Luxury Retailers May Wait Years For China's Payoff
Will China's moneyed class boost the bottom lines of the world's luxury brands? Don't bet on it just yet, a new report says.
Makers of designer clothing, watches and jewelry are pouring into China, the world's fastest-growing major economy. Established players such as Ermenegildo Zegna and Louis Vuitton are expanding, while newer entrants like Bulgari and Coach are joining the fray; in April, a Giorgio Armani flagship store is set to open on Shanghai's Bund.
With its fast-rising incomes and unapologetic taste for conspicuous consumption, China would appear to be a fantasy market for the world's deluxe labels seeking to offset the maturing of the U.S., European and Japanese markets.
But a report by Morgan Stanley says the real payoff for these companies is still years away. While a sliver of China's new rich might be willing to spring for a $3,600 Louis Vuitton handbag or an $87,000 Cartier men's platinum watch encrusted with diamonds, demand for and knowledge of these brands is still limited. And with China's import tariffs on luxury goods ranging from 10% to 35%, on top of value-added and other taxes, many Chinese prefer to do their high-end shopping in Hong Kong.
"It's a common mistake that foreigners make. They go in and think, 'Wow, one billion people.' Their hopes are too high," says Angela Moh, an executive director for Morgan Stanley in Hong Kong and a co-author of the report, "Luxury Goods in China: A Long-Term Investment." The report, published last month, asserts that "payback for most brands [is] at least five years away."
The report estimates that China's luxury-goods consumers could eventually number 100 million -- roughly the current size of the country's middle class. Bulgari has said China could account for more than 10% of its sales in a decade, compared with less than 0.5% now; Gucci says its sales in Asia outside of Japan could, over the same period, almost triple to 30% of total sales, with China as the key driver. China could come to represent for luxury brands what it already is for successful sellers of cars, cellphones and consumer goods: A significant contributor to global sales and profit.
But for now, industry estimates place the market's size at about 1% of the population, or about 13 million people. The brands are fighting for the same handful of ultra-rich people spread out over different cities.
Still, companies feel they can't afford not to be in China, both to start building brands and to grab the best retail spots, which are limited in each city to a few places, usually the toniest hotels or shopping malls.
A big factor weighing on China's luxury market is the accessibility of Hong Kong. Along with lower prices, Hong Kong's designer stores offer a broader and often more up-to-date range of products than their mainland counterparts. Many consumers enjoy the cachet of buying goods while traveling abroad. Some luxury brands get as much as one-third of their Hong Kong sales from mainland visitors, according to the report.
That puts the brands in a quandary. They can either bring prices in their China stores in line with Hong Kong and watch their profit margins shrink, or charge higher prices in China and take a hit in sales. A wide pricing gap also encourages parallel importing, or the purchase of products in Hong Kong for unauthorized resale in China, the report cautions. Separately, the report says the prevalence of counterfeit goods in China doesn't have a big impact on sales but does hurt the brands' exclusive image.
The China market has other quirks. Unlike in the West, China's luxury industry is heavily skewed toward male buyers -- entrepreneurs, senior executives and officials buying either for themselves or as gifts. The biggest beneficiaries include Hugo Boss, Dunhill, Zegna and Givenchy. But the dominance of male-purchasing is declining. Men's goods account for about 60% of all luxury-goods sales, down from 90% during the early 1990s, Morgan Stanley says. "Five or 10 years ago, it was all men. It's changing now," Ms. Moh says.
In contrast, jewelry might be a tougher market to crack with its reliance on female shoppers and its high import tariffs; pearls and precious stones, for example, carry tariffs of 35%. In addition, the report says, it is harder to identify a branded piece of jewelry compared with, say, a watch or a handbag, making it a less-attractive purchase. The traditional Chinese preference for gold over other types of jewelry might also inhibit growth.
How, then, to invest in China's growing appetite for luxury? There aren't many listed options. Anne Ling, an analyst at HSBC Securities Asia, says she is paying closer attention to several listed Hong Kong jewelry stores that do some sales to Chinese visitors, though she says she doesn't formally cover those companies. She isn't keen on Ports Design, a Hong Kong-listed designer and manufacturer that sells expensive clothing in retail outlets around China, because she feels inventory levels are high.
Yang Liu, managing director for Atlantis Investment Management (HK), likes Zhejiang Ruan's Pearl & Jewelry, which plans to be listed on China's domestic stock market next year. The company is China's largest maker of pearls; its products can compete globally with Japanese pearl producers while the company has a strong position in China's domestic market, she says.
Overall, though, Ms. Liu says the dearth of options shows that this type of investment is premature. "Luxury goods will be the future," she says. "But it will take a few years to get there."
高档名牌抢滩中国
中国的有钱阶层能否让全球高档名牌销售商们大赚一笔？某家大型投资银行在最新一份研究报告中指出，现在就妄下结论有些操之过急了。
名牌服装、手表和珠宝的制造商们正纷纷涌入中国这个全球增长最为迅速的市场。杰尼亚(Ermenegildo Zegna)和路易威登(Louis Vuitton)等先行进入中国的品牌正在扩张其业务，而宝嘉丽(Bulgari)和Coach这样的后来者也加入了在中国市场的角逐。今年4月份，阿玛尼(Giorgio Armani)旗舰店将落户上海外滩。
近年来，中国消费者收入迅速增长，消费品位也变得无可挑剔，中国似乎成为全球高档名牌厂家在美国、欧洲、日本和其他传统市场以外开辟新天地的最佳选择。 但摩根士丹利(Morgan Stanley, MWD)在报告中指出，这些企业要真正实现赢利还需要等上若干年。虽然中国为数不多的新贵们或许愿意一掷千金，支付3,600美元购买一只路易威登皮包，或是为卡地亚(Cartier)男式镶钻白金表花上87,000美元，但中国消费者对这些名牌的需求和了解还是十分有限。
报告称，许多公司进入中国更多是为了宣传品牌形象，而不是扩大销量。中国大陆对高档名牌商品除征收增值税和其他税项以外，还要征收从10%到35%不等的进口税，许多中国人因此宁愿到香港购物，也不愿在大陆购买这些商品。
报告中写道，目前，由于店铺网点密度低，而进口关税又极高，在中国大陆做生意的高档名牌公司尚无利可图。大多数品牌至少要在5年后才能赢利。
报告中估计，中国的高档名牌消费者最终能够达到1亿人，大致同中国现有中产阶级人数相当。宝嘉丽曾表示，中国市场的销售额将在10年后占到公司总销售的10%以上，而目前这个比例不到0.5%；古驰(Gucci)称，10年内其在不包括日本在内的亚洲国家的销售额可能将增长近两倍，在10年后占到总销售额的30%，其中中国是个主要增长点。知名消费品牌或许能在中国大获全胜，汽车、手机和其他消费品的销售商都已经在这里留下了成功先例：它们的全球销售和利润中有很大一部分来自中国。 但就目前而言，业内人士估计名牌商品的市场规模尽占中国全部人口的1%左右，也就是在1,300万人左右。所有高档名牌都在吸引同一批有钱阶层。
这份报告的作者之一──摩根士丹利驻香港的执行董事莫仁瑛(Angela Moh)说，外国人常犯的一个错误是，他们来到中国就对10亿人口寄于厚望。他们的希望太高了。
不过，这些公司还是不愿对中国置之不理，一方面他们需要开始在中国树立品牌形象，另一方面还需要为自己的店铺抢占最佳位置，每个城市中的好位置都不多，通常在一些高档酒店或是大型购物中心里面。
对中国的高档名牌市场构成压力的一个重要因素是大陆比邻香港。比起大陆的同类商店，香港的名牌店所售商品不仅价格较低，而且种类多，设计也更新。许多消费者喜欢在去香港旅游的同时享受购物的乐趣。报告指出，一些高档名牌的香港店有三分之一商品是被大陆游客买走。
这些高档名牌公司因此有些进退两难。它们必须或者将大陆店售价降至同香港店同样的水平，眼睁睁看著自己利润率受损；或是维持在大陆较高的售价，让销售额受影响。报告中警告称，两地的差价还鼓励了平行进口交易，平行进口是指不法商贩在香港购买商品后，未经许可便拿到大陆进行销售。另外，报告称，大陆的名牌仿制品横行市场，这虽然对销售额影响不大，但却已经伤害到这些品牌独一无二的形象。
中国市场还存在一个怪现象。不同于西方市场，中国高档名牌市场严重倒向男性消费者，通常都是企业家、公司高层管理人士或是政府官员为自己或是作为礼物来购买此类商品。Hugo Boss、登喜路(Dunhill)、Zegna和Givenchy是此趋势的最大受益者。不过男士商品销售占主导地位的趋势正在转变。摩根士丹利说，如今男士名牌商品的销售额占全部奢侈品销售额的60%左右，低于90年代初期的90%。莫仁瑛说，10年前这是男士的天下，现在已经不同了。 相比之下，珠宝市场大概很难改变对女性消费者的依赖，同时也很难摆脱高进口关税的影响；目前珍珠和宝石的进口关税高达35%。另外，报告指出，同手表和皮包相比，珠宝是否为名家设计较难辨认，因此名牌珠宝的魅力似乎稍显逊色。传统的中国人更青睐黄金，这种偏好也有可能影响珠宝销售的增长。
那么如何借中国市场对名牌需求增长之机进行投资呢？可供选择的上市公司并不多。HSBC Securities Asia分析师Anne Ling说，她正在密切关注几家在香港上市的珠宝公司，这些公司的部分销售面向大陆游客。不过她表示自己还没有正式开始追踪这些公司。 她并不看好香港上市公司宝姿时装有限公司(Ports Design Ltd., 0589.HK)，认为这家服装设计及生产商的库存过高了。宝姿在中国大陆一些零售店出售价格高昂的品牌服装。
香港西京投资管理公司(Atlantis Investment Management (HK))董事总经理刘央看好浙江阮仕珍珠首饰有限公司(Zhejiang Ruan's Pearl & Jewelry)，该公司将于明年在国内市场上市。她说，浙江阮仕是中国最大的珍珠生产商，其产品在国际市场上同日本珍珠具有同样的竞争力，同时其在中国国内的市场地位又令外来企业难以企及。
不过，整体来看此类投资选择并不多，说明投资高档名牌类股的时机还不成熟。她说，名牌类股的投资拥有美好的未来，但等到这一天还需要几年时间。
