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LIFESTYLE INVESTMENTS


Buyer beware investing in European luxury


The 2011 fashion weeks in Milan, Paris, London and New York produced much talk about the length of hemlines and the use of tulle over silk organza, but there was only modest coverage of the real story in fashion – how quickly and dramatically fashion’s audience has changed.


F


or designers and fashion houses, it is no longer enough to simply impress the mainly American and European fashionistas attending the big fashion shows – they all want their collections


and brands to connect with the increasingly important consumers of China’s rising middle and upper classes. In 2010, Chinese consumers accounted for roughly


10 per cent of the luxury goods market. By 2020, according to CLSA Asia-Pacific Markets, China will account for 44 per cent of global luxury goods sales. Today, some of the major luxury brands derive a significant share of revenue from the Asia-Pacific region,


104 FAMILY OFFICE: ASIA TOMORROW


with China representing the greatest share: Burberry 33 per cent, Prada 43 per cent, LVMH 34 per cent, Gucci 48 per cent, and Mulberry 12 per cent. These figures obscure the fact that in major retail outlets in Paris, London, Milan and New York, a significant number of consumers in the stores are Chinese nationals on holiday. In fact, their in-store spending is, on average, higher per transaction than that of Western shoppers. All of this has prompted the recent announcements by Prada, Burberry and others to increase planned openings of stores in China. Despite the local heritage of luxury brands and their


connections to the national identities of the countries where they were founded, the world of luxury fashion has decidedly and emphatically relocated to China. Chinese investment in the luxury fashion sector is on


the rise. While some Chinese investors have acquired stakes in local brands, the real focus has been on acquiring stakes in Western brands. A few examples include the YGM Trading Ltd acquisition of the Asian rights to the UK’s Aquascutum; the Trinity Ltd purchase of Italy’s Cerruti; Fosun International Ltd.’s acquisition of


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