Something quite extraordinary is happening across Asia.
In the big cities all across the continent, people are shopping as though their lives depended on it, day after day.
In Singapore and Hong Kong, it's been the main leisure pursuit for years.
But now, rather suddenly, the cult of luxury shopping is spreading - and China is emerging as what will soon be the biggest luxury market in the whole world.
Eclipsed
So many times in the past few decades, the insatiable appetite of the Americans for imported consumer goods has helped the world out of recession or helped to avoid it.
But if China's emerging class of consumers put their mind to it - up to 800 million of them, compared with roughly 200 million in the USA - their buying power will shape the needs and demands of the rest of the world.
In 2010 China became the biggest marketplace in the world for cars. It was already the largest market for mobile phones. The world's second largest economy, Japan, has been deposed - replaced (of course) by China.
And the place that has hitherto been the great consuming nation - the USA - is soon going to be eclipsed. Asians seem to have an even hungrier appetite for luxuries: people who only 20 years ago hardly knew what bling was.
Status symbols
Retail expert Paul Husband has been based in Hong Kong for 25 years and he knows the scale of what's happening in the East.
And with his Louis Vuitton bag, Cartier watch and Ferragamo shoes, he knows a thing or two about luxury too.
"It began really in the very late 80s and early 90s," he says, when the first luxury brands like Dunhill began to enter China.
These pioneers tended to base themselves in and around western hotels - although their customers were not always westerners.
"It was opening the cult of luxury. At that time of course, you would see them in hotels and not on the street because the people with money - well, quite frankly one might have questioned where the money had come from. They had to be very discreet. Hence the luxury stores also had to be fairly invisible to the street. One didn't want to be seen going in."
But thirty years later attitudes are different. China has a more relaxed attitude toward wealth and many Chinese have successfully followed Deng Xiaoping's maxim that "to be rich is glorious".
Rags to riches
The workshop of Chinese fashion designer Zhang Zhifeng in the posh centre of Beijing is a vivid example of the opportunities open to an entrepreneur in a China moving quickly from communist puritanism to Western-style consumerism.
The ambitious but approachable designer, who heads up the label Tiger NE, is one of the people in China trying to create expensive luxury brands that speak directly to this booming market of people with newly acquired wealth.
His own story is a peculiarly Chinese take on the rags to riches tale.
"At the time of the cultural revolution, my dad was labelled as a capitalist and thrown into a gulag-style labour farm," says Mr Zhang.
"Our family was dirt poor. My mum had to learn tailoring just to make a living, to feed the family."
Mr Zhang learned the craft too, and after graduating from high school he opened his own small shop - just him and a sewing machine.
"This was in 1982. This was still the early days of China's reform and opening up."
When the government began to allow cross-border bartering, Mr Zhang's position on the Sino-Russian border meant that he was able to take advantage of one of the first market liberalisations.
"Because of the barter trade, my business started to take off," he says. "Initially it was just a one man show, and then family and friends joined in to help as more and more business came my way. Soon, in 1985, my shop hired more than 300 employees."
"I was one of the first Chinese who had the opportunity to go abroad," says Mr Zhang, who visited his trading partners in the former Soviet Union, and, eventually, Europe and America.
'All we had was quantity'
"The more I saw, the more I realised what the differences were between the Chinese and Western clothing industries. For example, the cost of making a shirt in China was about 20 Yuan and the shirt retailed for about 30. But in the States and Europe, a shirt can often fetch anywhere from US $30 to about $100."
In the West, the brand and the design quality had all been factored into the price, he realised, "but all we had in China was quantity. That was when I decided to improve and move into the high end fashion business."
NE Tiger was registered as a brand in 1992. At the time, a Chinese-owned and run luxury brand was highly unusual - and remains so today according to Zhang Zhifeng.
"In Beijing and Shanghai, our shops are still mainly surrounded by Western brand shops," he says.
"The only Chinese high end brand is mine. We are soon to launch a flagship store in Shanghai central shopping district where my new neighbours will be the likes of Louis Vuitton."
Expanding
This puts Mr Zhang is in a good position to take advantage of Asia's luxury boom, according to Paul Husbands.
"There's a view that by 2014/15, China will be the largest luxury goods market in the world, meaning that consumption in China and consumption offshore by mainland Chinese would outperform Japan, America and Europe," says the retail expert.
"It's the one large market in the world where we cannot see really an end to the market."
The rise in demand for luxury goods is not just confined to China - it is happening across Asia.
For the series Start-up Stories, I have been speaking to entrepreneurs across the continent, some of whom are looking for a slice of this expanding market.
I've heard from Ho Kwon Ping, whose luxury resort chain Banyan Tree is now exporting an Asian take on luxury to the rest of the world. And I've spoken to watch retailer Jannie Tay and chocolatier Lyn Lee, whose businesses started in Singapore but now trades across Asia.
There are bound to be many more of these stories to come. The arrival of a mass of Asian consumers is quite extraordinary. It's potentially much more significant for the global economy than the 30 year emergence of China as the world's great manufacturing centre.
As we're about to see, when people start to become consumers, what they want is a little bit of luxury.
Source: http://www.bbc.co.uk
Showing posts with label Asia •Business •China •Hong Kong. Show all posts
Showing posts with label Asia •Business •China •Hong Kong. Show all posts
Monday, January 24, 2011
Monday, December 20, 2010
Asia steering world economy in 2011
SHANGHAI, December 19 (AP): The prolonged weakness in the U.S. and Europe may be the least of Asia’s troubles in 2011, economists say, as the region fights potentially destabilizing inflationary pressures. Asia will lead global growth in 2011, with China, now the world’s second largest economy, steady at about 10 percent growth, the government-affiliated Chinese Academy of Social Sciences forecasts.
With a strong rebound in the U.S. or Europe just as unlikely as a relapse into a “double-dip” recession, Asia is easing its way out of stimulus programs launched during the financial crisis. But the U.S. Federal Reserve’s effort to nurture job creation through fresh “quantitative easing” has governments across the Pacific maneuvering to keep price pressures from spiraling out of control. “The inflation outlook is really critical at this point,” UBS economist Duncan Wooldridge said in a recent conference call, noting that excluding Japan, consumer price inflation in Asia has been averaging about 5 percent.
“From my perspective there’s really only one thing that matters at this point: inflation,” he said. China’s consumer price inflation surged to a 28-month high of 5.1 percent in November. The government raised interest rates in October for the first time since the financial crisis struck and has shifted to a “prudent” monetary policy for 2011 from one that was “relatively loose,” signaling its intent to tighten credit as it fights price hikes.
Focusing on the politically sensitive food prices that are said to account for up to three-quarters of the latest inflationary spike, the Chinese government ordered a crackdown on commodity speculation, price caps for edible oil and subsidies for the poor. It is already claiming some success in bringing prices for some vegetables and fruits lower. Meanwhile, the weather problems – like drought in south China and floods in Pakistan and Thailand – that have pushed food prices higher should moderate by midyear, according to most forecasts.
But inflation remains a threat, especially for emerging economies that are attracting large inflows of money from investors seeking higher returns than they can get from U.S. Treasurys and shares. The surging liquidity is adding to pressures on Asian economies to either raise interest rates or let currencies that already have gained substantially against the weak U.S. dollar appreciate further.
“Emerging economies can stop inflation if they are determined,” says Shanghai-based independent economist Andy Xie. But he figures that an effective strategy would require raising exchange rates by up to 50 percent and interest rates by 10 percent. “There is almost zero chance for them to pursue such a contractionary policy,” he says. Those options, while unpalatable, reflect the region’s relative strength compared with the U.S., EU and Japan, says a report by Macquarie Securities.
“Treading the fine line between growth undershoot and inflation overshoot is a challenge that is particular to Asia,” it says. Japan, now the world’s No. 3 economy after it was overtaken by China this year, faces no such dilemma. Though its economy gained momentum in the third quarter, that is fading as slowing overseas demand and the strong yen bite into exports, while deflation continues to stymie growth.
With recession-stricken Americans unable to resume the kind of freewheeling spending that powered growth for much of the past two decades, the recovery increasingly hinges on Asian resilience. “Asia is depending on demand in this part of the world,” says David Cohen, a regional economist for Action Economic in Singapore. “That’s where it’s going to have to come from.” So far, China’s rebound has largely been powered by massive bank lending in support of government stimulus, backed by steady, double-digit growth in consumer spending. The benefits spill across the region, from coal and iron ore miners in Australia and Indonesia, to semiconductor makers in South Korea and Taiwan.
As they launch a new five-year economic plan and prepare for a leadership transition in late 2011, China’s leaders have signaled their determination to keep growth at a steady pace with a recent announcement that they will stick to a “prudent” monetary policy for the coming year, says Ye Tan, a popular economic commentator in Shanghai. “In my view, they are sending the message that once the government curbs inflation, it will carry on with another round of investment to ensure it can meet its growth goals for 2011,” Ye says.
Source: The morung express
www.morungexpress.com
With a strong rebound in the U.S. or Europe just as unlikely as a relapse into a “double-dip” recession, Asia is easing its way out of stimulus programs launched during the financial crisis. But the U.S. Federal Reserve’s effort to nurture job creation through fresh “quantitative easing” has governments across the Pacific maneuvering to keep price pressures from spiraling out of control. “The inflation outlook is really critical at this point,” UBS economist Duncan Wooldridge said in a recent conference call, noting that excluding Japan, consumer price inflation in Asia has been averaging about 5 percent.
“From my perspective there’s really only one thing that matters at this point: inflation,” he said. China’s consumer price inflation surged to a 28-month high of 5.1 percent in November. The government raised interest rates in October for the first time since the financial crisis struck and has shifted to a “prudent” monetary policy for 2011 from one that was “relatively loose,” signaling its intent to tighten credit as it fights price hikes.
Focusing on the politically sensitive food prices that are said to account for up to three-quarters of the latest inflationary spike, the Chinese government ordered a crackdown on commodity speculation, price caps for edible oil and subsidies for the poor. It is already claiming some success in bringing prices for some vegetables and fruits lower. Meanwhile, the weather problems – like drought in south China and floods in Pakistan and Thailand – that have pushed food prices higher should moderate by midyear, according to most forecasts.
But inflation remains a threat, especially for emerging economies that are attracting large inflows of money from investors seeking higher returns than they can get from U.S. Treasurys and shares. The surging liquidity is adding to pressures on Asian economies to either raise interest rates or let currencies that already have gained substantially against the weak U.S. dollar appreciate further.
“Emerging economies can stop inflation if they are determined,” says Shanghai-based independent economist Andy Xie. But he figures that an effective strategy would require raising exchange rates by up to 50 percent and interest rates by 10 percent. “There is almost zero chance for them to pursue such a contractionary policy,” he says. Those options, while unpalatable, reflect the region’s relative strength compared with the U.S., EU and Japan, says a report by Macquarie Securities.
“Treading the fine line between growth undershoot and inflation overshoot is a challenge that is particular to Asia,” it says. Japan, now the world’s No. 3 economy after it was overtaken by China this year, faces no such dilemma. Though its economy gained momentum in the third quarter, that is fading as slowing overseas demand and the strong yen bite into exports, while deflation continues to stymie growth.
With recession-stricken Americans unable to resume the kind of freewheeling spending that powered growth for much of the past two decades, the recovery increasingly hinges on Asian resilience. “Asia is depending on demand in this part of the world,” says David Cohen, a regional economist for Action Economic in Singapore. “That’s where it’s going to have to come from.” So far, China’s rebound has largely been powered by massive bank lending in support of government stimulus, backed by steady, double-digit growth in consumer spending. The benefits spill across the region, from coal and iron ore miners in Australia and Indonesia, to semiconductor makers in South Korea and Taiwan.
As they launch a new five-year economic plan and prepare for a leadership transition in late 2011, China’s leaders have signaled their determination to keep growth at a steady pace with a recent announcement that they will stick to a “prudent” monetary policy for the coming year, says Ye Tan, a popular economic commentator in Shanghai. “In my view, they are sending the message that once the government curbs inflation, it will carry on with another round of investment to ensure it can meet its growth goals for 2011,” Ye says.
Source: The morung express
www.morungexpress.com
Saturday, December 11, 2010
MBA in Asia: Stepping stone into greater China
There are only 55 MBA students in Emmanuel Poupelle's class at Hong Kong University. When he walked into his orientation session earlier this year, the French citizen scanned the room. The majority of his classmates were not Asian. He estimates 60 percent were westerners.
“Probably the first thing we thought is we made the right decision because that’s what we were looking for. That’s what we applied for... to be fully invested in China, fully invested in Asia,” Poupelle remembers. He's among a growing number of MBA students targeting Asia-based programs for their degree. The ultimate goal: landing a job in Asia.
Classmate Stuart Mercier of Canada chose Hong Kong to enroll in business school because he wants, eventually, to go into real estate in greater China. "I think in this region, you see the projections of growth that are five, six, seven-times what they are for the Western world for the next decade. And so this was really the opportunity to follow the growth."
Because of China's growth, the number of MBA programs on mainland China has tripled to more than 250 in the past decade.
Follow the test scores
Most business schools require GMAT test scores as part of the application process so the GMAT is a good measure of where people are applying. There's been a big spike in GMAT scores being sent to business schools in Asia.
"Asia is on almost an exponential growth pattern," says David Wilson, President and CEO of Graduate Management Admission Council which owns and administers the GMAT exam.
It's not just westerners but also an increasing number of Asian test takers who are applying within Asia. Wilson says a majority of Asian test takers (67%) are still sending their scores outside of Asia to international business schools but that number is down 4 percent in the past four years.
Wilson also notes an interesting subtrend. A good number of Chinese applicants are "returnees" – those people from Asia who immigrated to the west and who are now coming back. Since they are bilingual, they are also highly marketable in mainland China.
Salaries: Show me the money!
When applicants research MBA programs, they no doubt want to know how much they can earn with a degree.
Most schools provide data on the average salary an MBA graduate earns after finishing the program.
The Financial Times ranks global business schools every year. Most of the top ten schools ranked by the FT this year show average salaries between $140,000 to 160,000 per year.
The only Asian school in the top ten was Hong Kong University of Science and Technology (HKUST), which is also affiliated with Kellogg in Chicago. The average salary at HKUST was lower than the other ranked schools at $115,000 per year.
The associate dean of HKUST's MBA program, Steve DeKrey, cautions applicants to put this number in perspective. "We send a lot of people (graduates) to China. Salaries haven't caught up yet so our average is going to be a little low. If you stay in Hong Kong? Sure, it'll be a little higher. If you stay in finance? Higher yet. So there's a range."
Source: CNN
www.cnn.com
“Probably the first thing we thought is we made the right decision because that’s what we were looking for. That’s what we applied for... to be fully invested in China, fully invested in Asia,” Poupelle remembers. He's among a growing number of MBA students targeting Asia-based programs for their degree. The ultimate goal: landing a job in Asia.
Classmate Stuart Mercier of Canada chose Hong Kong to enroll in business school because he wants, eventually, to go into real estate in greater China. "I think in this region, you see the projections of growth that are five, six, seven-times what they are for the Western world for the next decade. And so this was really the opportunity to follow the growth."
Because of China's growth, the number of MBA programs on mainland China has tripled to more than 250 in the past decade.
Follow the test scores
Most business schools require GMAT test scores as part of the application process so the GMAT is a good measure of where people are applying. There's been a big spike in GMAT scores being sent to business schools in Asia.
"Asia is on almost an exponential growth pattern," says David Wilson, President and CEO of Graduate Management Admission Council which owns and administers the GMAT exam.
It's not just westerners but also an increasing number of Asian test takers who are applying within Asia. Wilson says a majority of Asian test takers (67%) are still sending their scores outside of Asia to international business schools but that number is down 4 percent in the past four years.
Wilson also notes an interesting subtrend. A good number of Chinese applicants are "returnees" – those people from Asia who immigrated to the west and who are now coming back. Since they are bilingual, they are also highly marketable in mainland China.
Salaries: Show me the money!
When applicants research MBA programs, they no doubt want to know how much they can earn with a degree.
Most schools provide data on the average salary an MBA graduate earns after finishing the program.
The Financial Times ranks global business schools every year. Most of the top ten schools ranked by the FT this year show average salaries between $140,000 to 160,000 per year.
The only Asian school in the top ten was Hong Kong University of Science and Technology (HKUST), which is also affiliated with Kellogg in Chicago. The average salary at HKUST was lower than the other ranked schools at $115,000 per year.
The associate dean of HKUST's MBA program, Steve DeKrey, cautions applicants to put this number in perspective. "We send a lot of people (graduates) to China. Salaries haven't caught up yet so our average is going to be a little low. If you stay in Hong Kong? Sure, it'll be a little higher. If you stay in finance? Higher yet. So there's a range."
Source: CNN
www.cnn.com
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