Breaking new markets, the Chinese consumption upgrade and localisation as a growth driver

An Operations Manager at Chopard Trading (Shanghai) emphasised that the “core of fine jewellery is brand awareness,” rather than the quality of the raw materials used, which has allowed players like Tiffany & Co and Richemont SA’s Cartier to monopolise the high-end market. The specialist noted that while he believes the “sales revenue of jewellery will rise,” non-jewellery brands such as Dior, Louis Vuitton and Gucci that want to compete with market leaders need to go above and beyond by “retain[ing] customers in their value chains” and offering pieces that “best match [their] other products… to demonstrate [their] strength and professionalism in the luxury jewellery sector.” 

While market leaders can rely on brand awareness, a former Store Director at Zara Commercial (Shanghai) suggested that Inditex’s Zara and other retail companies wanting to benefit from the “consumption upgrade” within China need to “develop accurate products to specific consumers.” Compared with the “maturity of European consumers” who already know the “kinds of collections and sizes they want,” the specialist suggested that Chinese consumers “rarely have such knowledge,” so retailers require a clearer market position that appeals to a specific segment of the “huge retail market” within China. He applauded Zara’s “clear customer positioning” and focus on supplying “basic essential and well-designed clothing to office ladies aged at 25 to 40.” He also suggested that China-based brands such as Urban Revivo could adopt a “‘Zara’ model” in attempts to challenge the company, but ultimately Zara’s clear position is likely to allow “great room for growth.” 

Likewise, a former Director of Marketing Strategy at Jaguar Land Rover (JLR) noted similar issues regarding localisation for JLR. He proposed that Land Rover should maintain its British identity for the UK market and tailor its product to regions such as China to achieve strong levels of growth. The former Director suggested that even in a hard-Brexit scenario, production of the Range Rover and the Range Rover Sport should remain in Britain to reinforce its identity because “…Britishness is really, really important” to the company. He expressed the opinion that this would offer the company further “price protection” and brand identity, which could disappear if production were to be moved to Austria or Slovakia. However, the former Director suggested that “localisation” is “absolutely key” for JLR to truly compete in China against companies such as Audi, BMW and Mercedes. He stated that with the market in China becoming “more aggressive,” JLR is “further and further exposed in terms of [its] ability to command premiums and fund the business,” which can only be assuaged if products establish a clear market position, as Zara has done in the country. 

Comparably, a former Global COO at Just Eat suggested that online food delivery companies should focus on regional identities as opposed to global appeal. He stated that “actually, regional players… can be very successful against big, global brands” such as Uber Eats, Just Eat or GrubHub. He reasoned that this is because each region is culturally distinct and there is not much chance for “global branding synergy,” meaning that the local nature of the industry is “in a sense, a barrier to entry” for global players. The specialist used the Netherlands as an example, stating that although the Uber subsidiary has entered the marketplace, Takeaway.com is “still dramatically bigger than Uber Eats.” He explained that this picture is unlikely to change in two years’ time because “it’s difficult for someone to come along and really seriously challenge [established players]” when they have such a strong market positioning.