I am currently travelling in the Taiwan having flown in with a day’s business stopover in Hong Kong. It has been a few years since I have been there and I was stunned. In Hong Kong Island there is mall after mall of luxury goods stores. This scale surprised me somewhat but what really shocked me is that their pricing was considerably higher than the U.K. High Street. Of course, these luxury goods stores are virtually all Western branded and I understand it is one of the ironies that, although many of the goods are made in the Far East, they are often then shipped to Europe in bulk and then shipped back again to Hong Kong.
However, the real message to me was not that Hong Kong used to be cheap and is now expensive, rather it is the scale of the wealth that is is accumulating in China and surrounds that can keep so many stores in business at such high prices. They make Liberty’s in Regent Street in Central London seem like a discount store. (This was a store that in their January sale had a rack of t-shirts marked ‘Down to £100’.)
Travelling outside of Europe is always a heady reminder of ‘where the people are’. In broad brush figures, Western Europe and the USA combined only make up about 0.8 billion of the 7 billion people in the world. In recent decades, hundreds of millions of people have been lifted out of absolute poverty and hundreds of millions are being lifted into conspicuous affluence in Asia.
The brands these nouveau affluent aspire to are still primarily from the West. There are still opportunities for many second-tier and more niche brands but one should expect in the long term that style/fashion will follow money and power. Perhaps it is the unusual fact that official Chinese ideology conflicts with its capitalist reality that is holding back the emergence of global Chinese elite brands? We should not be complacent because Chinese nationalism is very strong and national pride will ensure that in the long term, they will not just ape our wealthy for long. However, one should remember the Far East is not just China and many of the cool aspirational fashions in the region are coming not just from Japan but also Taiwan and Korea, in media and the arts particularly.
In Europe we need to rapidly come to terms that our American-Eurocentric view of the world is coming to an end. If the 18th and19th Centuries marked Europe’s and the 20th Century the U.S.A’s dominance, the 21st Century is rapidly becoming Asian. This presents opportunities and threats to all of us but the age of enlightenment in the West has transformed into the age of entitlement for Asia and that presents great opportunities and threats to all of us in business.