China Shopping

"Gosh, now if I could only get my hands on some Mexican abalone..."

I stumbled upon footage from the Mariachi “Alma de México”, who I managed for two months in Taiwan. They perform ´Guadalajara´ at the lobby of the Grand Formosa Regent Taipei, circa 2004.

In an incredibly interesting book on the evolution of the luxury brand market in Asia, The Cult of the Luxury Brand: inside Asia’s love affair with luxury, Radha Chadha and Paul Husband elaborate on the history of luxury retail in Taipei. The Grand Formosa Regent had a fundamental role in this process because it was precisely the retail space underneath this hotel, the Galleria, which housed Taipei’s first very own luxury shopping experience.

Luxury in China is one of the hottest business topics today. Just like Japan did in the 1970s and 80s, China is well poised to become the largest luxury product market in the world but, in proper China fashion, in a much larger, quicker, and impacting manner for all involved. Yuval Atsmon and Vinay Dixit, in McKinsey Quarterly, analyzed who the luxury consumer is in China. In Understanding China’s Wealthy (解读中国的富裕消费群体), both consultants identify 6 Chinese consumer segments.

Luxuo, a blog on luxury reports that China already consumes one quarter of the world’s luxury products and identifies its most luxurious cities.

How can one tap this market? As with any other market, one has to develop a specific product offer, but also deeply understand what motivates the Chinese affluent consumer to purchase. As acknowledged by McKinsey Quarterly, BCG, and Chadha and Husband, China’s different consumer segments obey differing motivations in purchasing luxury items. Perhaps one of the most important is signaling economic success. It is therefore important to establish how one’s product can fulfill a consumer’s need to signal success or power. Many European countries benefit from positive country associations. There is no arguing with the brands of “Italian style” or “French fashion”.

Can small companies develop a luxury brand from scratch? Mexican abalone a success story. As any Hong Kong commuter can tell, advertisements of Mexican abalone abound in the subway system. A simple search on Google for “Mexican abalone” (墨西哥鲍鱼) yields more than half a million search results. With just a simple trip to the supermarket one can witness the price premium paid for Mexican abalone.  Therefore, companies can profit from this exploding market just so long they can adequately fulfill the consumer’s wants and needs.