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When items from the collections of Chinese fine jewellery brand Qeelin started to appear in US shops last November, it was not just a case of a young company making a well-timed entry for the Christmas shopping season. The move into department stores such as Neiman Marcus, as well as smaller independent retailers, is a sign of the growing ambitions of Asian luxury companies to push beyond their home market.
It was once the case that the global luxury industry moved in only one direction: west to east. The most distinguished European and US brands would buy up prime retail sites in Asian megacities, selling old-world prestige to a new generation of affluent spenders. For Asian buyers, the pleasure of owning a pair of shoes, a handbag or a silk scarf was enhanced by the idea that some of the makers were more than a century old.
In recent years, however, a rise in outbound Chinese tourism has prompted companies to expand beyond the domestic market. As Chinese customers have started to combine holidays abroad with shopping expeditions, Chinese brands have begun to follow the money.
“There’s a natural attempt to capture [customers] as they travel abroad,” says Luca Solca, head of luxury goods at broker Exane BNP Paribas. The luxury research institute Hurun reports that France — home of labels such as Chanel and Louis Vuitton — has emerged as the top holiday destination for wealthy Chinese millennials. Other popular destinations include London, San Francisco and New York. Closer to home, Japan and South Korea are also favoured.
The move to expand into these locations is being led by the fine jewellery sector. Chow Tai Fook, the biggest jeweller in the world by market capitalisation, says Chinese outbound tourism was the main motivation for its push into south-east Asian countries, such as South Korea and Taiwan. The company, one of only two listed arms of Hong Kong’s Cheng family, had 2,319 stores in China, Hong Kong, Macau, Taiwan, Singapore, Malaysia, South Korea and the US at the end of March.
More than 2,000 of the stores are in mainland China, but those overseas, particularly in east Asia, are increasingly important. While the group prefers to run “large-scale advertising and marketing campaigns [to] deliver a consistent brand image”, there are occasional regional tweaks. In April, for example, members of Taiwanese boyband SpeXial were enlisted to help drum up publicity for a store opening in the city of Taichung, Taiwan.
Tourist trends are also important to Hong Kong-based jeweller Tse Sui Luen. Over three quarters of its 312 stores are in mainland China and it has three in Malaysia after expansion in the mid-1990s.
“Malaysia is one of the top tourist destinations among Asean [Association of Southeast Asian Nations] members, making the country an excellent spot to attract visitors from neighbouring countries and make them aware of the Tse Sui Luen brand,” says the brand’s deputy chairman and chief financial officer, Estella Ng.
Some Asian brands are expanding after having been bought by larger groups. Swiss luxury goods group Richemont, owner of jewellers Cartier, Van Cleef & Arpels and Piaget, took this approach with the acquisition in 1998 of Shanghai Tang.
The fashion group, founded by Hong Kong businessman David Tang, has 26 stores including outlets in London and Miami.
More recent examples are Qeelin and Shang Xia, a luxury label now operated by French luxury group Hermès. Qeelin, named after an auspicious mythical Chinese beast, opened a store in Paris soon after its official launch in Hong Kong in 2004. Acquired by French luxury conglomerate Kering in early 2013, the Chinese jewellery brand is pushing into the US, adding to its stores in Hong Kong, Macau and mainland China.
Qeelin began selling its products in the US partly to meet demand from the “local Chinese community and Chinese travellers”, according to Christophe Artaux, Qeelin’s chief executive. “The US remains a strong market when it comes to luxury,” he says. “The Chinese diaspora is very strong in North America, especially on the west coast.”
The brand is also targeting a broader audience in the US, encouraged by the performance of its Paris flagship store, where about 60 per cent of customers are non-Asians. Having opened stores in Manila and Seoul, it is also eyeing Taiwan and Australia.
“These [brands’ overseas expansions] are all really experiments,” says Mr Solca. Jeweller Luk Fook, for example, has more than 1,400 stores but only a handful are outside Asia.
That Chow Tai Fook — with a market capitalisation of around $7bn — has a US presence is thanks to its acquisition of American jewellery company Hearts on Fire in 2014. While Hearts on Fire’s products are sold in 183 retail outlets across the US, it only has two branded stores there.
Building a brand overseas will take time, says Erwan Rambourg, global co-head of consumer and retail research at HSBC. This is particularly true when it comes to establishing iconic designs that are as recognisable around the world as a Chanel handbag, for instance.
“Storytelling is easy if you’ve been around a century or more,” Mr Rambourg says. “You don’t build luxury brands overnight.”
Profile: Shang Xia
Having started life as a horse harness business in Paris in 1837, Hermès now presents itself as a champion of traditional French craftsmanship and high-quality manufacturing. That message is echoed at Shang Xia, the Chinese luxury brand that Hermès opened in 2008 with Jiang Qiong Er, a Chinese designer who studied in France for several years.
Its clothing, jewellery and homeware are inspired by traditional Chinese art and crafts and their techniques. Items are displayed sparingly throughout stores as if they were pieces of art. Its boutiques in Shanghai, Beijing and Paris could be mistaken for small galleries or museums.
The Paris outlet opened in 2013 and Shang Xia is looking for new openings “in the near future”, the company says.