As the dollars, euros and pounds continue to pour into China, a new breed has emerged. Wealthy, high-net-worth individuals with the desire and wherewithal to flaunt their wealth. China is rapidly becoming one of the largest consumers of high-end goods in the world. Estimates put China as the third largest luxury goods consumer, accounting for a minimum of 12% of the market, with Goldman Sachs suggesting that this will rise to around 30% by the year 2015.

No wonder then, that luxury retailers are flocking to the Chinese high streets and Malls, creating some of the most expensive retail real estate in the process.

Giorgio Armani was one of the first brands to enter the market, opening their  flagship store in 2004. Armani now have no less than 12 stores in Shanghai alone. Next to jump on the band wagon was Louis Vuitton, closely followed by Cartier, Hermes, Giorgio Armani, Prada, Gucci, Escada, Celine and Emmenengildo Zegna.

Luxury automobile manufacturers were the next group: Porsche, Ferrari, Bentley and Rolls Royce all opening new dealerships in China by 2005.

Indicators of the luxury retail rush are everywhere. Saks Fifth Avenue will open its first store in China in 2008, in Shanghai, under a licensing deal with Roosevelt China Investments Corp. Tiffany & Co. is set to unveil new stores this year in Beijing and Shanghai, both of which already have one Tiffany store each. New York City-based watch retailer Tourneau opened two stores in Shanghai in August, the first of 30 it plans to have in China within five years. Cartier operates 12 stores there now and has five more under construction. The company anticipates that 10 percent of its sales will be coming from China by 2012.

Ernst & Young published a report last year on the Chinese luxury market that says 13.5 percent of China’s consumers can afford luxury items. Most of these are between 20 and 40 years old and have a “spend now and worry later” attitude, the report says. The most active consumers are men.

Luxury department store Saks fifth avenue are also planning an entry into the Chinese market, but seem to be having trouble with the local sub licensee. Roosevelt China Investment Corp. recently announced that it has terminated its sublicense agreement with I.T. Ltd. "While we have terminated the arrangement with IT, we continue to seek an alliance with local market experts and remain committed to opening a licensed Saks Fifth Avenue store in Shanghai in 2009," said Tweed Roosevelt, Chairman of Roosevelt China Corp. Current plans are for the licensed Saks Fifth Avenue store to be situated in one of the most dramatic and historical buildings in China, the former Jardine-Matheson headquarters on the Bund. Plans call for the building to be fully renovated to its original grandeur with a flagship presence in the newly renovated Bund area. Saks Fifth Avenue is a part of Saks Incorporated.

"We are committed to bringing Saks Fifth Avenue, one of the world’s finest luxury department stores, to the burgeoning Chinese retail market,” said Mr. Roosevelt.

Napa Reserve recently opened a flagship store in Shanghai, selling premium Napa Valley wines. Shanghai is currently being described as the Manhattan of China, although one Napa valley wag on a recent trip described Shanghai as “New York on steroids.” Doesn’t bear thinking about.  
 
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