Luxury Brands Enter Less Developed Northwest
   2012-12-25 21:04:26      Web Editor: Guo Jing

This photo taken on December 6, 2012, shows the inside of the Asia-Europe (Ya-Ou) Shopping Mall in Lanzhou, Gansu Province. [Photo: Jing]

Many global luxury brands have entered main cities and coastal areas in China and seen considerable sales, benefiting from Chinese people's ever-growing living standards and consumption demand.

At present, such famous brands have cast their eyes on the country's less developed northwest region. Some of them have gained considerable ground in Lanzhou, capital city of Gansu Province.

At the end of 2007, UK's menswear brand Dunhill embarked on a "brave exploration" in its role as a "first mover" into the market. It opened a store at Asia-Europe (Ya-Ou) Shopping Mall in Lanzhou and now has nearly 10 million yuan (US$1.6 million) in annual sales.

Cartier, Dior and Hugo Boss have followed in Dunhill's steps and opened stores on the first floor of the shopping mall, said Guo Deming, CEO of Minbai Corporation and general manager of Ya-Ou Shopping Mall.

"Lanzhou has good potential for luxury goods consumption," Guo said. "In the past, when the city hadn't introduced high-end brands, local people bought luxury goods in other parts of China or even abroad. But now, they can choose the products without going outside the city."

When asked about the main purchasing power of luxury goods in Lanzhou, Guo said, "Since Lanzhou doesn't have many foreign-funded companies or a large population of young people, the city is not a place for fashion. Thus, most consumers of luxury goods are successful people such as middle and high-level earners aged 30 to 45, who work in minerals, real estate and foreign-funded companies."

The entry of luxury brands in Lanzhou is the result of a two-way selection process. On the one hand, the brands undertook market research and found business opportunities before they decided to open stores in the city. On the other hand, the shopping center selects only influential brands with a certain market share in China.

Since the entry of these brands in Lanzhou, Ya-Ou's high-end consumer group has expanded. Four of the mall's total 18 high-end brands have annual sales of more than 10 million yuan.

Take Dunhill, for example. "It attracts 20 to 30 consumers to the store each day. During the weekend, the number doubles," said Zhang Limei, assistant manager of Minbai Corporation's International Brand Company. "The bestseller of Dunhill is a leather belt priced from 2,000 to 4,000 yuan. Most consumers are male aged from 35 to 55."

A 20-year-old university student in the store, whose father is a successful businessman, said he did not care about luxury goods, although his mother was inclined to buy some occasionally.

Because Lanzhou's per capita income is much lower than that of the national average, Guo said the introduction of luxury brands here was not to increase his company's profit, but to promote the image of the shopping mall and high-end consumption."

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