Business of Luxury 2008
Guest column: Japan’s eye for quality may not be equalled
By Radha Chadha
Published: May 28 2008 03:50 | Last updated: May 28 2008 03:50
Japan has been the El Dorado for the luxury industry – the Japanese consumer accounts for 30 to 40 per cent of global revenues for leading luxury brands. It is also the number one in terms of penetration – for example, as many as 94 per cent of Tokyo women in their 20s own a Louis Vuitton piece.
With other countries in Asia now posting dramatic economic growth, the question is whether the Japan luxury story will be repeated. China, and eventually India, will develop into Japan-sized luxury markets, but there will be a significant qualitative difference. Japanese consumers are special in that they have always had a deep appreciation for the keener aspects of luxury. A sense of aesthetics, an understanding of craftsmanship, an eye for quality, a reverence for heritage, a thirst for detailed know-how are programmed into the Japanese DNA – it is as if the Japanese consumer was purpose-built for luxury.
The rest of Asia does not quite have the same finicky luxury gene. Nor, for that matter, does any other country in the world – even Louis Vuitton had to lift its quality standards for Japan. What was acceptable to the French consumer did not pass muster there.
The Spread of Luxury model is a helpful lens through which to examine what has happened in Japan and how it might be extrapolated to other Asian countries.
Japan has been through all the five stages – from a post-war economy in shambles (Stage 1: Subjugation); to rapid growth, when the masses shopped for white goods and a small elite bought Western luxury (Stage 2: Start of money); to the emergence of a moneyed middle class that liberally used luxury brands as status markers (Stage 3: Show off); to the late 1980s when the need to conform to the new norms helped luxury culture to spread (Stage 4: Fit in); to the current period where a discerning consumer finds herself locked into the habit (Stage 5: Way of life).
As economic growth puts more money into more hands in other Asian countries, the luxury culture will spread along similar lines. Hong Kong already has a sophisticated consumer base nudging towards the “way of life” stage. South Korea has developed at feverish pace to the “fit in” stage. China is at the “show off” stage – wealth has arrived to select segments of society and luxury brands have become the weapon of choice to display it.
In terms of population, China is like 10 Japans. Even when the first of these reaches the “way of life” stage, the other nine will be at different stages. Luxury brands will have to devise strategies to cater to consumers who range from the extremely sophisticated to the utterly uninitiated.
India is the other Asian giant. It is early days for the luxury industry there – western brands entered barely five years ago. The country is still largely at the “start of money” stage, where the elite are indulging in luxury brands. India does have some old money – royal families and industrial dynasties – but the real prize for the luxury industry is the new money that will be made by in coming years.
Revenues will certainly come, but will the Chinese and Indians eventually develop a Japan-like appreciation for the finer aspects of luxury? The answer lies in deep cultural roots, especially an evolved visual and aesthetic sense honed over centuries, as is the case with Japan.
Historically, the Chinese have a sophisticated culture, but Mao pressed the delete button on it so decisively that it may be difficult to reactivate. Indians, on the other hand, have maintained their rich traditions. Their appreciation of a finely woven benarasi sari or an intricately gold-embroidered wedding lehnga could well translate into an exacting eye for western luxury.
Mark Prendergrast, president of Tom Ford Japan, sums it up well: “Western brands are merely the ‘icing on the cake’ of a long-held tradition of luxury.”
Radha Chadha is author of ‘The Cult of the Luxury Brand’ and one of Asia’s leading consumer experts
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