Luxury Brands’ Value Shrinks $7 Billion as China’s middle class spend less

STC event pic 2Luxury isn’t what it used to be. The value of the top 10 luxury-goods brands fell 6 percent, or $7.1 billion, to $105 billion as companies from Prada SpA to Cartier grappled with slowing sales in China and Russia, research company Millward Brown said in the 2015 BrandZ study.

Only Louis Vuitton and Chanel saw an increase over last year. Vuitton gained 6 percent to $27.4 billion, placing LVMH Moet Hennessy Louis Vuitton SE’s biggest brand atop the luxury ranking for the 10th straight year. Chanel’s value rose 15 percent to $9 billion, propelling it to fourth in the list behind second-place Hermes and Kering SA’s Gucci.

Spending on gifts has fallen in China as the government clamps down on corruption, while Russia’s shoppers are suffering from the ruble’s depreciation and sanctions tied to the conflict in Ukraine, Millward Brown said. At the same time, efforts to appear more exclusive have created opportunities for cheaper brands such as Michael Kors and Tiffany, which finished in the top ten for the first time, the researcher said.

But this does not reflect the trends of High Net Worth Chinese, who still consume luxury goods overseas, during their business/leisure trips.

The brands who suffer the most are brands with low brand equity, in the eyes of Chinese consumers, as the most prestigious brands (in particular watches brands) continue to thrive with Chinese  affluent collectors.

Chanel, the maker of No. 5 perfume, and handbag purveyor Vuitton fared better than their peers thanks to their unique approach, according to Elspeth Cheung, Millward Brown’s Global Brandz Valuation Director.

Chanel has harmonized prices across regions, encouraging more in-store consumption, Cheung said. And Vuitton has successfully revitalized its brand with a fresh take on its original LV monogram.

The worst performers were Cartier, whose value decreased 15 percent to $7.6 billion, placing it sixth, while Prada slumped 35 percent to $6.5 billion, according to the study. An overly expensive product mix and lack of novelty at Prada have led shoppers to spend elsewhere, analysts at Exane BNP Paribas have said.

Gervois magazine - The new travel magazine for millennials travelers in the United StatesHermes’s value fell 13 percent to $18.9 billion and Gucci declined 14 percent to $13.8 billion, according to the study. Rolex fell 6 percent to $8.5 billion, placing it fifth. Rounding out the top 10 most valuable luxury brands were Burberry in eighth, Michael Kors and Tiffany.

The luxury ranking is part of a broader study commissioned by WPP Plc, the advertising-company parent of Millward Brown. The study is based on interviews with more than three million consumers and an analysis of companies’ performance.

 

In conclusion, Luxury brands should open less stores in Mainland China (and certainly close some of them), and focus their marketing efforts on Chinese outbound travelers who prefer now to buy overseas, to enjoy better prices, better service, and the social status which comes with a product bought in New York, London or Paris. “Bought in Beijing” is not cool anymore.

Source: Business of Fashion

 

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Mexico targeting affluent Chinese tourists from Guangzhou in 2015

Affluent Chinese tourists in Mexico - China Elite FocusMexico is committed to attracting more Chinese travelers this year, especially residents of the Pearl River Delta, according to Jose Alberto Limas, acting consul general of the Consulate General of Mexico in Guangzhou.
This year was officially designated as the Year of Mexican Tourism in China, one of several mutual cooperation agreements reached between President Xi Jinping and his Mexican counterpart Enrique Pena Nieto during the Mexican president’s visit to China at the latter part of last year.
Tourism between China and Mexico has rapidly developed and seen two-digit growth in the past two years. According to the latest figures, during the first 11 months in 2014, there were more than 63,000 Chinese travelers who paid a visit to the North American country and it is estimated the annual number would reach 70,000, with a year-on-year increase of 25 percent.
As many as 70 percent of the total 100 million outbound Chinese tourists in 2013 chose Hong Kong, Macao and Taiwan as their first choices. Among the remainder 30 million, 31 percent traveled to destinations farther from Asia. It suggests that in 2013, there were 5.6 million Chinese travelers willing to fly more than 10 hours to particular destinations, yet with only 1 percent traveling to Mexico.
“All the statistics show that our tourism is very vibrant,” said the acting consul general. “But we also noticed that there is still a greater potential in the Chinese market.”
To welcome the year with a good start and present more of the country’s attractiveness to the Chinese public, the Consulate General of Mexico will work in cooperation with the Mexico Tourism Board to participate in the 2015 Guangzhou International Travel Fair.
Also, the consulate general will organize a series of activities promoting Mexican culture, tourism and food, especially targeting the residents in southern China.
Aeromexico, Mexico’s global airline and the only airline in Latin America that offers regular and direct flights to Asia, recently released the latest direct flight schedule for this year. The airline will add one more flight between the two countries every week, which means that there will be three direct flights a week flying from Shanghai to Mexico.
To attract more Chinese tourists traveling to Mexico, the airline has also come up with promotional flights, with a round-trip ticket costing 8,000 yuan ($1,280), tax included.

Source: China Daily USA / Xiao Li Xin

Shanghai Travelers’ Club Magazine launches Men’s Fashion new monthly editorial feature

Shanghai Travelers Club - Men's FashionThe Shanghai Travelers’ Club magazine, China’s leading luxury travel magazine for High Net Worth global Chinese travelers, launches a new monthly regular section about Men’s Fashion.

“As Chinese entrepreneurs are becoming more and more international, they are more attentive to their personal style while in business meetings or in corporate events” said Pierre Gervois, Publisher and Editor-In-Chief.

The newly appointed Men’s Fashion Editor, Tyron Cutner, will be in charge of this new editorial feature.  An expert in men’s fashion, Tyron Cutner is a well known fashion adviser in New York City and will bring his expertise and style to the publication.

“I feel proud to be part of the prestigious Shanghai Travelers’ Club magazine. Every month, we’ll share with our Chinese readers the latest trends in Men’s fashion and accessories, as well as the basics that every international gentleman must have in his suitcase when traveling”, said Tyron Cutner.

Every month, starting in September 2015, the Shanghai Travelers’ Club magazine will feature a section providing fashion advice for the modern, style conscious, Chinese businessman.  Wether he’s attending a negotiation meeting in New York City, at a Charity ball in London, or attending a gala dinner in Paris.

According to a survey by China Elite Focus, 74% of Chinese male entrepreneurs and top executives aged 30 to 45 agree that paying attention to their personal style has a positive impact in conducting business.  And a staggering 81% think that they receive a “Disappointing” or “Very disappointing” welcome when shopping in the United States.

“It’s also important that fashion brands realize that they need to substantially improve the way they interact with affluent Chinese customers in the United States. We hope that this new editorial content will encourage U.S. retailers to implement long awaited changes in the customer service towards Chinese travelers”, Pierre Gervois added.

The Shanghai Travelers’ Club magazine is a China Elite Focus Magazines LLC publication withg offices in Hong Kong, Shanghai and New York City.

Chinese tourists “crucial” for cruise industry’s future, in Europe and the Caribbean

Shanghai Travelers Club magazine - CaribbeanThe potential of growth of the Chinese society, and its desire to explore the world are crucial factors for the cruise industry’s future, a high-ranking representative for the Cruise Lines International Association (CLIA) said in a recent interview.
“We believe what we are seeing today is just the beginning of a trend, with respects to Chinese tourists,” CLIA Italy’s national director Francesco Galietti told Xinhua.
Some aspects would so far distinguish Chinese from other tourists cruising in Italy.
“The first is a strong preference for cultural heritage cities such as Rome, Florence, and Venice, and a second aspect is that, when they visit Italy for the first time on cruise ships, they tend to repeat the travel, maybe in another way,” Galietti explained.
A third element would be related to a specific city, Venice, and to its power of attraction through the years.
“An important aspect we observe is a sort of ‘Silk Road tourism’ in that city… Because Venice used to be one of the final destinations of the ancient Silk Road,” he said.
Despite an increasing tourism flow from China to Europe, Chinese would yet represent still a large world to explore for cruise operators. “We believe Chinese are critical for our industry,” Galietti stressed.
“The potential of the Chinese society, and the Chinese people’s will to explore the world and put their own culture in contact with western culture… This is very important to us, and CLIA cruise lines are aware of that,” he said.
The changing trend in Chinese tourism would also impact China’s major shipping operators, whose presence used to be much limited to trade.
“Take Chinese COSCO shipping company as example: it is a big name in cargo, and we are now seeing its transition from a leadership in this sector towards tourism… It will be interesting to see whether (cities of) destinations will be able to match this growing demand from Asian tourism,” he said.
According to the CLIA representative, China’s domestic cruise market is also going through an unexpected phase.
“At the beginning, cruise lines thought that they would create hubs in China for the Chinese market, through river trips, domestic cruises, and so on… Whereas now, we see that it is not just the regional market expanding,” Galietti explained.
As such, cruise lines have adjusted and arranged for longer trips from China to other destinations, and some companies within CLIA have developed a strong footprint in Asia.
“I am thinking especially to Royal Caribbean International and Carnival, and also to Italy’s leading shipbuilding company Fincantieri, which has opened a big production site in China,” he said.

The prestigious travel publication “Shanghai Traveler’s Club magazine” published this month its first ever issue entirely about the Caribbean, featuring Jamaica and Tobago as well as cruise stories in the Caribbean. ” We have published this special issue because our readers told us they wanted to experience the Caribbean, while traveling on luxury cruise boats or super yachts between islands” told us Pierre Gervois, Publisher of the Shanghai Travelers’ Club magazine.
The cruise industry impacts widely on the European economy as a whole, and the sector registered a 40.2-billion-euro (44.6 billion U.S. dollars) output in 2014 with a 2.2 percent increase over 2013, according to CLIA data.
This performance led to the creation of almost 10,000 new jobs in Europe last year, bringing the overall number of people employed in the sector up to some 348,000.
According to the association, Italy is the country benefitting most from the cruise sector in Europe, despite a slowdown in 2014 compared to other European competitors, and visiting the country on cruise ships would remain a special attractiveness for tourists.
“We are speaking of a country that is a peninsula: the largest portion of Italy’s perimeter is on water… So, explore the country with cruising indeed makes sense and has something special,” Galietti said.
Source: New China/ Xinhua agency

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“Revolutionary” style holidays in Cuba for Chinese tourists

Chinese tourists cuba - china elite focusThe lure of beaches, luxury resorts, and golf courses may bring Chinese visitors to its longtime socialist ally, Cuba. In September 2015, a Chinese airline will begin offering direct flights between China and Cuba, a precursor to what officials hope will be a “sea of Chinese tourists” descending on the Caribbean island nation.
Cuba has already been working hard to attract some of the 100 million Chinese tourists who take overseas trips each year. Grupo Gaviota, the commercial arm of the Cuban military, started a campaign to ready 55 hotels and expand the country’s largest marina, the Gaviota Varadero Marina, to attract the Chinese. Cuban tourism authorities say they plan to have at least 85,000 hotel rooms available for tourists by 2020.
Cuba has long been an export destination for low-cost Chinese goods, but getting tourists there has been a harder sell. Top tourist destinations for the Chinese are usually in Europe, the United States, or elsewhere in Asia. Last year, only 28,000 mainland tourists visited Cuba.
But as Cuba’s tourism sector opens up, more Chinese companies and travel operators are turning their attention to the island nation. In May, a Chinese company, Beijing Enterprise, said it planned to build a golf course there, as well as condominiums. That would bring Cuba’s total number of 18-hole golf courses up to two.
Already, over 13 resort projects worth over $460 million in Chinese investment are underway, the official news agency Xinhua said this week.
If thousands of free-spending Chinese tourists begin to show up, the country’s burgeoning tourism sector could get a sizable boost. Travel and tourism is expected to contribute CUP12,709 million or 11.2% of GDP by 2024. China, Cuba’s largest creditor, also has the potential to help Cuba implement market-oriented economic reforms after its own path.
But there may be more at stake here than just golf courses and tourist dollars.  “The caribbean region is now a trending destination for affluent Chinese tourists” says Pierre Gervois, Publisher of the Shanghai Travelers’ Club magazine, a publication for China’s elite travelers. “Cuba is maybe the best well known Caribbean destination in the mind of Chinese travelers, it’s a major card to be played by Cuba”, Mr Gervois added. For China, closer ties with Cuba could help its trading position in the US-dominated region. For Cuba, China may be a way hedge against that US dominance as US-Cuban relations thaw. Last year, officials from China and several Latin American countries met in Havana to set up the China-Community of Latin American and Caribbean States (CELAC), an alternative to the Organization of American States, led by Washington.

Source: http://www.qz.com  / Lily Kuo

Could Asia become overly dependent on Chinese tourists?

Chinese-tourist-in-ThailandChinese tourism is changing the world’s tourism map. The biggest tourism destinations are looking to attract Chinese tourists, with new locations becoming more popular as Chinese visitors decide the best places to visit. As other Asian cities attract more Chinese tourists, experts are concerned that the economies in these destinations are becoming too reliant on Chinese travel.

The figures in the annual MasterCard Global Destinations Cities Index have always seen some fluctuations, but recent years have introduced a defining variable into the mix: Chinese tourists.

China’s emerging middle class and growing numbers of increasingly affluent travellers have created a new tourism market. The big winners in terms of increased Chinese tourism have been some of the biggest cities in Asia. In fact, the recent report shows that the top ten fastest growing cities include cities from most regions of the world, excluding Western Europe and North America.

The report ranks the world’s 132 most popular cities in terms of international visitor numbers and spending. London is still controlling the top spot, but big Asian cities are climbing up in the rankings.
Over 13% of the visitors to these Asia-Pacific destinations were Chinese tourists, the largest foreign tourist group in the region. Five years ago, the figure was only around 6%.
The Tourism Authority of Thailand says that Chinese visitors to the country stood at 4.6 million in 2014. By the end of this year, authorities expect the arrivals to increase by almost 40%.
An increase in Chinese tourism has not meant only an increase in pure visitor numbers, but also surge in the revenue the cities are able to attract from tourism. Bangkok, the Thai city ranking on the top spot in Asia-Pacific destinations, has visitor spending of $12.4 billion. The city is currently growing its visitor spending the fastest, with 11.8% growth between 2014 and 2015.

New Zealand, following a targeted promotional and media campaign made with China Elite Focus in partnership with the Shanghai Travelers’ Club magazine from 2011 to 2013, achieved remarkable results with affluent Chinese travelers arriving at Auckland Airport, and flying in premium cabins. “New Zealand is now seen by China’s elite travelers as the premium destination in Asia-Pacific”, said Pierre Gervois, CEO of China Elite Focus. “We have worked extremely well with Auckland Airport to create the Luxury New Zealand campaign and change the perception of New Zealand in order to attract more sophisticated and wealthy Chinese travelers”.

While Chinese tourism can greatly enhance the economies of these Asian cities, there is growing concern that some of the cities might become too reliant on Chinese tourism.
 
Eric Schneider, Group Head at MasterCard Advisors of the Asia Pacific Region, told gbtimes that tourism bodies must look to appeal a broader audience to guarantee ‘long term resilience’. “You must always be cautious not to put all your eggs in one basket,” Schneider said.
But China’s outbound tourism has still much more room to grow. According to Schneider, around 5% of Chinese citizens currently have passports. In a country with population of 1.357 billion, the potential for more outbound tourism is incredible. “It is inevitable that, as the Chinese middle class grows and begins to travel more often, they make up a bigger proportion of tourists to cities around the world,” Schneider pointed out.

It is certain that the power of Chinese tourists will continue to grow in importance in the coming years. For Asian cities, as well as for other big world cities, it is essential to maintain a diversified economy – not to rely too much on tourism or Chinese tourism particularly – while understanding the potential of attracting this new tourism powerhouse.

Source: GB Times, Krista Lomu