Friday, October 16, 2009

Luxury Brands Rock Asia

Imagine, Louis Vuitton ( and Ermenegildo Zenga ( just opened shops in Mongolia’s capital, a country of 2.7 million people, one of the poorest nations in Asia. It’s GDP of approximately $1,800 in 2008 places it 164th in the world, just ahead of the Gaza Strip. What makes luxury brands rock?

Read On:
Similar to world leading brands Coca Cola, P&G and McDonald’s to name a few, luxury brands understand the advantage of moving first into any new geography that can sustain business profitability, is a real benefit. They leverage their brand DNA to tap into the local affluent market. Despite Mongolia being known for nomadic herdsmen that produce some of the world’s finest cashmere, it is rich in minerals – gold, copper and uranium. As a result, affluent elite has slowly emerged.

What is brand DNA? It consists of two components. The first being “Code”, which is what the brand stands for in the psyche of its users. Once the “Code” has been established, it is all about the “Cue”, the sensory signals that alert consumers the benefits they are looking for from the brand. Leading luxury brands’ DNA clearly communicates wealth and status to the elite. Consequently luxury brands are now targeting Asia. Gucci has 28 stores in China. Bulgari, the jeweler, has one of its flagship stores in Taipei, the city where Hermes will open a store next month. High-end brands fill the new ION shopping center in Singapore – Christian Dior, Louis Vuitton, Cartier and Rolex.

Luxury brands is a topic I first wrote about back on 11/8/08 in a blog titled Premium Choices: (
Bottom-line, despite the unsteady global economy, the luxury market continues to prosper with luxury brands now rocking Asia, excluding Japan.

Year to year comparisons: The Gucci Group reported Asian sales up 25 percent in the first quarter. Richemont, the group behind Cartier and Chloé indicated that despite overall sales being down 16 percent, Asia was up 5 percent for the first half of the year. Hermès worldwide sales for the first half were up 7.6 percent, with revenues in Asia; again excluding Japan up 30.8 percent. Analysts predict that the growth of the luxury market in Asia is not a short-term fluke. It is projected that China and India will grow 6 to 7 percent in the next year compared to a 5 percent estimated decline in Europe and a 10 to 15 percent decline in the United States and Japan.

Oh yes, if you are playing geography with your kids the capital of Mongolia is Ulan Bator.

1 comment:

  1. I am not surprised with the statistics. Nuevo riche think they need labels to communicate their wealth. Furthermore, in emerging and third world countries labels are vital to flaunting wealth to the masses. Personally, I find it disgusting.