Chinese domestic luxury market weak when it comes to fashion

This week, the Chinese luxury site NobleChinese posted a Top Ten List of preferred domestic luxury labels, as chosen by its readers. Only two of the entries are fashion brands, while the rest are spirit labels, affirming that when it comes to fashion, Western brands are still the best-known and favored amongst Chinese netizens.

It comes as little surprise: A September 2010 study done by consulting firm McKinsey shows that affluent Chinese consumers prefer foreign brands: 52% of consumers whose annual income exceeds RMB 250,000 (USD 36,765) trust foreign brands more than Chinese ones, while only 37% said they prefer homegrown labels.

China, the world's second largest luxury goods market after Japan, is expected to become the biggest in the next five years. The booming retail scene there has led tons of Western brands to set up shop in the country. Every luxury European label from Christian Louboutin to Salvatore Ferragamo to Corneliani has announced that they will expand their business there within the next three years by launching a slew of new boutiques.

Domestic Chinese brands are increasingly facing competition from Western brands that have begun tailoring their products to local needs, tastes, and desires. For instance, Hermès recently launched a Chinese brand- Shang Xia, which sells ready-to-wear fashion, tableware, and home furnishings inspired by Chinese culture- while US denim maker Levi's launched its dENIZEN jeans brand this past summer, with measurements aimed at Chinese consumers since they have narrower hips, smaller bottoms and shorter legs than Americans.

Zhang Zhifeng- the founder of Ne-Tiger, one of the rare domestic luxury labels in China -says that the lack of Chinese luxury brands can be attributed to the fact that they are not treated fairly in their own country: "Some high-end shopping malls and department stores in major Chinese cities, for the sake of their own short-term interest, are willing to open the doors and to bow down themselves in front of foreign luxury brands by offering many privileges. For instance, foreign brands are always offered considerable discounts, the best locations, extended rent exemptions for a couple of years, covering cost for store renovation of the openings, reduced fees, etc. - all of these contribute to their rapid expansion in China," he told the blog Jing Daily.

Here is the top ten list by NobleChinese, translated from Mandarin to English by Jing Daily:

1) Wuliangye(???) - 38,729 votes - A high-end traditional Chinese distilled spirit, or "baijiu," label.

2) Guojiao 1573 (??) - 34,872 votes - A high-end traditional Chinese distilled spirit, or "baijiu," label.

3) Daoguang 25 (????) - 29,859 votes - A high-end traditional Chinese distilled spirit, or "baijiu," label.

4) Red Flag ( Hongqi, ???) - 26,553 votes - China's first luxury car brand, established in 1958. 

5) NE-TIGER (???????????) - 22,031 votes - China's first luxury fashion brand, established by Zhang Zhifeng in 1992. NE-TIGER opened its first Shanghai boutique in November and staged a high-profile runway show during China International Fashion Week this past fall .

6) Swellfun (???) - 21,259 votes - A high-end traditional Chinese distilled spirit, or "baijiu," label based in Sichuan. It was acquired by the London-based beverage company Diageo this past March.

7) Kasly Ju (? ??) - 20,237 votes - A producer of health food products, tea, dietary supplements and liquor.

8) Yuxi Cigarettes (??(???)) - 19,582 votes - A high-end cigarette company, whose cartons sell for a whopping 2000 yuan (US$301) each.

9) Erdos (????) - 18,303 votes - A luxury cashmere manufacturer from Inner Mongolia, established in 1979. Currently the world's largest producer of cashmere.

10) Furongwang Cigarettes (Diamond Pack) (???) - 16,965 votes - A high-end cigarette company, whose cartons sell for about 1300 yuan (US$195) each.

Sources:

http://www.jingdaily.com/en/luxury/chinas-top-10-domestic-luxury-brands-of-2010/

http://www.noblechinese.com/