Asian Markets Keeping the Global Luxury Brands Industry Alive

| 29 Feb 2012 | 0 Comments

Japan, China and numerous other non-European countries are playing a huge role in keeping the luxury fashion industry alive and flourishing. Despite the recession blazing its way through many countries across the globe, regions such as Asia, the Middle East and South America have assisted in maintaining the sale of luxury goods, and in most cases, augmenting them.

global luxury brandsThroughout the recessionary period, China and other Asian countries have played a progressively significant role in both outsourcing manufacturing for luxury goods companies as well as consuming such goods. During this period, demand for luxury products in such countries became rife, and this demand looks set to continue as the end of the global recession is in sight. High-end retailers such as Hermes, Gucci and Louis Vuitton have established dominant portfolios of luxury items, which are in high demand from many countries unaffected by the economic downturn. Whilst other countries have been shaken into a state of financial turmoil, Asian consumers continue to assist prestigious brands with registering an exceptional performance.

Reasons for this transition and boom in popularity are multifaceted, although a primary factor is the growing influence of the western world, resulting in the globalization of luxury. As social media platforms such as Twitter and Facebook provide instantaneous access to the latest fashions, trends and celebrity preferences, individuals from a range of wealth brackets have become inspired by western customs and traditions. Frequent images of affluent celebrities showcasing their designer goods are constantly being streamed via celebrity websites, blogs and magazines. The use of celebrities to promote brand awareness is increasing the demand for luxury goods, and with the rise in e-commerce usage, many immediate sales are being realized.

A term that has been coined to describe this behavior is aspirationalism, which simply means the desire of young or less affluent individuals to save their money for the purchase of prestigious brands. Despite being on a typically lower salary, young people who wish to associate themselves with a particular brand are saving up to purchase a number of items from that range, and demonstrate to others that they are followers of the biggest trends. As Chinese consumers affiliate luxury with success, the acquisition of luxurious items is a way to manifest this accomplishment.

The strong desire for such goods also stems from a rapidly emerging middle and upper class in China, who are increasingly demanding high quality and luxury items to express their newfound social standing. China’s booming economy – driven by an increased production of goods and enhanced international relations, has raised personal wealth, thus putting more and more people in a prime position to purchase lavish goods.

Another factor that is driving this trend is gift giving, whether for personal or corporate purposes. Gifting plays a huge role in China not only during Chinese New Year, but throughout the Christmas period. Buyers purchase high-end goods for employees, family and friends. These items, ranging from Omega Seamaster watches to De Beers diamond earrings, are estimated to account for 25% of luxury goods sales in mainland China. Many of China’s shopping malls are now home to luxury brand names such as Cartier, Louis Vuitton and Christian Dior, with many shoppers spending in the region of US$1 million or more during a given shopping spree.

In light of this vociferous buying activity, major retailers are being forced to keep up with persistent demand. Luxury brand names have extended their repertoire of goods to include a full line of clothing, jewelry, watches, handbags and shoes, along with other highly sought after items. Purchases of such goods are making these countries even more lucrative, thus assisting them in their journey towards becoming the world’s greatest superpower. China, a close second to Japan, is now one of the largest markets in the world for purchasing opulent goods, and analysts predict that it could easily become the biggest luxury goods market in the world within the next four years.

French company Louis Vuitton has been described as a ‘magnet’ for brand-hungry shoppers in Asia. This region has emerged as an engine of luxury goods worldwide – now accounting for a staggering 33% of the company’s group sales. Although European and US-based sales are making a steady comeback in the aftermath of the economic crisis, China has maintained its status as one of the most important markets for leisure retailers, closely followed by Hong Kong, Taiwan, Macau, India and Brazil.

brandsBrands such as Hermes, Chanel and Burberry have reported better than expected sales in the past year, with the primary demographic being male and between 30 – 40 years of age. Sales look set to grow even further as Asian economies continue to flourish. Recent figures released indicate that a sharp growth will be expected during the next few years, and by 2014, growth will increase by an estimated 7%.

Despite East Asian countries being typically affiliated with financial austerity and frugality, the younger generations are making up for years of lost time by enthusiastically spending amongst an active and dynamic market. Many luxury shoppers are engaging with brands online, with an estimated 80% using social media to research purchases, while an estimated 70% are using news portals for their research.

In today’s current climate, showcasing your wealth is the ultimate status symbol, and despite a negative financial outlook affecting many regions elsewhere, East Asian consumers strive to display their acquisitions and exhibit their affluence. A fundamental transition in behavior has been acknowledged amongst today’s Asian consumers, and without their continued passion for lavish consumerism, the luxury goods markets would inevitably suffer.

As the economies of China, Japan and other East Asian countries continue to thrive, it seems that demand for such goods is yet to waver. The explosion in middle class consumerism, combined with the demand for luxury goods and a booming economy, is driving the corporate gifting market and enhancing sales. The rapid enlargement of these countries’ wealth, combined with an insatiable appetite for westernized goods and brands, has riveted high-end retailers, encouraging them to aggressively expand across these nations.

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