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Jun
2015

Developing Brands

In this section of Luxury Insights China, we typically discuss a brand new to China that falls within the Sector Focus section. This month, we are moving slightly off this path, but there is a serious point here related to brand building in China, and the influence this has on the travelling Chinese, and that they in turn can have on the reputation of the brand back at home.

To be, or not to be a luxury brand

There has been quite a large amount of press recently here about a French luxury jewellery brand called Matzo Paris entering China with big plans to open 45 stores, and to compete with the likes of Cartier and Tiffany. Their story is that they have served the French aristocracy for hundreds of years, and now they plan to do the same in China. Theirs is not an uncommon approach to the Chinese market, but in this case, and the reason that we are talking about it here is that, it is an interesting case study for a number of reasons.

Its interesting how important a believable story alone can be in establishing a level of trust and faith in a brand that nobody knows, and a fact that we tell everyone we speak to. The investors in the brand are apparently Chinese and French, yet their claimed entry and expansion plans are not those of an exclusive luxury brand from Europe with hundreds of years of heritage that would value its history and exclusive status, and that would probably take a slow and steady approach to China, to avoid diminishing either. Chinese investors on the other hand will want quick returns and a scalable business model, as described in the publicised expansion plan, slow and steady can be a hard sell here.

The announcement of the expansion plans of the brand demonstrate that although the Chinese market is very large, there is still a significant level of immaturity amongst the consumer base that can be mined by those willing to tell a believable story, whether it has solid foundations or not.The challenge will be whether the brand itself can become established quickly enough before consumers either become more sophisticated and knowledgeable about luxury brands and their histories in general, or they have had the time or interest to dig a little deeper below the glittering surface they are initially presented with.

A further interesting angle revolves around the travelling Chinese luxury consumers, who will look outside of China for the origins of brands they considers as ‘international’. If these consumers cannot find evidence of those origins, they can do some serious damage to the brand through word of mouth and electronic social media back in China very quickly. There may come a time in the near future when ‘luxury brands’ that have tenuous links and origins in Europe or the USA, are found out. The question then will be to what extent Chinese consumers feel cheated or care?


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