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2010 Ohio Northern University: James F. Dicke inistration College of Business Admrs: Lead Authors/Edito Sarah Bachwitz rkany Benjamin Ta s:Co‐Author Jasmine Coleman y Greg Dell phrert Danielle HumChrissy LockhaJames March Morgan Neiss gen eingand Mike StevenhaChristopher WAdam Yunker CHINA IN FOCUS: LUXURY GOODS MARKET ProvidingU.S.businesspeoplewithavaluable“HowTo”factfilefocusingontheluxurygoodsmarketsinthecitiesofShenzhenandSpecialAdministrativeRegionofMacau,bothlocatedinChina,andhowtobreakintotheaforementionedmarketsofthesetwolocations. 2|PageContents Abstract.......................................................................................................................................3 AnOverviewoftheLuxuryGoodsmarketinChina..................................................................4 ProspectiveCities........................................................................................................................5 Shenzhen.................................................................................................................................5 Macau......................................................................................................................................5 MediaandAdvertising................................................................................................................6 GovernmentControls..................................................................................................................8 CulturalConsiderations.............................................................................................................10 InternetSales.............................................................................................................................12 PaymentMethods......................................................................................................................15 Logistics....................................................................................................................................18 AppendixA...............................................................................................................................19 AppendixB...............................................................................................................................19 AppendixC...............................................................................................................................20 AppendixD...............................................................................................................................23 AppendixE................................................................................................................................24 Bibliography.................................................................................................................................25 3|PageAbstract FormanybusinessesentertainingtheideaofexportingluxurygoodstothelargepopulaceofChina,themostdifficulttaskisoftendecidingwheretobeginwithsuchanendeavor.Thepurposeofthisreportistoprovideastreamlinedoutlineofinformation,familiarizingitsreaderswithstandardpracticesinChina,alongwithotherusefulinformationintheareasof:ProspectiveCities,MediaandAdvertising,GovernmentControls,CulturalConsiderations,InternetSales,PaymentMethods,andLogistics.Allsixoftheseareashavebeencenteredontheluxurygoodmarket,specificallythoseoftwoprominentcitiesthathavebeenhighlightedaspromisingmarketsforluxurygoods;ShenzhenandMacau.Throughouttheanalysisofthesemarkets,outsidesourceshavebeenprovidedtoaidintheunderstandingofkeypointsandtoprovidealternatereadingonthemattershoulditbedesired.Additionally,inAppendixC,primaryresearchisincludedfromMacau/ShenzhenresidentsaboutopinionsandattitudestowardstheluxurygoodsmarketinChina.4|PageAn Overview of the Luxury Goods market in China China’sluxurygoodmarketisthesecondlargestluxurygoodsmarketintheworldbehindtheUnitedStatesandisexpectedtobecomethelargestmarketforluxurygoodsinjustfiveyears.TheluxurygoodmarketinChinawasvaluedat9.4billionU.S.dollarsattheendof2009whichaccountsfor27.5%oftheworld’sluxurygoodsmarket.1Sowhatisaluxurygood?Aluxurygoodisagoodthatconsumerswillpayapremiumwhichisaboveandbeyonditsutility.2LuxurygoodcompaniesthathavefoundsuccessinChinaincludeLouisVuitton,Chanel,andOmega.Companiesaredoingbusinessabroadtosellproductssuchaswatches,jewelry,cosmetics,cars,handbags,andotherlargerticket-priceitems.AsthelargercitiesinChinabecomemorepopulatedwithluxurygoodoutletsandstores,thecompetitioncontinuestoheightenandcompanieshavebeguntoturntosmallercitiesinthecountryasanopportunitytosellluxurygoods.ThistrendiswherecitiessuchasShenzhenandMacauprovidebusinesseswithanewmarketforluxurygoods.Itisimportanttorecognizethegrowingmarketforluxurygoodsinthesesecondtiercitiesbecausethesecitizenshavemorerestrictionsontheirvisaswhereasfirsttiercitycitizenshavetheabilitytodotheirshoppingbroad.a3 1(Chinatobeworld'sbigg