.

"They're very hungry to learn about fashion. Fashion represents obviously status, but luxury is also a kind of bridge to the modern world for them."

As the Chinese economy surged more than 10 percent annually over the past five years, the country boasted 345,000 US dollar millionaires by the end of 2006, a third of whom were women, according to a report by Merrill Lynch and consultancy Capgemini.

Some 5,000 mainlanders had assets exceeding US$30 million, accounting for a third of Asia-Pacific's super-rich.

Even affluent Chinese women, without millions in the bank, are willing to spend their savings on designer fashions, seen as the ultimate status symbol in a country that is increasingly becoming preoccupied with the trappings of wealth.

Elegantly dressed Chinese manager Zhang Ning, 30, has never been to France but she likes to wear Hermes. "I like its simplicity, it makes me feel elegant," said Zhang, who works as a manager at an electric power company in the south China's Guangzhou City.

"France for me is elegance: good fashion and wines."

Western couture houses such as Hermes are now tapping into the discreet tastes of the super-rich.

"The Chinese mainland market is still very accessories-oriented but we believe that will change," said Alex Bolen, chief executive of New York-based couture house Oscar de la Renta, whose sleek cocktail dresses retail for up to US$10,000, while its evening gowns approach double that.

"There's definitely a market for the cocktail dress. But what has surprised us, pleasantly, is how rapidly the customer has also adopted our day wear."

Leading the charge is upmarket Hong Kong department store Lane Crawford, which is bringing cutting-edge Western designers to the mainland.

The opening of Lane Crawford's first store in Beijing last October has expanded the mainland presence of British designers such as Alexander McQueen and Stella McCartney, and heralded the arrival of more niche designers, including Dries Van Noten, Hussein Chalayan and Rick Owens.

Meanwhile, Chinese fashion editors, headed by Vogue China, have become an influential presence on the European fashion scene.

People's purchasing power and the growing sophistication of wealthy clientele is creating a very diverse market for fashion, says Angelica Cheung, editor of Vogue China. The magazine was launched in 2005 and has 320,000 readers.

"A young woman who might now be on a monthly salary of 5,000 yuan (US$716) could next year be running her own business. So it's a very aspirational market. Her first luxury product might be a Louis Vuitton bag but within a few years she might move on to something more niche such as Marni," said Cheung.

Chanel is the most preferred high-end fashion brand for affluent Chinese followed by Giorgio Armani, according to a MasterCard report.

Oscar de la Renta says China is central to a strategy for Asia which it hopes will account for 20 percent of its sales within five years.

Luxury fashion brands are all competing for space in a handful of luxury malls such as Plaza 66 in Shanghai and Lane Crawford in Beijing, where rents are sky high.

Retail analysts say that having a flagship store rather than being among dozens of brands in a department store is the best way to achieve brand recognition and exclusivity.

However, it is difficult and expensive to find good sites for boutiques on the mainland due to exorbitant rentals in high-end areas.

Reaching out beyond Beijing and Shanghai is the next step. The southern boom Shenzhen replaced Chengdu in 2007 as the city with the highest average spending on luxury goods, according to Credit Suisse.

(Shanghai Daily July 27, 2008)