The Bling Dynasty: Why the Reign of Chinese Luxury Shoppers Has Only Just Begun

Chapter 10 All In: Coach, Apple and the Cosmetic Surgeon

Winning isn't everything. It's the only thing.

—American football coach Vince Lombardi

In this chapter, we see that competition is not limited to the sector itself. Brands are competing cross-segment for Chinese consumer's budget. That budget is limited, and many brands will lose to competitors they didn't realize were in their competitive landscape. (See Figure 10.1.)

Figure 10.1 Fighting for Discretionary Spending

Budget Competition

A basic business principle is ‘know your competition'. While it is tempting to think about direct competition (will you buy a Burberry or a Zegna coat?) or substitute competition (will you buy a warm sweater or should you get a scarf instead?), most consumers probably view luxury spending as discretionary. For this reason, brands should be thinking more about ‘budget competition'.

Think about our avatar Lewis Wang when he purchases a Tadao tote bag from Louis Vuitton in Hong Kong for the equivalent of EUR2,500. Is the alternative to that purchase really a similar bag at Gucci, Prada and Burberry, or is there a much broader array of alternatives than you would initially think? For that kind of money, he can get a 15-inch MacBook Pro from Apple with retina display for himself and the 13-inch version to bring back for his wife. Or he can go to the Wan Chai computer center area on Hong Kong ...