REUTERS/Carlos Barria A woman walks beneath a Louis Vuitton sign in the
IFC Mall in Shanghai, China. China's elite have become too savvy for
Louis Vuitton, which has exploded in
popularity in the middle class.
"I don't see anybody carrying a Gucci or Louis Vuitton bag," Sara Jane Ho, the founder of the elite Chinese etiquette school Institute Sarita,
told Business Insider. "My clients are sophisticated. My students are
the people who were buying an Hermes bag 10 years ago and holding
themselves to higher standards."
As HSBC managing director Ewan Rambourg explains in "The Bling Dynasty: Why the Reign of Chinese Luxury Shoppers Has Only Just Begun,"
Louis Vuitton has been a big deal in China since around 2003, when
sales peaked in Japan. While Japan's elite were less concerned about the
brand hitting the mainstream, however, China's elite have a different attitude toward luxury.
"Japanese people used to
purchase luxury products to fit in whereas Chinese are buying the goods
to stand out," Rambourg writes, paraphrasing Swarovski executive Francis
Belin.
Now China's very high-end consumers are abandoning the label for even more expensive brands or bespoke goods. A typical Chinese luxury shopper, he claims, might think, "I can't buy Vuitton, I've seen it too much, it's a brand for secretaries."
"Louis Vuitton has become too ordinary," a billionaire woman
told China Market Research Group managing director Shaun Rein in 2011.
"Everyone has it. You see it in every restaurant in Beijing. I prefer
Chanel or Bottega Veneta now. They are more exclusive."
It hasn't helped that there are so many counterfeit Louis Vuitton handbags in China and around the world.
REUTERS/Bobby Yip Second-hand luxury handbags are displayed at a Milan Station outlet in Hong Kong.
Louis Vuitton sells
plenty of goods in China, but now the core consumers include young
office workers with spending money who save up to buy the status symbol.
This isn't necessarily a bad thing given that China's middle class may
be the biggest growth market there is. The challenge will be holding onto those core consumers while also trying to win back the richest customers.
To succeed, Louis Vuitton may
need to move away from its monogrammed, label-heavy image and become a
more nuanced luxury company.
"Wealthy Chinese want to make a
statement about their social status and what they wear, but they're
getting a little more subtle," Hansi Men, an investment immigration
lawyer at Streit & Su law firm, told Business Insider. "They want
you to know it's Louis Vuitton, but they don't like the big characters
on their shirt. They still want you to know that it's Louis Vuitton
without really knowing."
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