Personal Finance
HK luxury distributor thrilled by mainland's booming market
(Xinhua)
Updated: 2010-09-06 10:44
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HONG KONG - "Customers in the Chinese mainland have much higher enthusiasm in purchasing luxuries than in other places," Ivan Tong, chairman of Sparkle Roll company, one of the main luxury distributors in the Chinese mainland, said in a recent interview with Xinhua.
Sparkle Roll, a Hong Kong-based company, was previously engaged in comics and animation development, but it has evolved into a distributor for top luxury goods through acquisition of automobile dealership since 2008, eyeing the great potential of luxury business in Chinese mainland.
In addition to automobiles, Sparkle Roll has diversified its businesses to include distributorship of top tier watches, jewelry and red wines as well.
According to the company's results of the previous fiscal year, ending on March 31, 2010, its turnover reached HK$1.2 billion, an increase of almost 100 percent from a year earlier.
Tong credited his company's thrilling performance to "fast economic development of China and a growing number of newly-rich people".
Ultra luxury car Bentley costs 3.5 million to 7 million?yuan ($500,000 to $1 million) on average. Nowadays, one in every ten Bentley was sold in the Chinese mainland.
The case was almost the same with Rolls-Royce and Lamborghini, another top luxurious car brands.
DeLa Cour BiTourbillon Watches, from Swiss Luxury Watch Brand deLa Cour, launched business in China this January with only five hand-made watches in stock worldwide. It was not long before a deal which was worth HK$4.2 million was made with a client from the mainland.
According to a report on China's commercial development 2009- 2010 released in Beijing in May this year, China is set to rank as the world's biggest market for luxury goods in five years.
Produced by the Chinese Academy of Social Sciences, the report said China's luxury goods market had increased to $9.4 billion last year, accounting for 27.5 percent of the world's luxury goods market and supplanting the United States as the world 's second largest luxury goods market, second only to Japan.
In five years, the market for luxury goods in China could reach $14.6 billion, becoming the largest in the world, said the report.
"Over 30 years of economic reform since 1978 benefited the Chinese people, creating many billionaires", said Tong. He maintained that China used to be seen as the world's factory, no one did the research on its great demands, but now things were different.
What's more, "most of the rich people in China were not affected by the global financial tsunami because renminbi is not convertible."
Tong said he was once told by a senior businessman who was familiar with the global luxury industry that China's fast development and growing in luxury was impressive, while such momentum in Japan, who used to be the flagship, cooled down and the market of rising India was just hard to step in.
"Hong Kong did not have the luxury industry until the late 1960s," said Tong. With over 30 years of development, the city has now become a famous fashion and shopping destination.
The learning curve of the Chinese mainland, however, was a lot sharper compared with that of Hong Kong and other markets, he said.
Tong, however, also pointed out that the market in the Chinese mainland was not yet mature. "It will take five to ten year for the market to grow mature, when middle-class families are able to have their own luxury goods," he said.
Why would they choose luxury instead of the ordinary? Tong said since it was an open market, everyone had the opportunity to buy luxury goods and reasons varied.
For example, some saw it as a way of rewarding after years of hard work, while others used this high profile expression to win attention and in turn business opportunities, he said.
Tong called those who are not for the best but for the most expensive as immature luxury shoppers.
"You have to understand what you're buying, its history, its uniqueness, the function and so on, when the price doesn't come first."
As for the fact that some rich people were criticized of being pompous, Tong said it was understandable for those millionaires or billionaires to buy luxury and natural to feel like telling others when they got something really precious, yet they should be telling it in a proper manner, otherwise they were just showing off.
What they need was time, said Tong, noting that some local billionaires only made fortune in recent years and they were 15 years younger in average than their European counterparts.
"I knew some European billionaires who went to work driving a Toyota or a Honda in order to avoid passive impression even though there was a Bentley in the garage."
Tong said luxury dealers were also responsible to "educate" customers on how to appreciate luxury as service is a key element in luxury sales.
"I'm delighted to see that there have already been more and more billionaires in China who won't follow the trend blindly, who love and enjoy luxury out of understanding, who expend because of the design and the utility."