RETHINK Luxury: Asia Leads

Welcome to RETHINK Luxury, a new four-part, forward-looking series on the luxury industry at-large.

On today’s episode, we take a deeper look at the APAC region, with a particular focus on China, the new Chinese luxury consumer, and the impact this region will have on the global luxury market.

This episode features interviews with “Future Luxe” Author Erwan Rambourg, Matteo De Rosa, former President of Dries Van Noten, and RETHINK Retail’s Representative for China Joyce Deng.

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Hosted by Julia Raymond
Written and produced by Gabriella Bock
Edited by Trenton Waller
Marketing and social media by Natalie Arana

 

TRANSCRIPTION

Joining us today are guests Erwan Rambourg, Matteo De Rosa, and RETHINK Retail’s new Representative for China, Joyce Deng.

 

Up first, we’ll hear from China luxury marketing expert and equity analyst Erwan Rambourg. Erwan is also the author of the bestselling book The Bling Dynasty. His recent book Future Luxe is now available wherever books are sold—so be sure to check it out. 

 

Erwan Rambourg:
Hi, this is Erwan Rambourg, I’m the author of Future Luxe. I’ve been involved in the luxury sector for the past 25 years, initially as a marketing manager, and more recently as an equity analyst. It’s great to be with you today.

 

Julia Raymond Hare:
Thank you for joining us, Erwan. While a good portion of western thought regarding the luxury industry in the times of COVID has been more doom than gloom, you’ve expressed great optimism for tomorrow’s luxury consumer, particularly when it comes to consumers in the APAC region,  can you tell us why? 

 

Erwan Rambourg:
Yeah, so I think the timing post-COVID is quite interesting because there’s a lot of stress going on. This is a bit of an unprecedented crisis, and I think you’ll find a lot of observers in the luxury sector not being too confident about the long term. And my book is very confident about the next 10 years. And it’s essentially down to three cohorts of consumers. First of all, the female consumer. I put in the book that the future is female. I got pushed back on that with people saying, “Well, the past and the present are female as well.” And that’s true. But what I meant by the future is female is you have Womenomics at play if I can use a Japanese connoted term. You will have salary gaps reducing, you will have participation rates to employment going higher for women.

 

Erwan Rambourg:
You have people getting married at a later stage, getting fewer kids or if they do get kids at a later stage as well. And so women are on the cusp of spending significantly more. So the first reason to be optimistic is the female consumer. The second reason to be optimistic is the Asian consumer. If you look at the next billion people entering the middle class 88% of those will be Asian and obviously a lot will be from Mainland China. So I think there’s still a lot of recruitment to be going on. The Chinese theme has been quite a dominant intellectual space for the past 10 years. I argue it’s still going to be dominant for the next 10 years. And you’ll have a lot of new entrance that brands can consult to.

 

Erwan Rambourg:
And the third cohort is youth. This is partly related actually to the Asian development but it’s also true in the US. People tend to buy luxury at a pretty young age. It’s about fitting in. It’s about being recognized by peers, and it might sound a bit counter-intuitive, but luxury with this so-called Selfie Generation or Gen Z or however you want to name them is very important. The perception of who you are to be accepted as part of the club by peers, coworkers, family members is quite paramount. And so the combination of female consumers, Asian consumers, young consumers will I think fuel a lot of growth, but we’ll also put some pressure. Because especially with younger consumers, many questions will be asked to luxury brands that they haven’t been accustomed to hearing. And so they’ll have to adapt to be able to answer those questions.

 

Julia Raymond Hare:
Excellent. So you said there’s a lot of reasons to be optimistic, with some drivers related to demographics namely the female, the Asian and the younger consumers, and the statistic you shared blew my mind. You said 88% of the next billion consumers entering the middle class will be Asian. Billion is such a huge number to even conceptualize, how would you describe the impact of this growth?

 

Erwan Rambourg:
So, I would say, to put things more precisely, if you look at the target market of some luxury brands in China, it’s probably 15 to 20 million people only if I could say. And if you look at the next five years, that 15 to 20 will likely double. It’s not necessarily about making consumers loyal, obviously, it’s better if you can, or about trading up necessarily. It’s about being set up to be able to welcome more consumers through your brand. So it’s really almost about pure recruitment still in Mainland China.

 

Julia Raymond Hare:
And when you say pure recruitment it’s about capitalizing on the new entrance to the luxury market?

 

Erwan Rambourg:
Yeah. It’s recruitment by opposition to repeat purchases. The main driver of growth is your capacity to welcome new entrance. So first-time purchasers people who are in the market of my first branded handbag, my first branded watch my first branded piece of jewelry. And that is still quite dominant today. Even globally most of the luxury brands that I look at will generate more than half of their sales with people who are buying that brand for the first time ever. It sounds crazy but it’s true.

 

Julia Raymond Hare:
It does sound crazy.

 

Erwan Rambourg:
So I think you still have a lot of potential for the industry to welcome more people.

 

Julia Raymond Hare:
You mentioned that the ability to welcome first-time purchasers is the main driver of growth. So would you say based on your experience working as an executive in the luxury industry, and then also on the analyst side, that it’s difficult for luxury brands to really attract those first-time buyers? What are the challenges you’ve seen?

 

Erwan Rambourg:
So I think the main challenge when you’re dealing with a recruitment market is essentially scale and your capacity to have a voice and to basically drown the voices around you. It’s a very competitive space. If you’re looking for a branded handbag or footwear or ready to wear, you have 60, 70, 80 brands to choose from. The issue is when you are in the market of my first branded handbag, well scale matters because you’ll have a handful of brands dominating the airwaves. Dominating the blogs and forums, dominating advertising. Again, if you look at scale and you’re in the market of my first branded handbag in the luxury field, you’ll be probably looking at the top three. The top three being Louis Vuitton, Gucci and Chanel. If you have more means you might be looking at Hermès. If you’re edgier, you might be looking at [foreign language 00:16:47] or Prada, but really it’s a handful of brands.

 

Erwan Rambourg:
A second-tier brand will not cut it as your first purchase, because again you’re purchasing to fit in, you’re purchasing for peers to understand that you’re worthy of doing business with, or you’re worthy of a promotion. It’s all about what the Chinese called [foreign language 00:17:11], so relationship building. If your first branded handbag is a brand that no one knows it defeats the purpose somewhat. So I think the challenge is really one of scale and that’s part of the reason you’ve seen a lot of M&A, a lot of consolidation in the luxury sector over the past 10 years. It’s probably the reason why I’m optimistic as well, that you’ll see an acceleration of M&A and consolidation once we get out of this COVID-19 mess.

 

Julia Raymond Hare:
Absolutely. And when you say a little bit, when you talk about the Asian consumer and about fitting in. And you said that this was important to US but also Chinese consumers and maybe more so for the latter. How is the Chinese consumer different from the European or the North American consumer? What are the key differences culturally or otherwise?

 

Erwan Rambourg:
Yeah, so I would say there are psychological differences. There are age differences, there are expectations that differ. In terms of psychology in the very short term, you’ll meet a lot of Chinese consumers who will tell you that COVID-19 is yesterday’s story. I don’t think you’ll meet a lot of French or British or Italian or American consumers sharing that view. We’re still trying to live with this, whereas in China things have opened up pretty quickly. And as of April or May, you’ve seen a pretty decent rebound and consumers on the higher end displaying a lot of confidence. Another big difference I would say is in terms of age. The average age of consumption for luxury in China is very low. It’s essentially a young female professional in her twenties. I think if you look to Europe, she’ll probably be eight or 10 years older, and if you’ve moved to the States, she’ll be older still.

 

Erwan Rambourg:
So it’s a slightly different demographic.

 

Julia Raymond Hare:
Very interesting.

 

Erwan Rambourg:
I would say also linked to psychological elements and linked to age, I think there’s a level of confidence today that will tell you that Chinese consumers are ready for bolder propositions, for more colorful products, for a greater logo content as well. So I’m not thinking that the US is particularly understated despite everything that’s happening. I think many brands are pointing to the fact that so-called signature products or products that have a logo content or actually ad performing. Again, a bit counter-intuitively in the US today versus six months ago. But the product assortment of what is being sold in China will come across as being bolder.

 

Julia Raymond Hare:
Being bolder. And you did mention you said Chinese consumers might say COVID-19 is yesterday’s story compared to other consumers. And earlier in our conversation, you mentioned that you foresee a lot of M&A in luxury. So how would you say that will play out in terms of the physical stores?

 

Erwan Rambourg:
Yeah, so I think because you’re looking at a market which is essentially about recruitment, I think physical stores have a great future in luxury. Unlike maybe some cosmetics companies or some sporting goods companies like Nike, who will tell you that eventually more than half of their business will be online. I believe that will happen for those. For luxury going to take a lot longer. One of the companies that I look at is Moncler the down jacket company based in Milan. They recently guided that online sales were about 10% of total sales a year ago and that should go to 20% over the next three years. That’s ballpark reasonable for me. I don’t think it will go way beyond, because again, your first experience as a first-time purchaser will probably be in a brick-and-mortar store with the sales associates. You touching and feeling the product and getting the story directly from her or from him, rather than having to go online and make a few clicks and get the product delivered to your home.

 

Erwan Rambourg:
That’s not great in terms of storytelling. So I think stores have a great future. Obviously the stores need to evolve. The stores need to be exciting, inviting, surprising. It can’t be a sort of cookie-cutter approach that you had in China back 10 years ago, when a brand would open a flagship in Shanghai and if that worked out, they would open 40 times the same store. There is an issue with that in terms of what the Americans called déjà vu. So you don’t want to go through that impression that you’ve seen it before. Every time you walk into a store, it has to feel different. It has to feel unique. It has to feel bespoke.

 

Erwan Rambourg:
And so I think a lot of brands that started on that journey of working with different artists for the artwork within the store, working on specific assortments to have that differentiation either by city or by neighborhood even. There is a horrible word which is retailtainment which is I need as a young luxury consumer to be surprised and delighted. And the reality is now the brands need to step up. And they’ve done so with pop-up stores which have that possibility of surprising you and putting a smile on your face, but they need to do it also with the more permanent stores that they have in their fleet.

 

Julia Raymond Hare:
Final question Erwan, how do luxury players get exposure in China if they don’t already have it?

 

Erwan Rambourg:
I think there’s a need for speed. If you are a luxury company and you have a limited exposure to China I think it’s now or never, right? Because again, things are evolving very quickly and you are facing groups that have leveraged as I said, in terms of a voice, but leverage also in terms of real estate. If you are a shopping mall ramping up in China, you basically need the two or three multi-brand groups to participate in your mall. And then you have a few nice to haves, and then that’s all you need so if you’re an independent company trying to get exposure to China I think it’s almost too late. The idea is you either speed up very rapidly now, or you’ve missed the boat to a certain extent or the fast speed train I should say.

 

Erwan Rambourg:
Again, it goes back to scale. It goes back to leverage. It goes back to being in the driver’s seat not being a passenger. If you’re a small independent company and you haven’t worked at China at this stage, it’s probably late.

 

Julia Raymond Hare:
You just heard from Future Luxe author Erwan Rambourg. Joining us next is Joyce Deng. A marketer with over twenty years of experience in retail, Joyce recently joined RETHINK Retail as our Chief Representative for China. Joyce has also worked with some of the luxury industry’s most renowned brands such as Louis Vuitton, Coach, Bottega Veneta, and Luxottica. 

 

Joyce Deng:
So if we talk about China markets, I think firstly it’s really about the definition of luxury has been changed. I think, especially with the new generation of a consumer and also this new technology, which impact our daily life and the not just not just technology to really about. So our daily life in China, it’s always connected and you cannot leave without a mobile phone to be honest. So that makes the definition of luxury, has been changed because I think so far luxury means technology, you need to have technology, of course you would still have also the creativity, but technology. It’s part of the creativity. And then that in terms of the contents of luxury, it’s not just about heritage.

 

Joyce Deng:
It’s not just about some money, cannot buy experiences also about how you define cool, how you define how to say, how you define fresh because Chinese costumer really loves change so that easy to be bond with something, if you don’t change. So I think that also brings a lot of pressure, positive pressure to luxury brands. They need to create something new. The concept that the product and even for the store design for the sales, the steady ceremony of sales, how to tell the story you need the need to consistently be changed in this market. Because given, the social media is also booby here. I think there is no overnight news. Okay. Now today, maybe you are on the top search in top search results and the tomorrow that will be another one. You will be totally forgotten.

 

Julia Raymond Hare:
It’s so much to keep up with. It sounds like that’s a lot of pressure for luxury brands.

 

Joyce Deng:
Yes. And also besides that, I think now Chinese customer also quite, how to say, quite sophisticated. So you also need to ensure the quality, when you speed up, you also need to guarantee the quality because they are really picky customers.

 

Joyce Deng:
Yeah. But if you get things right done, you will win the market and you will be the big winner.

 

Julia Raymond Hare:
And you mentioned, the Chinese consumer is very sophisticated. They love change. Is this true across generations, or do you see differences between some of the younger Chinese consumers who are buying their first luxury product for the first time versus some of the older consumers?

 

Joyce Deng:
I think especially for the new generation of a customer, because if we look at the China market about to the consumer, I’ll just say that in China, 50% luxury customer are under 30s. So they are your half business. Because I remember when I was in like, what was it? Louis Vuitton like 10 years, almost a 10 or 11 years ago, the consumer average age in Louis Vuitton is 32. So far at that moment or with, we still think, okay, it’s quite young, but now 50% of China luxury customer is under 30. So I think this pressure is getting higher. So you need to be, you need to fit in the young generation customer and that they also the main stream of your customer database.

 

Julia Raymond Hare:
And one thing the younger generation seems to be pushing ahead, especially in China, is livestreaming. Do you see a lot of livestreaming happening in luxury, too?

 

 

Joyce Deng:
Yeah, I think that live streaming is really phenomenal in China Kuaishou, if you heard about Kuaishou is also a very popular apps in China. And also Douyin, TikTok, chinese TikTok.

 

Joyce Deng:
So these three major apps, the major e-commerce apps, they are pushing for this channel. So that make live stream is quite phenomenal in China, especially for mass market, because so far, I think the live streaming, if for commercial wise, it’s a still like a price war. So people are looking for really good price with this kind of live streaming host. But if we specifically talk about how live streaming impact luxury brands. I think so far, because like we talk about so far, it’s really the young customer buying luxury and that the young customer also spend a certain time with this social media.

 

Joyce Deng:
It’s a mystery. So I think a luxury brand that they have to step into live streaming, but different brands that have different objectives in terms of live streaming, because the live streaming for me, I think it’s still just a tool. So how do you, this tool can be decided by different brands. So we can see some brands just to you just elaborate, live streaming, to deliver the creative content to deliver the fashion show.

 

Joyce Deng:
Because so far, either in China, in Q2 and the Q3, there’s still no offline a fashion show except the Louis Vuitton brand. So live show is good, connect channels with young consumer to bring, to communicate to your creative accountants. So you can see Prada or Bottega Veneta, they just to use live streaming to, to deliver some creative content. But also some brands that they’re trying to leverage live streaming to do sales, like Louis Vuitton. They use [inaudible 00:12:43] and other apps. They were popular in China too. So they use to do live show, to sell product in the store, but it gets a lot of negative comments because people think it’s not high quality to, it looks very cheap. So I think so far Louis Vuitton didn’t do the second time.

 

Julia Raymond Hare :
Oh, interesting. So people actually were not a fan of Louis Vuitton streaming the products.

 

Joyce Deng:
Yes. Especially because I think that event it’s not so prepared to, you know, it’s not a well-prepared. So to have a KOL to host the, the live show and also to do the live show in their boutique in the store, but it’s totally look like they sell some cheap product. So it’s not, well prepared. It’s not sophisticated away. So I think of a luxury brand that they can use live streaming, but they also need to deliver the high expectation. They need to understand that the high expectation from consumer, so the need, they still need to make sure it’s a wow experience, not just a sale product, because that’s not, that’s a disaster. And also some brand does elaborate to the live streaming, the super hot live streaming hosted to increase their brand awareness or their hottest product like, like BB, I think a BV, a boutique event. It had worked with number one live show host called [inaudible 00:14:22]. This guy is super amazing. He can sell, like he can sell like a two or 3 billion in one year.

 

Julia Raymond Hare:
Oh my gosh. Wow.

 

Joyce Deng:
I think that this year, he went double. He can sell like a 5 billion because another one, even we have another super KOL of streaming to sell products. She sell so fast. You already sell 10 billion RB. Can you believe that?

 

Julia Raymond Hare:
Wow. That’s amazing. But would you say it’s better for creative versus selling for when it comes to the top luxury when it comes to BV when it comes to LVMH?

 

Joyce Deng:
So true. I think so. So it’s better to, through the live show, to tell your brand story or to deliver your creative content, like what product or deal has been done. I think that’s, that’s quite good. Yeah. Yeah, too, because, you still need to educate, you know, through this channel, you can do more customer, new customer education. It’s not for you to sell, because think about one live show, especially for the top care L one live show, they can have like 2 million viewers. So how can you put your product in that mass-market?

 

Julia Raymond Hare:
It would sell out very quickly. Right? I mean,

 

Joyce Deng:
Yeah. But the fact is for live streaming is really still the people buy stuff, buy products through a live stream, it’s a steal to lower average ticket. It’s a really high discount rate.

 

Julia Raymond Hare:
That makes sense. And would you say, you mentioned that fashion shows even in Q1, Q2 of 2020 were online, do you think the future of fashion shows will be a mix of online or only online? Or do you think that was just because of the pandemic and moving forward, they will be in person still?

 

Joyce Deng:
I think for if for China, I think digital channel is super important to its significant. So even we have offline fashion show, I think it’s all the brand in China is still will leverage a digital platform to do live streaming, to create some formats of live show can also fit in both offline. VIP is about also online broadcasting. So I think that they were together.

 

Julia Raymond Hare:
And is the online broadcasting, is that have a sense of exclusivity as well? Or is that typically open for anyone?

 

Joyce Deng:
I think either would be open for anyone because you already get exclusivity for your offline participants. So ally will be really, open to public to really, to get to the quantity.

 

Julia Raymond Hare:
Absolutely. Joyce, I have a question for you because I know that I was talking with someone else, Juan REM Rambo. And he said that if you are not a large luxury brand already in China, it’s too late. You need to be there now and you need to be there in a big way. Would you agree with that?

 

Joyce Deng:
And not quite agree with that because I think if, if you want to, if you haven’t been in China, you don’t need to go rush, because any time is a good time because it’s the market today, is very strong. So as long as you prepared, as long as you understand the how to fit your brand a culture helps you product into this markets. Anytime is good. It’s not never too late for me because I’m quite optimistic person.

 

Julia Raymond Hare:
That is optimistic. And I think I would like to ask from your perspective, you said you have to fit your culture to enter the market in a good way. What advice would you give to some Western retailers about entering the APAC region when it comes to luxury or innovation even?

 

Joyce Deng:
Yeah, I think firstly, they really need to understand the consumer demographically because so far, like while we mentioned the China market is quite differently, it’s younger, right? The customer is so much younger and also the digital impact is super strong for either for branding or for sales. You do need to have a very strong sense of digital because that’s the fact in this market. And also you also need to understand that the localization is very important now for Chinese customer given, you know, we call the China pride. So you really need to make sure you understand that the Chinese customer, you understand the how to talk about your product with the language they understood or they love to hear.

 

Joyce Deng:
And also when you step into this market, you can not just a copy-paste to your global content, you really need to have some mix with some tailor-made local content. You need to work with this local partners with local KLs and understand that the local lifestyle. And then you can be because I think that the young customer, they are super, the young customers are really how to say that they’re really want to see, okay, you are not just to come to the markets to make money. And that you also respect that the culture respects his lifestyle. Do you understand this market?

 

Julia Raymond Hare:
So it goes deeper than just, hey, we’re entering to sell you things. The customer wants to see that you get them digitally, you’re offering what they’re expecting and that you also care about the local markets and local suppliers and things like that.

 

Joyce Deng:
Yes. And also it’s very significant to find the right local partners as well. Because so far, there are so many. It’s a  very good market, it is a very energetic market but also a little bit of chaos as well. So you need to find the right partner. You need to be very smart. Otherwise, you just to pay the lowly cost.

 

Julia Raymond Hare:
And what about advertising? You’ve mentioned that the Chinese consumer wants the newest and hottest products. And Erwan mentioned earlier that it’s now or never for western brands and China, So how do these brands get the word out?

 

Joyce Deng:
That’s true because I think the digital platform or the digital ecosystem in China is quite comprehensive. So it’s not like Facebook or Twitter in the overseas market in China, either T-mall or Wechat, actually, they have quite a functional ecosystem. So start from your creative content exposure to customer engagements or to sales channel sales.

 

Joyce Deng:
This kind of ecosystem is super mature in China now. So I think when luxury brands want to have successful business in China, they do need to understand, not just one action. Actually, they need to have comprehensive actions to cover this customer journey, through this platform. And I believe all the luxury brands, they invest a lot in China, our digital platform, because as an individual, in my own experience, when I use the social media, when I see which article, I always can see a lot of luxury advertising. So, and also they have a lot of KOL collaboration. They have a lot of customer engagement things. So I think they have to move fast and they need to do more.

 

Julia Raymond Hare :
Absolutely. Well, that was amazing to hear from you. Is there anything that you would say you’re most excited about in luxury over the next few years as we look ahead and wrap up this interview on a really positive note?

 

Joyce Deng:
I think for me, I think how luxury can really be empowered by technology is quite, I’m quite interested to see how the luxury brand, that they leverage technology, they leverage the digital to create some more amazing content and to find the new connection with the consumer. 

 

Joyce Deng:
Because I think in terms of products that’s not quite interesting, but it’s really about how luxury brands they do, the breath communication, they do the business through digital channels to fit in digital X system. I think that’s a big challenge for all the brands.

Julia Raymond Hare:
You just heard from Joyce Deng, RETHINK Retail’s Representative for China. Today’s last interview with our guest Matteo De Rosa. Matteo formerly led  Dries Van Noten as its Chief Executive Officer. Born in Europe, Matteo has overseen the expansion of several European brands into the APAC region, specifically China. We spoke with Matteo a few weeks ago while he was quarantining at his home in Hong Kong following a trip to Milan. Let’s hear what he had to say about the new Chinese luxury shopper and the cultural factors that make entering this market so unique. 

 

Matteo De Rosa:
So when you talk about luxury market in China, it’s a huge topic. As you say, China is really a complex social and cultural environment. I always define it in a funny way, like Italy steroids. In Italy, we have different regions, different cities, different even culture and dialects or languages. And China is exactly that replica, but really in a big scale. So China, difference in regions, in dialects, different in features of the people. In some parts of country, is very tall and it’s very cold. In some parts of the country they’re very short and it’s very warm. So the overall trend is that, China is categorized in tier cities and in tiers of consumers. Third, second tier cities are the most development one, and third, four, and so on are the least development one, on the trend to become, or to go leading to the first.

 

Matteo De Rosa:
And so, the consumption of luxury differs in those kinds of tier cities. What we generally focus on is always the first and second-tier cities, where there is a consumption that is similar throughout. And the trends, Chinese luxury consumer is sophisticated now, very sophisticated. It can be similar to what we used to consider Japanese or Korean. It’s very interested, so it’s hungry for information, it’s hungry to know the history of a brand, it’s hungry to know how the product is made, it’s hungry to know what’s behind the curtain. It’s hyper demanding, it’s spoiled… It can be spoiled and it’s looking for uniqueness. Uniqueness is the key of the conversation because uniqueness for this generation of consumer is a combined history. Combines product design, it combines how the storyteller or how the storytelling is perceived by them. And how this storytelling is adopted or translated to appeal to the consumer and the consumer experience.

 

Matteo De Rosa:
All to this, the trends they became for scars are or the interest on these are always accessories, beauties, beauty products on designers, which is a new kind of the [comer 00:00:05:16], where they are interested in their own national brands. And throughout the common denominator of this, is a young consumer, a new generation that in European or American society is not that predominant, but in Asia it is. The average age, the consumer is very much younger than us. And for that reason, they are very hungry and they’re very interested in what’s going on. They’re very interested also in the sustainable aspect and how the product is made. 

 

Julia Raymond Hare:
Matteo, you and our other guests today have all noted that the average age of the Chinese luxury consumer is younger than in the West. Can you explain a little bit about why that is and the significance it plays?

 

Matteo De Rosa:
Well, it’s because it’s a much younger population and also it comes with the development of the country. This country had the first regeneration, building the level of wealth that they have now. The one child policy created a very wealthy base of gen Z and gen X. And this generational rule is, only child had all the wealth in their possession for all different parts of the family, converging to them as the education, as the monetary spending and they want to leave, or they saw as an example, our way of living and they want to replicate it in their own way, in their own codes. Differently from other regions, the Chinese code part and their values are preserved and they just need a translation of this into their own life. So the interest in casual wearing looks like streetwear.

 

Matteo De Rosa:
It comes because it’s a generational part. When we talk about luxury consumption usually in the West, we always assume it with a bit of a stuffy formal, let’s say hardcore and older generational level, here nor here. What we know of that is that how we translate it to appeal to a younger generation. And we see all these trends with a V or a Gucci, or even lately thing with your code, trying to modernize and translate those level of manufacturing and values that they bring together for a new generation and to appeal and speak to the code of this new generation.

 

Matteo De Rosa:
Also, there is one other aspect that most people underestimate. When the younger is born here, the first gift that you receive is a red envelope with money inside and this is the best gift they can give. And this red envelope is a constant part of their life throughout to become adulthood. This gives you a very clear idea in my opinion, to how their values are built. So if there is this top value for gold, it means that with that money that they receive is that money that is allowing them to buy and purchase all the goods in their life. So they value a lot, money and wealth accumulation and what they can do with that money compared to us that when a new baby’s born, we give them a little animal or a little toy or little things, there is not that immediate connection. In China, there is an immediate connection and is indicated their culture, from the very first beginning.

 

Julia Raymond Hare:
That’s so fascinating. As a European who entered this market, what other cultural factors should other Westerners be aware of when attempting to expand into the Chinese market?

 

Matteo De Rosa:
I think one of the or the thing that a European luxury player or any European player should consider when they attempt to enter the Chinese market, is to low down or complete your race, their prejudice, and completely open their mind for some tools that they might need to use that did not resonate with our society. So when we talk about innovation or when we talk about how to reach the consumer, there is really a set of proper tools that here they use and they resonate a lot with the gen Z, with the gen X and with the consumer in general, that we would never even consider using in our market because they would be considered either to elevate it or downgrade it for the brand.

 

Matteo De Rosa:
So either clean mind when you enter, try your approach, be really yourself in the way of enhance your history, enhance your culture but not in a classic way. Not in a way that, “Okay, I did this for years, that this is my problem, because I said or not.” Try to incorporate all those values in a communication that appeals to the consumer, sticking really in the understanding of the consumer and really trying to focus all your effort in communicating with this consumers, which are again, younger and very interested and very spoiled, are the key of entering the region.

 

Matteo De Rosa:
There are a number of online events in China for which Single’s Day is the most prominent, but there are also minor days or minor, how you say, episodes or appointments, where is more replica of this. But it’s all about that piece of the culture that we were saying before. The Chinese love to bargain, the Chinese love to negotiate on prices and they love to again, shop online. So this day was created to reward yourself if you are single, 11/11, and because one is the number of singularity. So I think this is one of the cultural piece that I was telling before. Do not discriminate when you enter the Chinese market on some occasions and at times they might not resonate with our Western societies. We see usually sales, or we see usually online as not the enemy, but quite so. Here it is a tool in order to really enter and connect with the consumer with either a different range of product or a different kind of or some promotion on some level.

 

Matteo De Rosa:
See it as a way of connecting with the wider consumer that also maybe sometimes will not be able to purchase your brand, but you will start to connect for the moment when you will be able actually to purchase all the other range. Aside 11/11, the tools that I was saying before, there are online video sales with an ambassador or a celebrity selling your products live online. This is done enormously now. Things that we will never consider for our market, here are all legitimate, and they actually are very beneficial for the brand health because they connect, they reach. They allow you to tell your story and to make the consumer understand what you are and what you stand for.

 

 

Matteo De Rosa:
I think the learnings that we can come or that we can take, are how to use this tool in order to communicate and educate a generation of consumer to our products, to really appeal and create a desire for our products, a curiosity into our brands, curiosity into our lifestyle. And mostly also maybe rejuvenate our way of thinking, our way of proposing our products to the market. It’s really, really important in my way to talk to these different kind of generation with the tools that they’re familiar with, without any kind of mental block, but actually being smart and use it in the best way possible.

Julia Raymond Hare:
On today’s episode, we heard from Future Luxe Author Erwan Rambourg, Matteo De Rosa, former President of Dries Van Noten, and RETHINK Retail’s Representative for China, Joyce Deng, about the promising future of China, and the rest of the APAC region’s ˈbərjəniNG burgeoning luxury market. Join us next time as we explore what the future of frictionless means in our finale episode on connected experiences. 

 

RETHINK Retail Luxury was brought to you by RETHINK Retail in collaboration with Valtech. Hosted by Julia Raymond Hare, Written and Produced by Gabriella Bock, Edited by Trenton Waller, Social Media and Marketing by Natalie Arana.

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