Southeast Asia sparkles for luxury brands (IHT)
By Alexandra A. Seno International Herald Tribune
“For most of us, Asia is the answer,” Paul Smith, designer and chairman of the British fashion house that bears his name, said Thursday at a conference in Hong Kong.
Smith underscored the key focus for growth at many international brands in years to come. He made his remarks at “Luxury 2004: The Lure of Asia,” a conference sponsored by the International Herald Tribune.
Though China may be the Asian nation that excites executives and shareholders, the heart of the luxury business remains in Southeast Asia.
“Everyone is talking about China,” said Francis Gouten, Asia Pacific chief executive for Richemont, which owns brands like Cartier and Dunhill. “We also expect a lot from China, but we are well-established in Southeast Asia. China is still a dream.”
Last year, Richemont, one of the world’s biggest luxury groups, had sales of €637 million, or $849 million, from Asia, outside of Japan. Hong Kong contributed the most to revenue, Gouten said, followed by Singapore. Mainland China was third.
The sense for now is that while China is an area to explore, the real money is made in Southeast Asia. “China is a long-term investment,” said Diego Della Valle, chairman of Tod’s Group. “Southeast Asia is a place that will give you back investment quickly.” While Tod’s, a maker of high-end leather shoes and bags, plans to open as many as 20 more shops on the Chinese mainland over the next five years, it is doubling its presence in places like Singapore and Thailand.
“We don’t have a billion people but we have a lot of people in Southeast Asia with a propensity to spend,” said Douglas Benjamin, managing director of the Singapore retailer FJ Benjamin.
Benjamin — whose company represents Valentino, La Perla, Ungaro, among others — said the rise in sales of high-end goods reflected a greater optimism in Southeast Asia, following a series of political and fiscal upheavals in the past few years.
“Retail is all about tomorrow,” Benjamin said. “If people feel good about tomorrow, so they spend today.” A new survey from ABN-AMRO indicates that consumer confidence in Asia is high, with 53 percent of those polled expecting the economy to improve over the next 12 months. In China, 78 percent felt things would be better. Results in Indonesia and Singapore were also high, at 76 percent and 72 percent, respectively.
“Things are looking up,” said Vachara Phanchet, Thailand’s vice minister for industry. “We have been improving since the economic crisis of 1997.” One of Vachara’s priorities is to establish Bangkok as a fashion capital to showcase local and foreign brands. Thailand already hosts boutiques of international brands like Emilio Pucci that cannot be found in other parts of the region. Indonesia, which has a population of 216 million people, has been enjoying a surge in consumer spending in the past three years, something that is not lost on luxury retailers.
The portion of the population that might buy expensive fashion and jewelry might be very small, but the rich have preserved their wealth and are now comfortable spending it again. The Asia Pacific managing director for Richemont’s Van Cleef & Arpels, Benjamin Vuchot, said: “If you go to a high-profile function in Jakarta, the amount of carats on people’s necks and ears is very impressive.” This week, Van Cleef & Arpels opened a new outlet at the upscale Plaza Senayan mall for its watches and jewelry.
In March 2005, the $120 million avenue K shopping center will open in Kuala Lumpur. “The wealthy have always been wealthy in Malaysia,” said Nicole Yap, a director of avenue K. “But we also have a huge aspirational middle class population in Southeast Asia.” Designed by Christian Liagre, it boasts 360,000 square feet, or 33,500 square meters, of prime commercial space, some of which has already been leased to Gucci, Ermenegildo Zegna and Hugo Boss.
Even in countries whose economies are only now starting to turn around, like the Philippines, the prospects for growth in luxury goods seem to be rising. “Our market is probably only 1 percent to 2 percent of the population — but they have gotten richer,” said Anthony Huang, executive vice-president for Manila’s Stores Specialists, which operates stores like Bottega Veneta. “A lot of customers are finding they have the option of shopping at home,” Huang said. “Because the price is right and the malls are better, they don’t wait until they travel to shop.”
IHT, Friday, December 3, 2004
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