European luxury-goods makers have “been using the know-how of these countries for some time,” said Francois Arpels, managing director of Bryan Garnier’s branded luxury goods practice. Buying Asian brands “is the next step.”
Made-in-Asia luxury’s allure highlights changing tastes. Shoppers from China’s biggest cities are eschewing widely distributed branded products in favor of newer, more exclusive alternatives, according to HSBC, which estimates that three out of five products Vuitton sells are covered with the company’s LV logo. Chinese adults under 35 consider the style of a product more important than who makes it, according to Bain.
In China and India, a new generation of savvy clients are “looking for products that mean something,” Arpels said. Domestic brands drawing on local traditions and cultures “are starting to emerge.”
Merely Affluent
Cheaper labor means Asian luxur- goods makers have more flexibility on price. Among Couronne’s top sellers is a $500 leather handbag that’s about the same size as Vuitton’s Alma, which runs $1,340 to $2,930 for a canvas-and-leather version.
While European brands such as Vuitton are charging more in a bid to create more exclusivity while boosting earnings, the bulk of sales growth in China over the next decade will come from the merely affluent -- consumers earning 15,000 euros to 75,000 euros a year -- not super rich, estimates Exane BNP Paribas. That leaves space for rivals offering cheaper products that differ little in their quality.
“There is a tectonic shift happening in handbags,” said Luca Solca, an analyst at Exane BNP Paribas. “The upmarket shift of mega-brands like Gucci and Louis Vuitton is opening a price umbrella for aspirational brands expanding or entering the market.”