Luxury Chanel Versace Doubles Expansion in China

Affected by the global financial crisis, the consumption of luxury goods in the world is rapidly declining. According to France’s largest trade union, the Total Trade Union (CGT), Chanel, an internationally renowned brand, issued a statement at the weekend to lay off 200 people, of whom only 16 would be laid off on 31 rue Cambon in the first block of Paris. The rest of the staff will be treated differently as permanent workers and temporary contractors. The new employment contract will take effect on Wednesday.

Internal staff: The workload of 200 layoffs is equal to 10% of Chanel’s production

According to Chanel insiders, the layoff was the most serious economic event the company had suffered since the founder of Chanel Coco Chanel fired all employees in 1939. The workload of 200 people is equal to 10% of Chanel's production. A Chanel spokesman said: "In the current international situation, we need to reset our investment and development plans."

Chanel layoffs as a sign of luxury industry shrinkage

The start of layoffs at 31 on Kangpeng Street was seen as a sign of the shrinkage of the luxury goods industry. In recent years, the luxury industry is almost a profitable industry due to the favorable momentum of global economic development. However, under the influence of the current global financial crisis, the industry is inevitably affected. Analysts at the JP Morgan Chase Group believe that in 2009 the global luxury goods industry will at least reduce sales by 4%.

However, contrary to the luxury brand Versace, it is against the wind. As the Vice President of Public Relations of Versace Asia Pacific at the Tenth CCTV Model Competition, Peter said in an interview with the China Economic Times that “China is expected to become the largest global market for luxury consumer goods in the next five years. The huge consumer potential in the Chinese market surprised us. We cannot allow us to ignore it. Therefore, strengthening the development of the Chinese market and formulating a special marketing strategy are the general trend."

Against the background of the global economic crisis, the world's leading luxury brands have landed in China. Versace Group also plans to make great strides in the Chinese market. Peter told the reporter: “Given the good sales performance of stores in China, Versace currently has 22 stores, and it is expected to increase to 44 by the end of 2010, and the total number of stores will be double that at present.”

Versace and CCTV model TV competition, contest winners will have the opportunity to participate in the Versace brand 2010 in Milan, the International Fashion Week's catwalk show, and will participate in Versace brand in the Asia Pacific region all promotional activities. Peter believes that the selection of the finalists of the Tenth CCTV Model Competition to perform Versace's style fully reflects Versace's confidence in the Asian market, especially the Chinese market.

As a world-famous international fashion design palace, Versace has been a symbol of Italian luxury throughout the world. Now, Chinese consumers can purchase a full range of products that are listed simultaneously with Europe without going abroad. Peter said: “At present, Versace’s products in China are a full range of products, not a part of them.” But on the point of localized production, other major brands often implement localization strategies after entering China, even in China. Set up processing plants, Versace has shown its unique stubbornness, and it always upholds the tradition that Versace's garments and accessories are 100% made in Italy.

Of course, Versace also knew that the marketing of luxury goods is not very mature in the Chinese market. “The high price means luxury? It should be said that the key lies in how to guide consumer behavior and how to convey its own luxury content.” Peter said, “Versace The extravagance comes from its particularity and small batch production. Perfectly producing products under delicate craftsmanship, even glasses, handbags and other small things, can be the same luxury."

Experience has shown that Asian consumers prefer branded shoes and bags, and relatively high prices for ready-to-wear garments make it easier to own accessories, which in turn can further open the market and narrow the gap with more young consumers. According to reports, Versace will pay more attention to the sales of accessories.

"China's luxury consumer groups are very different from those in foreign countries. That is, the average age is much younger," said Peter. "We currently have a special brand for young people, Versace jeans couture. The design style and price are more suitable for young people." The young people's market is the main goal of the Versace Group in China, and we hope that the young Chinese now are Versace’s loyal consumers in the future.”