For this week’s posts, I am going to focus on issues surrounding luxury goods in Asia. In some short paragraphs, I’ll introduce news topics surrounding the Asian market, where brands are pushing hard to establish a presence.
Gucci, Tiffany target Chinese banks in piracy law suits
You have probably heard the phrase “imitation is the best form of flattery”. While that is true for many things, piracy in China bears huge costs for US firms – between $2.5 billion and $3.8 billion per year. In this article from Reuters, Emily Flitter discusses new developments in attempts by luxury brands to eliminate piracy.
Piracy and counterfeiting are huge “value leakers” for high-end brands, but in a strange twist of irony they can also serve to proliferate a brand (only at lower product prices and brand value).
The Rising Cost of Luxury In Asia
In the MBA program we are exposed to the macroeconomic dynamics of purchasing power parity (PPP). PPP is a figure that tell us if a big mac is more expensive in Brazil, than in China. Well, luxury goods have their own metrics, tracking the price of a basket of luxury goods across world markets. While Forbes Magazine uses the Cost of Living Extremely Well Index, Julius Baer’s August 2011 Wealth Report: Asia brings a new indicator to the party of economic indices. According to the Swiss private banking firm, the the price of luxury goods is up 11.7% in dollar terms in the four big markets of Hong Kong, Singapore, Shanghai and Mumbai. What is even more important is that prices have risen far faster than generic inflation in these cities. Want to know where to get the best price on a Chanel bag? Click here.