Luxury brands face challenges in China

CCTV recently broadcast the topic of pricing comparison of Starbucks coffee across the country. It also revealed on certain levels that the development environment of overseas companies in China is actually very complicated. The China-America Chamber of Commerce also released a report to analyze the overseas companies in the Chinese market. The top 10 challenges. The following will list four major challenges that are specific to the luxury sector.

1. Intellectual property issues. From fakes to infringements, China’s intellectual property issues abound, and intellectual property issues are even more important for overseas companies that rely on brand recognition for luxury brands. Referring to counterfeit goods, the higher the brand's reputation is, the higher the chance of counterfeiting is. For example, Louis Vuitton's fake goods in China can be seen everywhere, which also affects the image of the brand to some extent. Recently, Louis Vuitton and Alibaba.com cooperated to crack down on counterfeit sales on Taobao. This is due to the fact that the Chinese government's efforts to crack down on counterfeit goods are not large, and overseas companies can only personally do so.

2. High cost. Chinese consumers only buy one-third of the total amount of luxury goods in the country. The most important reason why more people choose to go to Hong Kong or buy luxury goods abroad is the price difference. China’s luxury pricing is generally around 40% higher than that of foreign countries. This is mainly because China’s tariffs are too high. Therefore, many luxury brands hope to attract customers through high-end services. For example, the Hublot brand has recently invited heavyweight basketball star Kobe Bryant to Beijing to meet face-to-face with branded VIP customers.

3. Finding qualified clerk is not easy. According to this report, the high-quality clerk in the Chinese market is very scarce. For luxury brands, the clerk's sales ability and service performance are closely related to the brand's image. However, finding a suitable clerk in a relatively small city in China is not easy. Many employees do not have the same qualities as big cities, and training costs a lot.

4. Protectionism. China’s media often criticize the way overseas companies operate. Starbucks is one of the companies that has recently been exposed by CCTV. The attacks on Apple Inc. and some overseas auto companies have also been on the rise this year.

Another potential challenge that has not been on the list is that Chinese companies are gradually growing, and many overseas luxury brands are facing more competition.