Beauty in the East

China will overtake Italy as the second-biggest market behind the United States for iconic sportscar maker Lamborghini within three to five years, the group’s chief executive said on Wednesday.
The Chinese associate luxury more with chauffeur-driven cars than sports cars because of bad road conditions, traffic congestion and driving standards, Stephan Winkelmann told the Reuters Global Luxury Summit.

But the sports car culture will gain ground in China, he said, as road infrastructure develops fast and Chinese consumers aspire to own well-known European luxury brands.“They change so fast. They change in a year like we changed in two decades in the past,” he said.

“They have such a knowledge about the brands and what is going on in Europe. They love what is coming out of Europe. What is European is something for them which they want to possess.”

Sales are likely to remain at the same level as last year in China in 2009 even as they fall sharply elsewhere such as in the United States.

China was the ninth-biggest market for the carmaker in 2008, ahead of Russia. Lamborghini sold 741 cars in the U.S. last year, 230 in Italy and 72 in China.

The carmaker said China was the only emerging market in which it had sent Lamborghini managers to oversee the growth of the business and help deal with red tape and complex safety regulations.

China overtook the United States as the world’s No. 1 auto market in January. Growth slowed to a single-digit percentage rate in 2008 for the first time in at least 10 years after exceeding 20 percent for three years in a row.

China car sales rose 21 percent in the first five months of this year, compared with a 15.9 percent drop in new car registrations across Europe in the first four months of the year. U.S. auto sales fell by a third in May, with the market in its steepest slump since the early 1970s.
Source: Reuters

With the GDP growth in China, Chinese people or Chinese rich people are becoming richer and richer. Some of them are puzzled with the big fortune and tend to squander money for fun, for showy, which can partly accounted for the odd luxury industry increase even in the recession year.

About the rich people, I think they can be divided into two division.

1. Fat cats: They gain their fortune in almost "a night". They don't have the luxuriou consuming habits as division 3. They tend to be showy. They want others to know that they are now "wealthy". All this contributed for their squandering consumption habits for luxury brands. From many surveys, we can see that Chinese luxury demands are rising, for cars, boats, the experience of being rich...

2. Offsprings of Fat cats: well, they are kind of different from their parents. They know brands, but only know. They value taste. They don't know how hard it is to make money. They are even showy than their parents, which we can see from the young 90s girl who bring a bag of cash to the car exhibiton, bought the luxury car, and drave it away.

3. The Rich for generations. This division is reasonable in consumption. They know brands. They know brand history. They know what suits them. Their consumption habits is luxrious but low profile.

The trend that many new brands, no matter Chinese local brands or newly imported foreign brands are aimed at the premium segment for the growing demand and high profit.