International Development Strategies of Luxury-goods Players in China

Abstract

The aim of this paper is to study and analyse the internationalisation strategies chosen by the main luxury-goods players in the Chinese market, demonstrating the business internationalisation processes. The research questions are: How luxury companies have developed distribution strategies in the Chinese markets? What are the main formats of distribution for the Chinese markets? Are there any differences in the internationalization process between the main players of the luxury markets and the smaller ones? The methodology is based on the analysis on multiple-case analysis on a sample of luxury-goods companies and identifies and compares the different strategies used by the players analysed. The research process starts from identifying and selecting the most well-known companies operating in the luxury branded sector, which have established a presence in the Chinese market with their own brand, collecting secondary data for the selected companies (website, corporate profile, articles on websites and in trade magazines and interviews with the management), analysing the data collected and interpreting the main results to have emerged from the research. The main findings and conclusions are that the route to development in the Chinese market taken by the players in the luxury-goods sector, historically undertaken by delocalising production operations, has in recent years begun to accelerate with new forms in play, principally linked to distribution. The Chinese market for luxury brands is ever more an outlet market rather than a production hub. The ability to create brand awareness will become a key factor for successful consolidation of the competitive position in this market, an operation that can only be performed through distribution. Moreover, Chinese high-end consumers are becoming ever more demanding, seeking out an ever more sophisticated shopping experience. Just as happening in other markets, opening directly operated stores is a strategic choice for reaching and convincing end-consumers, since these stores become their point of contact with the brand. Creating a shopping experience plays a central role in communicating the values, heritage and spirit of the brand to consumers. Global luxury-goods enterprises are multiplying their investment in opening new sales outlets, using different formats to create distribution system that is predominantly selective but that ensures adequate distribution coverage. The development of direct distribution channels, alongside the more traditional forms of indirect presence, is accompanied by the more innovative players developing the digital channel to accompany and support their retailing activities.