Major Luxury Brands Compete For Cross-Border Transformation In China

Following the recent acquisition of Chinese food and beverage enterprises by LV, Armani brand has successfully signed a luxury residential project in the prime location of Beijing, which indicates that luxury brands are beginning to find another way out in China. Although luxury brands do not necessarily have high cost performance products across borders, they break the monopoly in some way. Good for consumers.

　　 The sale of luxury brands is at a foregone conclusion. Sales in China are much worse than before.

This year, the dazzling brilliance of luxury brands has gradually faded. First is Chanel In March, it announced the price reduction. The price of its counters was 20% lower than that of the whole line. Many styles cost less than 1000 yuan after the price cut. Since then, more luxury brands have been following the trend. Luxury brands have begun to walk down the "altar" in the Chinese market.

In May 20th, CUCCI began its half off sale. It is reported that almost 4 of the products are involved in the promotion, including bags, shoes and many other products. The 50 percent off activity is spread across the CUCCI national store for 2 months. Dior (Dior) also lowered prices in China for two bags of Miss Dior and Dior Soft.

It is not only luggage products, but also lists. Swiss high-end wristwatch brand Calatrava Ref (Patek Philippe) also participated in this round of China's price cut; LVMH group also adjusted its watch brand TAG Heuer to 8%-13%.

In the case of price cuts, foreign media reported that the growth of luxury goods sales in China is under pressure. The size of China's luxury goods market accounts for about 1/3 of the total size of the global market. Take the world's largest luxury goods company Lu Wei Mo Xuan group as an example, in the first quarter of this year, Asian endogenous sales decreased by 6% compared to the same period last year.

According to recent data, the total retail sales value of Hongkong's retail industry in May was estimated at HK $39 billion, down 0.1% from a year ago, much less than the expected decline of 2.7%. Hongkong is known as a shopping paradise. Many mainlanders went to Hongkong to buy luxury goods.

However, Chinese consumers are still buying. Luxury goods They just don't buy it in China. In 2014, sales of local luxury goods in China dropped to about $25 billion, a drop of 11%. However, the wealth and Quality Research Institute in Shanghai said that at the same time, Chinese consumers' spending on luxury goods overseas increased by 9% to $81 billion.

Mr. ho mu, founder of Lian Zhi Da Consulting Group, believes that foreign brands have finally realized that when the pricing strategy first entered the Chinese market has come to the time of adjustment, "too high price itself is unreasonable and can not last long."

　　 Change strategy to play cross-border Armani into the luxury industry, LV sell Cantonese cuisine

Since the development in China is not as good as before, luxury brands have started looking for new ways to develop in China. Take Armani as an example. In early July, it announced the signing of a luxury residential project on the south side of the Chaoyang Park in the golden section of Beijing, which is expected to be completed in 2017.

It is reported that Armani group's Armani / home interior design studio will be responsible for the public area and convenience facilities design of the Central Park square project, and will create several Luxury Apartments. Armani cooperation with Chun Hao (Hongkong) Investment Development Co., Ltd., which is its first project in Beijing, including residential, grade a 5A office buildings, street business, underground business, business alone, office and supporting seven parts. According to the official micro-blog of the comprehensive project, its average price is 150 thousand yuan / square meter.

Armani entered the luxury industry, and other brands were not idle. For example, in 2014, LVMH group bought a more than 90% stake in the Jade Restaurant Group of the Chinese restaurant through its private equity fund L Capital Asia, which spent 100 million US dollars. The restaurant group has the main Cantonese cuisine, including various dim sum, handmade pastry and baking products, and has more than 100 branches in Asia. After the acquisition, LVMH group plans to expand the jadeite restaurant to the Middle East and the European market and take the international route. This leads netizens to laugh and eat bags?

In addition, luxury brands began experimenting with e-commerce channel sales. In April, Chanel, after its price cut, CO operated with Net-a-porter, a luxury shopping website, to open a sales section for its premium jewellery series Coco Crush, priced at 1970~19000 Euro range.

Zhao Ping, deputy director of the Consumer Economics Research Institute of the Ministry of Commerce, said that in the increasingly difficult and increasingly competitive market of luxury goods, many luxury brands have to lower prices in order to win more consumers in order to boost sales.

Ho Mu told the new China life channel that consumers now have some changes in their cognition of their brands with their former consumers. "Former consumers think that" forever "bicycles are good, and" permanent "sewing machines are not good. Early marketing theory is also so publicizing. With the change of business environment and consumption concept, this concept is out of date.

He believes that with the development of the Internet, information tends to be more transparent, and consumers' understanding of brands has changed. They are no longer "confused love", blind love, consumers are more rational, and judgments of commodities are no longer locked in a category or brand. "Facing the change of consumption concept, the marketing means of enterprises need to keep pace with the times."

He said that today's business environment and resource integration capabilities have changed. In the new business environment, all technologies, specialties and resources can be integrated. Armani may only design clothes and design models, but it can integrate the best Real Estate Company and property companies in the world as long as it sticks to the brand of the brand.

For these luxury brands across the border, he expressed his optimism. "LV entry into restaurants and Armani into real estate must be very rational in terms of product quality, service experience or architectural style. The cost performance is not necessarily very good, but it has introduced competitive elements for other industries and is good for consumers. "

Other experts believe that the change in consumer behavior patterns is closely related to the impact of e-commerce. In this environment, luxury companies are wise to diversify their businesses and diversify their income.