Why‘Busloads Of Chinese Tourists’ Are Good For European Luxury

　　When the president of the French luxury fashion house Zadig & Voltaire carelessly pronounced to a magazine reporter that Chinese tourists wouldn’t be welcomed at the new hotel his company was building in Paris, a collective gasp was heard from Brussels to Beijing. To manage the crisis, Zadig’s president later apologized and released a statement saying that what he was actually referring to was busloads of tourists, and not Chinese, per se. But by subliminally interchanging Chinese visitors with busloads of tourists, the company may have unwittingly revealed its own ignorance of the spending power of tourists from the mainland, or worse, a racist hostility to Chinese guests altogether.

　　Surely, Zadig’s president was only trying to emphasize just how intimate and exclusive he wanted his property to be. But with the European economy still faltering, he fails to realize that without the Chinese, or more accurately, without guests from emerging markets like Asia, luxury brands like his would already be out of business. The economic malaise in Europe is no longer just an inconvenient blip; it is a prolonged crisis that is forcing companies to seek markets overseas to keep them afloat.

　　Perhaps Zadig & Voltaire’s public relations crisis can be blamed on its Anglo-American and Euro-centric business strategy, surely one of the few left holding that business model. Louis Vuitton was one of the first to realize the potential of the Chinese consumer and is reaping the benefits of setting up shop in the Mainland back when few luxury brands would. Today almost all the big luxury brands are represented in China, even putting up flagship boutiques in second and third-tier cities of the mainland.

　　As every successful luxury company understands so well today, doing business in Asia isn’t just about introducing brands in the region; it also entails creating specific products for the Asian consumer. And it’s not just about printing images of dragons on watches and handbags. Luxury goods companies are taking the Asian lifestyle into account and are producing the clothes, cars and services that appeal to this market. The world is turning upside down, or should I say, shifting from West to East. Here are some sectors that are feeling it the most:

　　Hospitality

　　Whether Zadig & Voltaire’s president likes it or not, busloads of Chinese and Asian tourists are actually good for the European hospitality industry. With tourist arrivals expected to rise further in years to come, luxury hotels are introducing menus and amenities targeted at Asian guests. Expect to find congee in the breakfast buffet and instant noodles in the room bars of more hotels. The preference of Asian travelers for the oriental brand of service is also driving the expansion of Asian hotels in Europe and America. The Raffles, Mandarin Oriental, Peninsula and Shangri-La groups are all busy launching new properties outside Asia.

　　Automotive

　　With luxury car sales expected to drop in Europe due to poor financial prospects, car companies continue to look East to boost their bottom line. Rolls Royce, already a fixture in the Gulf, China and Singapore, is opening its first showroom in Bangkok, while Bentley is mulling entry into the Philippines. With fewer buyers for top-of-the-line car models in the West, many of these exotic units are finding their way to showrooms in the region—no doubt, good news for local enthusiasts who have had to wait up to a year to get their hands on one.

　　Jewelry And Timepieces

　　American and European luxury houses have always recognized the Asian appetite for all things bling, but have never had enough pieces left to offer customers in the region. That is, until now. Watch and jewelry fairs in Europe are now openly pandering to Chinese and Asian buyers and even the pieces themselves have as of late adopted designs and precious metals favored by oriental clientele. These precious pieces are no longer one-off creations but are now increasingly part of the main line of venerable brands like Chopard, Cartier and Rolex.

　　Unless companies prefer to remain small and marginally profitable, ignoring Asia and other emerging markets is increasingly suicidal. Indeed, it would be interesting to see how Zadig & Voltaire’s new boutique hotel fares when it debuts in 2014.

　　For more of David’s top picks, visit executive-class.blogspot.com. You can also catch more of his picks on ANC, Saturdays at 10 p.m. and Sundays at 8 p.m.