Two cultures, two different games. China and India have become an obsession for European luxury companies.
By: HH Alexandra Orloff, CEO of Sacha Orloff Ltd
Posted on: June 10, 2010
Two cultures, two different games. China and India have become an obsession for European luxury companies. Europe, the hub of luxury, is expanding in these two enormous emerging markets as the demand for luxury goods continues to climb.
However, the ‘game’ should not be the only focal point in selling these products. The culture of both countries also needs to be considered. A deeper understanding of the Chinese and Indian cultures could be the ‘miracle worker’ in identifying the potential for luxury brands in both countries.
The financial turmoil of the last two years affected the luxury industry too, compelling brands to seek an increased presence in relatively newer markets like China and the rest of Asia.
Chinese consumers have distinctive buying trends and their fondness for luxury brands has not been reduced in the slightest by the economic downturn. Not surprising that the luxury market here is expected to grow by 35 per cent and become one of the largest worldwide.
India, in comparison, is as enigmatic as its curry. Marketing blueprints, so successfully implemented in other emerging markets, just do not seem to apply here. All has to be learnt, tested from scratch. The country eliminates the basic essence of the game - that time is money.
However, despite many differences, China and India do resemble each other in one respect - the market is young and thirsty for accessible luxury. Their purchases mirror strong cultural, social, personal and psychological characteristics which must be taken into account for an overall successful marketing. Both stand in stark contrast to the European outlook, where luxury is the equivalence of an experience, rather than just a reward.
Can a market, expected to nearly double, be conquered? The avant-gardist of the modern-day Chinese conquest was Pierre Cardin, who in 1978 took (what was regarded at the time) the brave, if not slightly frivolous step to place his brand in China. Over 30 years later, other luxury brands are waking up to the smell of China
As a short anecdote, I had the pleasure of meeting Mr. Cardin when I was taking my first tentative steps into the world of luxury as a student. Assigned to write a paper on Maxim’s restaurant with its Art Nouveau décor - and anticipating a lunch at this infamous Paris landmark - Mr. Cardin personally toured me around the restaurant. First tentative steps...one big jump for me...and for my heels, which sank into the five inch deep carpet of his office!
The golden dragon: China
The expansion of the luxury sector in China had earlier been coerced by the tradition of the ‘gift,’ in a system where interdependence within a group takes priority over the individual autonomy. The Chinese market is in majority run by men’s consuming habits, buying gifts to prove their success and a certain kind of modernity. These presents are mainly for their wives (Tai-Tai) and girlfriends, a more conventional style for the former and an ostentatious look for the latter, hence the necessity for much diversified products. However women will soon join them in this exercise, and will contribute to the extensive growth of luxury needs.
Buying for others will turn to buying for oneself, and will result in the creation of a knowledgeable and sophisticated consumer. Therefore European luxury brands will have to increase their exquisite effort to understand the cultural identity of its new consumers, such as Hermès, which will launch in September 2010 a new brand especially for its Chinese Market “Shang Xia”!
The prowling tiger: India
It is a world apart from India, where being the proud owner of a luxury item is a symbol of aspiration, and, simultaneously, achievement.
What is making the Indian market seem so inaccessible? Luxury brands, which for decades have been able to adapt and bridge the cultural and consumer divide, have been unable to penetrate such a large and untapped market. The Indian market is still in its infancy, accepting a gentle infiltration of its soil by some of the most renowned players in the European luxury market.
Although there is no doubt about the demand for luxury products and brands, there is an unexplained reticence to allow them to fully exploit the Indian market. This leads to further questions. How do you approach the Indian luxury consumer in a manner which responds to both style and culture? Is it a post-colonialist reaction not to divulge the key to their doors?
The market itself demonstrates the key signs of potential and opportunity - economic growth and stability, a young population, quite a few millionaires, a growing population and increased urbanisation. Nearly all major brands have placed themselves in India, eliminating a once traditional need to shop abroad.
One may then ask if brands are present in India, why is the market not opening to the same ‘gold rush’ like China? This is explained by the brands simply over-pricing their products and ruining the appeal for affluent consumers in terms of quality and service: two issues which should never be under any circumstances compromised on. Whether in China, India or Timbuktu, luxury remains above all an experience to please and tease all the senses.
Hence, luxury brands must be cautious not to wager all their efforts on two markets. Although they have an enormous potential for growth and consumerism, their position as new market entrants, teamed with a limited ability to forecast trends, creates a non-negligible risk for European luxury brands. The question remains - is this a risk worth taking?
Russian and Spanish aristocrat, HH Alexandra Orloff, is the CEO and owner of Sacha Orloff Ltd, a consultancy offering services and products in luxury jewellery, watches, and fashion industry. Having worked in numerous prestigious luxury brands, she has enormous expertise in strategy development for luxury brands across emerging markets.