Luxury shows abound but quality questioned
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E-mail China Daily, October 8, 2012
As China's luxury market develops fast, albeit with a bit of a blip this year, many Chinese businessmen have been investing in exhibitions that highlight the range of goods available.
Hundreds of various luxury shows take place around the country every year. In Beijing alone, three large events will be held from October to December this year.
The exhibitions not only take place in China’s big cities but also in second- and third-tier cities, including Hangzhou, in Zhejiang province, Nanchang, in Jiangxi, and Tangshan, in Hebei, which have held them increasingly from 2011, when China’s luxury consumption stood at $12.6 billion, according to Starcom MediaVest Group.
The theme of the shows varies from wine and jewelry to cars and yachts but their irregular quality can have a negative effect on rising businesses.
"Most of the current luxury shows are organized by exhibition companies, which seek nothing but profit and do not understand luxury," said Zheng Haojiang, chief executive officer of the Sparkle Roll Group Ltd, a Hong Kong listed luxury goods dealership.
The process to organize a luxury show is not more complicated than other trade fairs. It only needs a registered company to apply for a commercial license.
In smaller cities, organizers use the title "luxury show" to attract local brands to pay for booths.
"It is a disordered industry and, in some places, luxury shows become local specialty shows," said Zhou Ting, executive director of the research center for luxury goods and service at the University of International Business and Economics.
Some organizers invite internationally well-known brands without any fees and some even pay for the brands in order to upgrade the show’s level.
Local brands eager to be seen alongside luxury commodities are the main income sources for organizers.
Most of the exhibitors in China's luxury shows are minor international luxury brands or Chinese high-end brands, Zhou added.
These grass-roots exhibitors go against the position of a luxury exhibition and fewer and fewer real luxury brands like to attend such events, she said.
"The business model cannot continue for long," Zhou said.
However, business insiders are still confident about the industry’s future after inferior products get pushed aside.
"The exhibitors and visitors will differentiate the different shows and most of the inferiors end up only with the first session," said Sheng Lei, general manager of Shanghai Borrison Expo Co, which has organized the Top Marques In China exhibition since 2005.
He said his company started to make profits in 2008, three years after its first event.
The main income for the business is from sponsors, exhibitors and visitors.
"The key point for a successful luxury show is the visitor data base," Sheng said.
Only if the brands can make contact with their target customers through the show will they pay and continue to attend the shows, he added.
Meanwhile, newcomers keep coming to the luxury show industry and some organizers are profiting from them.
Sparkle Roll held a luxury brands culture expo from Sept 6 to 9 in Beijing at which several international brands, including Boucheron, Rolls-Royce and Richard Mille, attended.
"The business including the luxury expo, a magazine and forum is an important event for Sparkle Roll," said Zheng Haojiang.
The company predicted the expo business will contribute 10 to 30 million yuan ($4.7 million) to its annual profits from next year but the group will adopt different tactics.
"The profit will be from sponsors and advertisements, rather than exhibitors," Zheng said.
All the ticket income from this year’s expo was donated to a charitable foundation, he added.
"We want to convey the fact that luxury does not only mean money: It can be connected with charity," Zheng said.
The expo will be an annual event from this year, he added.
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