China’s Homegrown Luxury Market Expands

Guo Pei - Haute Couture

On the outskirts of Beijing, couture designer Guo Pei presides over a studio that stretches more than 1,000 square meters and rises nearly four stories high. Inside, an army of employees is drafting, cutting, and sewing – all working to bring the designer’s latest creative visions to life.


Guo Pei is the woman credited with inventing Chinese haute couture, and one of the first to build a luxury brand in a country better known for cheap ersatz copies than authenticity and quality.


“There wasn’t even a word for haute couture when I started,” the bubbly 45-year-old, perfectly groomed in a white silk organza dress, tells The Financialist. Guo’s creations, which are steeped in Chinese tradition, have inspired a new generation of designers – not just to replicate Western designs, but also to fully embrace their rich domestic cultural heritage, and to create goods that are uniquely Chinese, both in the provenance and the design.


Guo is passionate about creating lines that showcase the best of Chinese handicraft. Take, for example, her recent spring collection showcased in Beijing. Overall, it was a riot of colour and rich textiles with a torrent of pearls and tight embroideries. One of the 30 dresses shown took more than 7,000 hours to make, and another incorporated nearly half a million pearls, reports Style Magazine’s online edition. Guo’s more accessible ready-to-wear line, which is popular with China’s A-list crowd, commands prices in the realm of 50,000 Yuan ($7,875).


“For centuries, ‘Made in China’ was actually synonymous with an unparalleled level of quality and craftsmanship,” says Pascal Armoudom, a consultant with ATKearney, the management advisory company.  During boom times, when China’s economy grew at double-digit clips, local business leaders helped designers launch their own lines in an effort to revive this know-how.


Undoubtedly, China’s recent economic slowdown has curbed demand for haute couture and other high-end goods. Still, Credit Suisse luxury goods analyst, Rogerio Fujimori, remains confident the sector will continue to grow at a healthy rate. “Our main takeaway… is that luxury demand growth in China is slowing but remains relatively healthy,” Fujimori wrote in the bank’s latest industry survey entitled: Slowing but still healthy growth in China.


Over the next three years, China’s luxury market is expected to double to more than $27 billion, accounting for 20% of the global luxury market.


Given such prospects, Guo and her peers are keen to get their share of this lucrative market rather than leaving it exclusively to well-established western brands.


This appetite for domestic luxury goods has motivated a new generation of designers to establish their own brands. Like Guo, they aim to convince China’s newly-rich to swap their Birkin bag for a local design.


“When I arrived five years ago, the quality of Chinese designers was terrible,” recalls Zora Belmejdoub, who runs the Chinese branch of ESMOD, an international fashion design school with a satellite campus in Beijing. “But progress has been impressive. They are learning very quickly,” she adds.


The school trains 250 students each year, many aspiring to launch their own couture label.


“I hope to become the Chanel of China,” says Lui Lu, an ambitious 30 year-old designer who launched her line in 2008.


Lui is typical of China’s new creators. Trained in Paris and New York, she returned to her native China where she says “there were more opportunities.”


She now showcases her clothes in five shops around the country and is rapidly expanding. Lui says she designs for “urban, wealthy, and independent women who want to invest in a local brand.”


Indeed, more and more, China’s well to do are seeking to “avoid the recognition of certain western brands for the more discreet appeal of Chinese luxury,” says Chloe Reuter, who runs ReuterPR, a PR company covering luxury brands in Shanghai. “The mega-rich are looking for something different,” she explains.


This quest for authenticity is motivating local brands to source their inspiration from China’s deep cultural and artistic heritage.


Whereas Guo Pei’s previous collections were inspired by Europe or the Middle East, her fall 2012 collection displayed distinctive Chinese influences.


Shanghai Jahwa, a centuries-old cosmetics company, is another luxury retailer playing up its Chinese heritage. In 1998, the company launched Herborist, a cosmetic line that draws on Chinese herbal sciences to make creams and other personal care products. With over $300 million in annual revenue, the brand has become a runaway commercial success.


“It is still rooted in the minds of many that China cannot make luxury products,” explains ATKearney’s Pascal Amourdom. “But for me, it’s a generational issue. Those born after 1980 – and they will soon become opinion leaders – will not have that barrier. They will prove more confident about purchasing better quality Chinese luxury products.”


Photo: via Getty