CHINA. Bvlgari plans to open a single-brand store in Beijing it confirmed, at the opening of its first China store in Shanghai this week.
The company is aiming to increase its presence in the Asian market, opening other Bvlgari stores in Guangzhou, the capital of the southern province of Guangdong and in Dalian, north-western China.
A year ago Bvlgari ceo Francesco Trapani said it was too dangerous to go it alone in China. The company already has single-brand stores in Japan, Indonesia, Malaysia, Singapore, Australia, South Korea, Hong Kong and Taiwan. Bvlgari sales in Asia account for 40% of the total, the company said.
Chinese consumers currently accounted for between 15% and 20% of total Bvlgari sales, although sales within China next year will only account for less than €4 million (US$4.8 million), or 0.5% of total revenue, which hit €774 million (US$920 million), in 2002.
“Ten years from now I expect China to be in excess of 10%”, said Trapani in a Reuters interview after opening Bvlgari’s first mainland China outlet in Nanjing West Road in Shanghai this week.
“China is probably the most promising market today. “You have all the ingredients for this market to grow fast and be the second-largest luxury market in Asia after Japan, Trapani said.
Bvlgari, which already has hotel projects under way in Milan and Bali, has even been eyeing up a potential hotel venture in Shanghai.
“Shanghai would be an interesting spot for us,” Trapani told a news conference. “We have some talks but there’s nothing concrete on the table right now.”
Bvlgari Hotels and Resorts, a joint venture with US hotel chain Marriott International, plans to open a five-star hotel in Bali in mid 2005. It will be managed by Luxury Group, a unit of Marriott International. In 2001, Marriott International and Bvlgari set up the luxury hotels venture. The first hotel of the five-star Bvlgari hotels is expected to open in Milan next year.
With rivals like LVMH, Swatch Group, Cartier and Gucci following their own China-oriented strategies, Bvlgari seems to have made a key decision on the Chinese market, despite an expectation of some initial losses and counterfeit problems.
“I expect to see the business growing but I expect to see losses to finance growth,” Trapani said.
Gucci ceo Domenico De Sole has predicted that Asian market revenue – excluding Japan – could soar to 30% of global luxury goods sales in ten years, driven largely by China.
Cartier is also focussing more on travellers in China and Chinese consumers. The company opened three new hotel boutiques last year to add to the first franchise boutique in Beijing’s Palace Hotel.
Because of high import duty, prices in China are almost a third higher than the already expensive markets of Hong Kong. However duties on luxury products are starting to drop, as China conforms to the requirements for World Trade Organization membership.
