There are many conclusions one can draw from the Global Financial Crisis (GFW) of 2008 - 2009. One is that China came through it very well, another is that Asia in general (except for Japan) bounced back quickly, and lastly luxury sales took a major hit in the USA in 2009 yet recovered in 2010.

Last month I covered the Billionaire Club and found that China is the fastest growing country for new billionaires. Last week Merrill Lynch Global Wealth Management and Capgemini issued a report saying that

the Asia-Pacific region has passed Europe in millionaires and totals to rank 2nd in the world behind the USA.

Hong Kong’s millionaires alone increased 33.3% in 2010 to number 101,300.

Luxury brands in Asia have been multiplying quickly and tracking millionaire growth. Enter a mall in Shanghai and you are likely to find Prada, Versace, Dolce & Gabbana, Coach, and the like. Not just one mall in Shanghai has these elite retailers, many malls do. Prada launched its IPO in Hong Kong last week. Coach is looking to launch on the Hong Kong market this year as well even though Prada’s IPO was flat.

Why are the world’s luxury brands looking to Asia?

Looking at the graph below you can see China enter in 2004 and increase steadily and take Asia along with it. Meanwhile, Europe, the USA, and Japan look like they have all maxed out their growth.



Another recent report called “How Global Business is the Business of Retail?” surveyed over 300 of the world’s top luxury retailers in 73 countries. This was the 4th year of the report. Included was a ranking of the Top 20 global cities with a percentage of the retailers surveyed operating in the city. Asia is represented well with Hong Kong (1), Singapore (7), Tokyo (8), Beijing (10), and Shanghai (11).

Cleary, there is much data behind the recent rise of Asia for luxury brand sales. Tokyo, Singapore, and Hong Kong have been luxury goods destinations for years. Shanghai and Beijing are relatively new on the scene and are also the best known Chinese cities in the world. But, have you heard of Shenzhen & Guangzhou (near Hong Kong), Tianjin (near Beijing), Hangzhou & Suzhou (near Shanghai), or Chengdu (central China)? These are China’s second tier cities, and many of the world’s luxury retailers are opening stores in them. Louis Vuitton opened 22 stores in 27 Chinese cities during the GFC including many of these second tier cities.

If you can market your product or brand as a luxury good, then you should look to Asia.

It is the one region of the world where you have established markets (Hong Kong, Tokyo, Singapore), newly minted darlings (Shanghai & Beijing), and emerging markets with China’s second tier cities. $11 trillion dollars of asset wealth is sitting in Asia waiting to be unlocked.

By: Matt Flax - Senior Business Advisor at www.DragonGate.Asia



Sources used; Data/Information Links:

US Luxury Sales Fall
http://www.businessweek.com/bwdaily/dnflash/content/may2009/db20090529_986529.htm
Asia Millionaires
http://www.google.com/hostednews/afp/article/ALeqM5hbCc030QzCT4qv_ZT0RwBN8QrPwg?docId=CNG.436300006124f4b5cbc7fecc0f68b6d5.451
Hong Kong Luxury IPOs
http://www.chinadaily.com.cn/usa/2011-06/24/content_12768924.htm
Top 20 Luxury Retail Cities
http://www.retailinasia.com/article/markets/hong-kong/2011/04/hk-retains-no1-ranking-luxury-and-business-fashion
China's Emerging Markets
http://interaksyon.com/article/5601/worlds-top-luxury-brands-compete-for-market-in-china-emerging-cities