Bringing the life of luxury to China's shoppers
By Emily Ford |
December 30, 2012, Sunday
|
Print Edition
Print Edition
FOR a man who sits at the helm of a business empire worth US$23 billion, with a seemingly charmed life in Paris and a beautiful film-star wife - the Mexican actress Salma Hayek - to boot, Fran?ois-Henri Pinault is disarmingly down-to-earth.
Genial and smiling, the chairman of French luxury conglomerate PPR talks rapidly in Gallic-accented English about the moment he discovered that many of its customers wrongly believed that its Gucci handbags were being mass-produced in factories.
"We realized that customers thought our handbags were industrialized, coming out of machineries!" He laughed. "It is only handmade, everything is handmade ... That is why it is so expensive. But we realized five or six years ago that we were not communicating that. This is why we changed."
Few in China are likely to have heard of PPR, the company founded nearly 50 years ago by Pinault's father Fran?ois. However, they are certain to know at least one of its brands, a glittering roll-call of designers that includes Gucci, Yves Saint Laurent, Balenciaga and Alexander McQueen.
Pinault gestured out of the window of the Shanghai Puli hotel, near Nanjing Road, to one of the city's newest malls. Inside, are seven stores housing six PPR brands and counting, their glittering window displays a tribute to a seemingly unstoppable demand for luxury goods in China that has helped to send sales at the company soaring in the past decade.
Yet, after any boom comes a slowdown. This year, the soaring Chinese economy began to slow noticeably, and the high-flying luxury goods sector with it. Suddenly, people began questioning whether brands such as Gucci, with 56 stores in cities as far-flung Hohhot in Inner Mongolia and opening more, might be over-exposed.
Pinault said firmly that he is not worried. "Let us be very cautious when we say that 'it is a slowdown, that's the end of the world, the Chinese market is 'only' growing at six percent'," he said. "It's still a booming environment. It is still amazing growth."
Not all of this growth takes place in China. Each year, armies of Chinese tourists travel abroad to shop; with a third of luxury sales worldwide going to tourists for whom the experience of buying handbags in their native Paris or Florence is worth paying more for.
Yet Pinault says France is not taking advantage of tourist demand, with Chinese travellers currently hindered by a bureaucratic visa process that takes weeks. It is a personal bete noire. "The biggest industry in France is not building airplanes, cars or producing wine. It is not soccer. It is tourism," he said. "It is something that I'm trying to push a lot in my country - we are sitting on a goldmine and we don't know it."
Pinault believes that tackling the difficulties of obtaining visas is a priority for the luxury industry and also wants officials to simplify the process for collecting back tax on goods bought abroad, allowing travellers to go to the French consulate in Shanghai instead of waiting in line at the airport.
Tastes change so fast in China that for PPR and its ilk, keeping up with demands of luxury consumers is a constant challenge, Pinault said. "In cities like Beijing or Shanghai, the maturity of customers is changing very fast. What takes 10, 15, 20 years in Western Europe or America is taking three to five years here. The sophistication of the customer in Shanghai, Beijing or Hong Kong is very high, comparable with New York or Paris," he said.
The challenge of China is that while in Shanghai, shoppers want the same products as in Paris or New York, for customers in less developed cities buying their first handbag, a big logo is a must-have. "This is what is very tricky in China, you have to deal with all those kinds of situations at the same moment," Pinault said.
An often-asked question is why, for all its love of luxury, China has yet to develop a homegrown brand with the potential to be known worldwide. Yet that may have come a step closer to reality this month, with PPR's announcement that it had bought Qeelin, a Hong Kong-based jeweller. Qeelin's products, which include diamond-encrusted panda designs, appear to be aimed squarely at the Chinese market, yet the group believes that Qeelin, its first non-European brand, has the ability to inspire international appeal.
Pinault says that China's thousands of years of expertise in crafts such as porcelain, silk and jade will in future give rise to more to luxury brands, but in fields distinct from the Western traditions of leather or tailoring. "China has a very strong tradition in many fields and in some of these areas of tradition and craftsmanship and know-how that are very deeply rooted in the Chinese culture will arise luxury brands, I'm sure."
A huge headache for luxury executives is how to sell high-end products online. How do you translate a shopping experience based on personal service into pixels? Pinault is adamant that it is possible. "If you want to be consistent in the eyes of your customers, you have to be online," he said.
Online retail is even tougher in China, where it has long been associated with discounts. Yet Pinault believes it can be done. He talks of the possibility that brands might send someone to your house to make alterations.
"Selling full price online in China is not obvious for the Chinese customer, so it will be a new way of doing things. But the luxury experience has to be the same. There are no cheap customers, they are just customers," he said.
Genial and smiling, the chairman of French luxury conglomerate PPR talks rapidly in Gallic-accented English about the moment he discovered that many of its customers wrongly believed that its Gucci handbags were being mass-produced in factories.
"We realized that customers thought our handbags were industrialized, coming out of machineries!" He laughed. "It is only handmade, everything is handmade ... That is why it is so expensive. But we realized five or six years ago that we were not communicating that. This is why we changed."
Few in China are likely to have heard of PPR, the company founded nearly 50 years ago by Pinault's father Fran?ois. However, they are certain to know at least one of its brands, a glittering roll-call of designers that includes Gucci, Yves Saint Laurent, Balenciaga and Alexander McQueen.
Pinault gestured out of the window of the Shanghai Puli hotel, near Nanjing Road, to one of the city's newest malls. Inside, are seven stores housing six PPR brands and counting, their glittering window displays a tribute to a seemingly unstoppable demand for luxury goods in China that has helped to send sales at the company soaring in the past decade.
Yet, after any boom comes a slowdown. This year, the soaring Chinese economy began to slow noticeably, and the high-flying luxury goods sector with it. Suddenly, people began questioning whether brands such as Gucci, with 56 stores in cities as far-flung Hohhot in Inner Mongolia and opening more, might be over-exposed.
Pinault said firmly that he is not worried. "Let us be very cautious when we say that 'it is a slowdown, that's the end of the world, the Chinese market is 'only' growing at six percent'," he said. "It's still a booming environment. It is still amazing growth."
Not all of this growth takes place in China. Each year, armies of Chinese tourists travel abroad to shop; with a third of luxury sales worldwide going to tourists for whom the experience of buying handbags in their native Paris or Florence is worth paying more for.
Yet Pinault says France is not taking advantage of tourist demand, with Chinese travellers currently hindered by a bureaucratic visa process that takes weeks. It is a personal bete noire. "The biggest industry in France is not building airplanes, cars or producing wine. It is not soccer. It is tourism," he said. "It is something that I'm trying to push a lot in my country - we are sitting on a goldmine and we don't know it."
Pinault believes that tackling the difficulties of obtaining visas is a priority for the luxury industry and also wants officials to simplify the process for collecting back tax on goods bought abroad, allowing travellers to go to the French consulate in Shanghai instead of waiting in line at the airport.
Tastes change so fast in China that for PPR and its ilk, keeping up with demands of luxury consumers is a constant challenge, Pinault said. "In cities like Beijing or Shanghai, the maturity of customers is changing very fast. What takes 10, 15, 20 years in Western Europe or America is taking three to five years here. The sophistication of the customer in Shanghai, Beijing or Hong Kong is very high, comparable with New York or Paris," he said.
The challenge of China is that while in Shanghai, shoppers want the same products as in Paris or New York, for customers in less developed cities buying their first handbag, a big logo is a must-have. "This is what is very tricky in China, you have to deal with all those kinds of situations at the same moment," Pinault said.
An often-asked question is why, for all its love of luxury, China has yet to develop a homegrown brand with the potential to be known worldwide. Yet that may have come a step closer to reality this month, with PPR's announcement that it had bought Qeelin, a Hong Kong-based jeweller. Qeelin's products, which include diamond-encrusted panda designs, appear to be aimed squarely at the Chinese market, yet the group believes that Qeelin, its first non-European brand, has the ability to inspire international appeal.
Pinault says that China's thousands of years of expertise in crafts such as porcelain, silk and jade will in future give rise to more to luxury brands, but in fields distinct from the Western traditions of leather or tailoring. "China has a very strong tradition in many fields and in some of these areas of tradition and craftsmanship and know-how that are very deeply rooted in the Chinese culture will arise luxury brands, I'm sure."
A huge headache for luxury executives is how to sell high-end products online. How do you translate a shopping experience based on personal service into pixels? Pinault is adamant that it is possible. "If you want to be consistent in the eyes of your customers, you have to be online," he said.
Online retail is even tougher in China, where it has long been associated with discounts. Yet Pinault believes it can be done. He talks of the possibility that brands might send someone to your house to make alterations.
"Selling full price online in China is not obvious for the Chinese customer, so it will be a new way of doing things. But the luxury experience has to be the same. There are no cheap customers, they are just customers," he said.
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