China Luxury Demand Rallies, But What Does It Mean For 2013?

Ferrari's 20th anniversary in China is marked with their biggest parade ever in Guangzhou

That Ferrari is a brand with several millions of fans across the globe is known to one and all. As the brand forays new markets it captures more hearts and earns more fans. The famed automaker recently celebrated its 20th anniversary in China. And to mark the end of the 11 month long 20th anniversary celebrations of the brands presence in China, more than 250,000 people lined the streets of Guangzhou in the south of China. The event kicked off with the arrival of Ferrari’s Chairman, Luca di Montezemolo, who interacted with the media during the first press day at the Guangzhou Auto Show.

The afternoon witnessed celebrations at every important landmark in the city of Guangzhou. The city also witnessed a parade of over 130 Ferraris, the biggest ever in China. The highlight of this parade that had all its 250,000 spectators screaming in excitement, was the very first public appearance of the new limited edition version of the 458 Italia produced for the Chinese market.

The parade started from the local Ferrari showroom and ended at the Haixinsha stadium, where 18,000 people watched the conclusion of the event that ended with an exhibition of the 2012 International GT Open championship-winning 458 GT2 driven by Gianmaria Bruni. That’s not all. The Canton Tower, the city’s main landmark was illuminated in red to mark this special occasion and more than 500 clients took part in a gala evening event inside.

If Ferrari ever had any doubts about the Chinese market, they were definitely laid to rest with the amazing response and enthusiasm of the fans in China.

[Ferrari]

G-STAR 2012 Part 3.

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Watchmakers hope for a rebound in mainland Chinese demand next year

Despite rising sentiment, the world's largest luxury groups aren't out of the woods quite yet. While Richemont celebrates a 13 percent increase in luxury watch exports month-on-month, LVMH raised prices at its top fashion and leathergoods brands in Europe following reports that indicated its lowest sales increases since 2009. With raw material costs continuing to rise, the luxury giant is set to increase jewelry prices next year. However, we don't expect the increases to dissuade Europe-bound Chinese tourist-shoppers, as prices will remain significantly lower in Paris than Beijing.

In 2013, the question for China remains what kind of growth leading luxury groups like LVMH and Richemont can realistically expect. According to the average estimates in a recent Bloomberg survey, China's economy should expand around 8.1 percent in 2013, up from 7.7 percent this year but down from 9.3 percent in the luxury boom year of 2011. Though more conspicuous brands like Rolex and Louis Vuitton should perform better than expected in 2013, owing to continued third- and fourth-tier expansion, we expect the most significant growth stories in top-tier cities like Beijing and Shanghai t0 be among boutique luxury brands, independent high-end designers (via e-commerce and brick-and-mortar), and even a handful of domestic jewelers.