This is all very fine, but the accelerating knowledge of luxury in China also has important negative impacts on the very brands that are at its core: the life cycle of a luxury brand in China finds itself substantially reduced, while the Chinese “consume” the brands when they are firing from all cylinders.

For example: Five years ago when I started specialising in China, I visited the most prestigious Bordeaux vineyards and offered to help them sell to the Chinese. China at the time was not drinking red wine, distributors such as ASC or the Torres were selling “grands Crus” only to rich expatriates, and producers from the Bordeaux region had serious questions about Chinese taste for wine. Since then, the Chinese government has launched a campaign in favor of wine and against 60 degree rice alcohol, Bordeaux wines have marketed China with notorious success, and the whole of China has started buying up Chateau Lafite, as witnessed by the prices seen at auction houses such as Sotheby’s and Christies… particularly in Hong Kong.

Now, five years later (after two years of discovery and three full of success) the Chinese are bored, want something new, and are therefore turning to Burgundy and Romanee Conti. Yes, the Chinese are quick – to adopt new products but also to change their mind …

I carry out numerous consumer “insights”, ie luxury client interviews, and five years ago Louis Vuitton was all the rage with the wealthiest French families, as was Rolex for watches. Today, both of these brands have disappeared from the favorites list of French millionaires (whatever Hurun may say) and this creates a certain level of acrimony. The Chinese resent that these brands were presented as the best and the brightest, when a few years later, competitors like Hermes (vs. Louis Vuitton) or Patek Philippe (vs. Rolex) came to China with products of superior quality. To remain leaders in their respective fields, these brands must now make enormous efforts to demonstrate the exclusivity of their offering, and must move even more upscale, which goes against the democratization of luxury in the Western Hemisphere.

The life cycle of a brand is very very short in China. This is due to the Chinese law of great numbers. When a brand becomes successful in China, it becomes very successful, too much so, and rapidly the brand goes mainstream. Because the elites want exclusivity, they soon abandon that specific brand, thereby playing their role as trendsetters for the general population. Like magnets, elite and the middle class attract and repulse, and the brands meanwhile lose their reputation.
It is essential that brands be aware of, and take into account these dynamics, in order meet the challenge of the shortened product life cycle.

While the Jasmin revolution in the Arab countries was showing the power of Facebook or Twitter in mobilising crowds and organising resistance, on the other side of the globe, Weibo was spreading like wildfire in China, promoting brands and star bloggers such as the Han Han and Hublot couple. Weibo was dedicated to mass consumerism, and was developping powerfully, while protected from western competition.

And now,  a dazed West discovers a Weibo that is more userfriendly and popular than Twitter or Facebook, and alliances are starting to take place between Weibo and Facebook. Worse, internet media are calling Twitter a copycat of the latest version of Weibo. Unbelievable reversal of fortunes in just one year, which a number of western brands are taking advantage of to penetrate the Chinese market. Yes, I was surprised in 2011 when, around December 20, in the People Daily, the Chinese government announced it was now mandatory to register on with the central government to own a Weibo. In short, the end of a world of innocence and Chinese grumbling about social media.

Virtually no media, even those who had so actively condemned the departure of Google from China, has echoed this incredible information : the Chinese must now send their weibograms under State surveillance. Not a single conference, not one news outlet to expose this news, which is so much more oppressing than the departure of Google. Fighting for human rights is a noble cause, but to ignore something of this importance is irresponsible. Weibo works and facilitates mass consumption, so why should anyone care if its users are monitored ? as long as they buy ? As we say in France, “different era, different values’”.

The store is spacious and full of light, the products are abundently exposed everywhere, the walls are white and bare - to open the mind to what the jewels evoke. The craftsmen are French but designed by Chinese and Junlon is the only Chinese brand to produce in France.

Princess Fei Earings - Uighur influence

Junlon masters all sorts of materials, faceted stones or cabochons, whether precious and semi-precious, balls, pearls, that he assembles with all the skill demanded by “haute joaillerie”. But the most striking is the excellence of his traditional worksmanship at the service of contemporary pieces, often minimalist and warm at the same time, like the store which serves as their jewelcase. His creations contain many symbols mainly stories of Silk Road.  For example, the “Four Seasons” collection of rings uses perfectly rounded cabochons, to express time past, present and future turning to infinity.

Golden Abacus - Chinese Influence

Pearls, whether baroque or not, are selected according to draconian criteria. The jewels are both delicate and full of strength. The use of a multitude of small stones, assembled with white or yellow gold, results in finger rings so thin that you can slip them on one after another, according to the day’s mood or clothing. The earrings come in various lengths, depending on the ears or the neck they will highlight.

Women and men can only be seduced, so broad is the creativity, so reasonable the prices (for the time being!

Junlon has decided to take us on a journey, with excellence and humility, through his oniric universe, born on the Silk Road.

Silk Road by Ella Maillart

Silk Road for dummies : Silk Road exists from millemia, starting from Chinese capitals like Luo Yang (Xian today) or Beijing and end in Turkey around Trabzond.or Istambul. It goes through Central Asia,through towns like Kashgar, Samarcande, Khiva, Boukkhara and others. Silk Road was the most important exchanges road between East and West before the reign of vessels and the maritime roads. It has carried from East to West  precious goods, but also technics, ideas, religions which explain that all the cities along thèse roads are a melting pot of several influences Eastern ones as well as Western ones.

Silk road is the ancestor of contemporary global economy.

What?
The case study “Sephora Beauty Academy”, broadcasted summer 2011 on Dragon TV and the Web, presented at the first evening event China ConnectInTheCity event organized by Laure de Carayon.

How?
30 days of shooting with a team of five French and Chinese 90
10 episodes of 45 minutes broadcasted on primetime, with over 30% audience market share on the Shanghai region
15 million views of episodes on the net
25 million votes combined on the web
51 080 posts around the program on Weibo, one of the Chinese twitters
40,458 blog posts
A production cost equivalent to a programme on TNT in France, or, one third of a prime time on M6.

How?
Alexis de Gemini discovered China with Pekin(Beijing) Express. He moved in shortly after with his family and develops over ten concepts he pitches to brands and channels. “To go to China, it’s better to be small, agile, which many large audiovisual structures can not,” he says. Sephora was seduced by “Beauty Academy”, a format that allows to educate a population consuming more care products than makeup. “In Communist China, there was a total lack of makeup culture. The mother-daughter transmission does not exist. “Beauty Academy is a major competition in 10 episodes, looking for the country best “make up artist”. At stake: a two-year contract with the brand.

A 100% web broadcast was first thought of, before the main Shanghai region channel, Dragon TV, broadcasts the program, the first of its kind (reality TV with hidden mirrors). “In China, 15-35 years old watch video on computers. 35 and over, on TV. A TV broadcast gives coverage and amplify awareness. The Web can reach a younger population, with low purchasing power, but they are Sephora next customers”. Dragon TV took four months to give the agreement for the broadcast of the broadcast it has acquired for free, and wanted the format delivery 3 months after the signing! The local team was recruited in a month.

Chinese law is quite flexible on TV product placement: the main sponsor and its products can appear up to 12 minutes per hour. Sephora has given a list of products and brands to highlight, and the program was written to integrate them. The cast reflects the values ​​of the brand, highlighting a dynamic urban youth. A makeup artist from Benefit has come to give a masterclass, as well as Diane Von Furstenberg. Marc Jacobs held a fashion show specifically for the show. Make up Forever was associated with a challenge shot in Paris at the Moulin Rouge.

TV episodes were all available on video portals and on Yoka, a beauty portal. Rushes were used to design specific videos, around masterclasses and tutorials. The votes were exclusively online, legislation prohibiting voting by phone. Sephora now considers a broadcasting in other countries, and possibly a season 2, more digital, with the establishment of a true e-CRM strategy to maximize the ROI of the brand.

Article published on http://www.petitweb.fr/, http://t.co/IWIquoqq
by Benoit Zante and translated from French by the producer of China Connect in the City, Laure de Carayon

What is China Connect ? A sort of open forum, where any marketing specialist interested in China may listen to presentations by the major players in marketing, and meet them in the networking areas. The event is rich, intense, lively and completely worth the cost. It is all the more important since the major players of emarketing – Facebook, Twitter, Google, Youtube – are not present in China for political or economic reasons, and since China has developped its own players for the  several hundred millions of Chinese connected through their PCs or mobile phones. These players have often grown autonomously from the western world, due to the specifics of Chinese ideograms, or for cultural reasons such as the predominance of mobile phones over PCs.

Have you heard of the war machines that are the weibos from Sina or Tencent ? The world’s largest B2C ecommerce site TaoBao ? The Baidu search engine ? The local equivalents of youtube : Youku and Tudou ? If not, run to China Connect, because China is preparing to invade the West, and what is happening in China today will happen tomorrow in Europe. To prepare for this, you can come and meet the head managers of these players and build your network.

In parrallel, numerous brands from the fields of luxury, design and consumer goods will be presenting Chinese business cases, offering lessons that are often valid across industries. Finally, a few experts in Chinese marketing will focus on the reality of numbers, on the on-going battles between the various Chinese players, on the successes and failures …

Among participants this year (available on the following site http://www.chinaconnect.fr):

-Youku, the Chinese Youtube, represented by its General Manager for East China (Beijing, Shanghai, Guangzhou, Shenzen and the whole east coast) Lee Li.

-Elleshop.com.cn, the e-commerce arm of Elle magazine, leader in Chinese women’s fashion for the past 25 years.

- case studies with the Adidas brand, presented by  Hélène Saurais, in charge of the brand’s ecommerce activity

-Fei Wang Eyewear, profiled glasses for the specific Chinese physionomy, represented by its founder Fei Wang

-Philips’ Chinese design center, represented by its star designer Tammo de Ligny

-the famous Shanghai blogger Sam Fleming, who will analyse the key trends in the Chinese internet.

Many others are expected to join the list as they confirm their participation.

On my personal wishlist : A specialist on weibo microblogs, search engine Baidu, ecommerce site TaoBao, and a few others.  I have no doubt that China Connect organizer Laure de Carayon will know how to attract them, because coming to Europe is good for these players’ relationship with the large brands that finance them, and because the European audience is largely worth the effort.

It is up to us to sign up for China Connect and show these great players of the world’s main luxury market that we want to listen to them, and to meet them in person in Paris and, in the words of Loreal, that “we are worth it”.

What is a Weibo ? As its name indicates, it is a microblog on which you can write 140 chinese characters (equivalent to 1,400 of our letters), and which allows you to attach a picture which can be changed at will from your mobile phone, and sent with a new text to all your followers. In short, a hybrid of Twitter and Facebook, all of which (picture, text and blog access) is managed in three seconds through a mobile phone.

A formidably effective communication tool, whose versatility comes from the fact that 140 chinese characters offer a lot of room for expression, available at any time

While Twitter is forbidden in China, Weibos are proliferating. The one from sina.com, the first to appear two years ago, will end up eating up the giant internet portal which generated it. On par with Sina and counting more than 200 million users, Tencent Weibo is the child of Tencent instant messaging (among other things), a local social network. Then there are others, smaller, less advertised.

As Chinese political experts point out, Weibos were not shut down last summer, when popular discontent (also spread by these same weibos) was very high due to the high speed rail crash. Could Weibo be the Facebook of Chinese “Jasmin Revolution” ?

I am just back from two weeks in China and after seeing how my Chinese friends use Weibo, I can’t help wondering what the future holds for social networks in China. Each time I have been to the restaurant with a Chinese, the same ritual took place : when the meal arrived, my Chinese guest took out his phone, photographed the food, incorporated it in his weibo and sent it to all his followers. As I discussed this with them, I realised that the “civilized” Chinese have their weibo which they use particularly at restaurants or trips. They find it pleasing for their self estime and think that Weibo gives another dimension to their life. Everyone knows at any time what everyone else is doing, and the Chinese use this in a very compulsive way. I am rather impressed by this dimension. On the one hand, one could almost measure the popularity of a restaurant by counting the number of messages devoted to its food. On the other, you now need time before eating for the Weibo. Finally, everyone knows what everyone is eating.

The Chinese, through this Weibo phenomenon, remind us how important eating is for them, how it shapes Chinese social relations and how it plays a role even in the most futuristic dimensions of our humanity. It is clear that Weibo occupies a real place in Chinese society. It may at times be reassuring that, when faced with such novel media and rites, traditional values remain as strong and even stronger than ever
I don’t know whether Weibo will become a major tool for urban warfare against the political system, but it has clearly entered daily lives of the Chinese as a tool for self promotion. Whether these two aspects are compatible is a question for another day.

Is the market really shrinking, or is the available data not being correctly analysed ?
On the one hand, in China, Upper Middle Class purchases (mainly watches, luggage and clothing) are no longer growing and even seem to decline. On the other hand, we have seen foreign luxury markets boosted by the Mainland Chinese buyers.
In Paris, after an unending, record year, luxury stores are out of inventory. Patek Philippe or Breguet limit sales to the Chinese to one watch per passport, in order to keep some for the other buyers. Hermes is overloaded by demand for its large colored (pink, green, blue, anis) Birkin bags. Cartier on the Champs Elysees does not have enough inventory to put the new collection on display. Jimmy Choo is out of eel skin … All this, thanks to (or because of) the Chinese. The phenomenon is not unique to France. In New York for the first time, Tiffany’s flagship store on Fifth Avenue has acknowledged its growth in the first semester is linked to the Chinese tourists. In London, Global Blue detaxing institute has noted a 50% growth in Chinese purchases.

The Chinese luxury market is very peculiar.
Due to a 30% tax on luxury products (luxury products being defined very widely), these products cost 30-50% more in China than in France, where the same product is sold tax free to foreign tourists. This cost differential exists everywhere around the world, since it is in China, a “socialist market economy”, that luxury products are the most expensive, precisely because of this tax.
In such a context, purchasing a Patek Philippe watch or a Birkin bag in China is so expensive that its justifies, in itself, a trip to Hong Kong or (if one has more time) to Europe.
For a long time this phenomenon was not fully understood, because foreign visas were difficult to obtain, which was a real obstacle for the Chinese. This is no longer the case, and with guarantee deposits, European embassies now deliver visas much more easily.

Luxury sales are shrinking in China but growing exponentially abroad because of the Chinese. What is the real size of the Chinese luxury market, when 3 out of 4 luxury purchases by the Chinese are made outside mainland China, starting with Hong Kong, and continuing in Paris or New York ? Are the luxury purchases of Americans, hobbled by a weak dollar, multiplied by 4 due to huge purchases by Americans abroad ? No. Should we measure sales of the onshore Chinese market – which is currently the second largest luxury market – or global sales to Chinese nationals, which surpass those to any other nationality around the world.

Is the Chinese luxury market shrinking or is it just moving to other countries and spreading throughout the world ?

Should the 30% luxury tax be condemned or celebrated for globalizing the purchases of the Chinese ?

Finally, what could be the rate of employment of qualified Chinese youth in the national luxury sector, if the government eliminated this tax and allowed China as a country to develop a fully functional luxury market ? This is a difficult question which should be seriously considered by a country which struggles to offer adequate job opportunities for its highly educated students, in an increasingly competitive world.

There are three schools of thought in this regard :

- the phonetic school uses Chinese phonemes, that is, Chinese characters which have over time lost their meaning, but reproduce the « sound » of the brand. This is the case for « Cartier » in Chinese – it does not mean anything but sounds good in Chinese, and its assembly of characters without meaning gives it a very western and modern feel.

- the semantic school, on the other hand, seeks to translate the values of the brand while moving away from comparable prononciation. The names carry real meaning by have no relationship to western prononciation.

- the intermediate school focuses on prononciation, while trying to use characters with strong semantic meaning.This is a dangerous exercise, because it is often used and may generate bland names with relatively hollow meaning and referring profusely to « pearl, excellence, noble, gemstone, treasures …. »

My client was telling me of his disarray because his distributor, instead of testing the Chinese translations with a given population, had given the list of proposed names to a Feng Shui master, equipped with a compass and a dial, who set about determining which name would provide the greatest health and prosperity to the brand in China. This is an original technique I had never heard of and which delighted me. Of course the said distributor, when he focuses exclusively on distribution, is excellent.

Transcription of the brand is a critical step, and quite often, the distributors handle it by themselves, using their own Chinese methods. Smaller brands do not see this as an issue and are rather satisfied to save on an expense they had not thought about. The job is entrusted to the distributor who (when he doesn’t call on a Feng Shui master) uses his own semiology skills to ensure that the translated brand sounds good, attracts the client and reflects the values of the original brand. Worst, quite often nothing is tested, or in any case, not in any scientific manner nor on a representative set of clients. The Chinese, because he is Chinese, considers this job is best done by a Chinese, and does not concern the brand, or a semiologist, or a name specialist, not even a writer or anyone used to handling words and sounds.

This process can rapidly become a real impediment to development ; One major Bordeaux brand, whose distributor had chosen a phonetic name with a meaning completely unrelated to the history and values of the Château, found himself blocked in exposing his message to the market. This is sad, since the key to success in the emerging Chinese wine market is specifically to put forth the history and values of the brand (the Chinese, while very fond of wine, are paradoxically not yet very knowledgeable about the nuances in taste between such and such variety of grape).

Transcription of the brand, whether small or large, is a fundamental step which cannot suffer any compromise and should be, at the start, handled by a language or litterature specialist, then tested on a panel of 50 representative persons. This is a minimum and it should be seen as a strategic investment in the future. However small the brand (and some Burgundy wines such as Romanée Conti are extremely rare yet extremely well known), there is no telling how far the Chinese will go in their search for singularity through luxury. Noone can say what the Chinese luxury market will be made of in ten years time : it is therefore essential to invest, in order to ensure one’s place among the leaders.