Luxury brands pin hopes on China
Katidja Valy has visited seven countries over the past two months, trying to sell his super-expensive Swiss watches to the world's rich, and nowhere has the interest been greater than in China.
Marketing a series of watches incorporating pieces of steel salvaged from the Titanic wreckage might seem a tough assignment against the backdrop of the worst financial crisis in half a century, but not, he said, in China.
"In some countries, they don't believe in the future. This is not the case here. Everybody wants to make business," said Valy, a communications manager with Geneva-based Romain Jerome Watches.
"It can change tomorrow, but I don't feel the financial crisis for my own brands or for any of the people I have spoken to."
Valy was exhibiting his Titanic-DNA series of watches at the Top Essence exhibition held recently in Beijing -- an opportunity for the world's top luxury brands to get a snapshot of the China market.
World-class brands such as cognac producer X.O and auto maker Bentley were present at the event -- which attracted Chinese actors and other celebrities -- but some participants admitted to having had somewhat modest expectations.
"The times have been hard since October, because of the financial crisis," said Zhao Qianying, a marketing supervisor at Mercedes Benz.
"But we think it's just a short-term phenomenon. Generally, the forecasts for Beijing are good. We expect next year to be good for luxury products."
Attendance at the exhibition turned out to be respectable, but not spectacular.
About 10,000 people paid the 150-yuan (22-dollar) ticket, roughly the same as last year, according to reports in the local media.
Not all of them were window shoppers -- take the example of Li Jingge, an IT executive, who declined to say how much he was making every year.
"I'm looking for a car. It's essential that it's a model I like. Money is not that important," he said.
But Jessica Liu, an advertising executive who was touring the show to get a sense of new trends, said she saw little concrete consumption.
"My feeling is that most people come here out of curiosity. They're window shopping. They don't really want to buy anything," she said.
Even so, foreign luxury brands are increasingly looking to China to tide them over until the world economy returns to normal.
Just as it is expected to save other parts of the world economy amid the continuing global woes, China could also become the saviour of the luxury industry -- or so the reasoning goes.
"Look at what happens to many, many brands that suffer in the United States. They are investing in China now," said Valy, of Romain Jerome watches. "Big players that have overstocked have to pay attention to China."
The question is how realistic such predictions are. The jury is still out on what to expect in the Chinese market for luxury items, which has seen annual growth of 20 to 30 percent in recent years.
Recent data are making for more pessimistic predictions for the market in the short term.
A list of China's richest people, published by US magazine Forbes in October, showed that the net worth of the 40 wealthiest fell 57 percent from a year earlier.
And economic growth next year could hit a 19-year low in 2009, the World Bank predicted this week, although at 7.5 percent this would still be a dream for Western nations fighting off recession.
"Although the situation for the domestic market is still not clear, luxury consumption will certainly be affected by the global economic crisis," Liu Zheng, an analyst of the luxury goods industry, told the China Daily newspaper recently.
"Previous surveys have shown that many consumers of luxury goods are young office workers, whose purchasing power for the items is extremely unstable," he said.