The China Edit | Beyond Bling, Lower-Tier Cities Beckon, Topshop Explores Mainland Sites, Hobbs, Paul Smith

The China Edit is a weekly curation of the most important fashion business news and analysis from and about the world’s largest luxury market.

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Luxury Goods in China: Beyond Bling (The Economist)

“It seems that China remains the biggest prize in the luxury industry, but the low-hanging fruit is gone. Luxury firms must now venture beyond the coastal cities where they have made easy fortunes, cultivate new types of customers and market niches, and experiment with new business models. It will be worth the effort. Despite the recent troubles, Bruno Lannes of Bain & Company, a consultancy, insists that ‘Chinese have become, and will remain for a long time, the most important luxury consumers.’ His firm estimates that luxury sales in greater China (which includes Taiwan, Hong Kong and Macau) will grow by 6-8% this year, to exceed $35 billion, making it a luxury market second only to America.”

For Luxury Brands Targeting China, Expansion to Lower-Tier Cities Beckons(Jing Daily)

“It’s hard to exaggerate the importance of the retail markets in China’s roughly 460 second- and third-tier population centers. The Boston Consulting Group has projected that both wealth accumulation and consumption in these locales will surpass that of the first tier in coming years. More than half of the country’s economic growth, 60 percent, is expected to come from these cities by 2020, while 80 percent of the country’s market for mid- to high-priced fashion will originate there. Indeed, in the not-so-distant future, luxury companies’ ability to appeal to consumers in these cities will be as important to their growth in China as their growth in China has been to their overall global earnings.”

Topshop Explores Sites for First Mainland China Store” (FT)

“Sir Philip said he would open on the mainland tomorrow if the right opportunity came up, but was happy to take his time to make sure the economics were right. ‘If we can get going in the next few months, why not?’ he said. He was in no rush and wanted to get a better idea of the lay of the land, because he would rather do it on his own than with a partner. ‘Giving away a big country on day one – why would you do that?’ he said. ‘You need some local expertise, but I’m not afraid to open one or two on my own.’”

Hobbs Takes New Look to China” (Telegraph)

“The retailer is now prioritising expansion into China and is in talks about opening a store in Hong Kong as its first move. Dulieu, who joined Hobbs from Marks & Spencer, said: ‘China has come up the rankings. We have spent a fair bit of time there. We were slightly overwhelmed by the response we got in terms of how strong this brand would be in the market, which is already well-populated. ‘They are passionate about authenticity, because clearly there are so many fakes. With the emergence of a middle class — and the tier two and tier three cities having a much bigger spending power — ‘entry luxury,’ which is where we would be positioned, is a very fast-growing market.’”

Paul Smith Re-Enters China Market to Woo Wealthy Customers (Bloomberg)

Paul Smith Ltd., the British fashion label, plans to open 25 outlets in China in the next five years as it re-enters the world’s second-largest economy to tap wealthy customers for growth. The brand, worn by former English footballer David Beckham and actor George Clooney, will focus on establishing outlets in Tianjin, Beijing, Shanghai and Chengdu and has no plans for smaller cities in the next five years, Paul Smith, the founder and designer of the fashion house, said in an interview today.”

Lina Lee is on vacation.