China doesn’t just have a thirst for oil. It wants high-end bling.
Made in China is a label we are all used to seeing. But, these days China is also doing some buying. As its economy booms, so is the demand for high-end bling.
It’s showtime at the Cartier mansion on Manhattan’s Fifth Avenue. A night of champagne and celebrities as the world famous French jeweler launches a new addition to one of its iconic jewelry lines.
While the Cartier name is synonymous with luxury in the wealthy American and European and Japanese markets, they also have their sight set on the fast growing Chinese marketplace. China's economic boom has luxury brands hungry to sell to its relatively small high-end consumer class.
Known for its cheap labor and manufacturing, China is changing. Right now China accounts for 12 percent of global luxury good sales generating more than $2 billion dollars a year according to estimates by Ernst & Young. By 2015 those sales are expected to be closer to $12 billion.
“China is the third largest consumer of luxury brands and is expected to surpass the United States in 10 years,” said Jay McIntosh of Ernst & Young.
Right now there are around 300,000 millionaires among China’s more than one billion inhabitants. China’s new rich know what European brands they want and they want their status known.
"Chinese have always had a tremendous appetite for status ritual and luxury as they come members of the world economy out of this group of wealthy consumers learning what brands mean status whether Rolls Royce, Bentley, Cartier or Harry Winston for jewelry,” said Luxury Institute CEO Milton Pedraza.
Sales of European labels like Burberry and Louis Vuitton are already booming in Asia. Louis Vuitton will open thirteen new stores in 2007, while Cartier expects 10 percent of its sales to come from China by 2012 and is buying up storefront space in strategic spots to introduce its idea of luxury to the Chinese market.
“Today we have twelve stores and building five more stores. The average dimension is the highest average,” said Cartier North America CEO Frederic de Narp. "We are building stores like 5K square feet all in the very selective environments."
Is the developed world losing its hold on luxury lifestyle? Not yet. Japan and the United States still dominate the luxury market. But, high-end brands are already looking east to India once their idea of the good life takes over China.