Companies

Montblanc eyes rich pickings from China's luxury market

By Chen Weihua (China Daily)
Updated: 2010-09-16 10:42

NEW YORK - Lutz Bethge, chief executive officer of luxury goods maker Montblanc, does not remember how many times he has visited China.

He has already been to the nation three times this year and will go again in November for a promotional event in Beijing.

China overtook the United States in 2008 to become Montblanc's largest market. "What surprised me was how fast it happened. I was always saying that China will overtake the US in 2010 or 2011," Bethge told China Daily.

Although the US market has been doing very well, Bethge believes China will continue to be its No 1 market in the future.

"The US market will continue to grow, but the Chinese market offers more opportunities than the US market," he said.

According to reports, nearly 7 million people in China, over 0.5 percent of the population, can afford luxury products.

A recent report from the Chinese Academy of Social Sciences said luxury goods sales in China were around $9.4 billion last year, and accounted for 27.5 percent of the global total. The nation surpassed the US in terms of sales and occupied second place after Japan.

China will become the No 1 market for luxury goods, with estimated annual sales of around $14.6 billion by 2015, it said.

Montblanc has 98 stores in China, compared to 34 in the US. Its total number of stores in China is likely to hit 130 over the next five years, said Bethge.

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The Montblanc store in the Citic Building on Shanghai's Nanjing Road is the largest of its 400 stores in the world, but Bethge said an even larger outlet will open in Beijing next year.

India, where Montblanc is the top luxury brand, has also been a fast growing market for the company, but Bethge said he does not expect India to surpass China in sales.

The company is making its biggest investments this year, both in advertising and large stores, in China.

In some second-tier cities, smaller stores will be expanded in order to give customers a better environment to experience the brand.

Bethge cited the early arrival of its products in the Chinese market as a major reason for its good business in the country.

"It has to do with the fact that Montblanc was known in China relatively early. It is not just in stores in Shanghai and Beijing, but from Harbin in the north to Shenzhen in the south, where we have had stores since the mid-1990s," Bethge said.

He did not disclose the exact figures but said China is a very profitable market and accounts for 10 to 20 percent of the company's total sales.

Among Montblanc products, watches and pens are the most popular with Chinese customers. But leather and jewelry items are also catching up.

Bethge said piracy of Montblanc items has not taken away its business, as most of its customers do not buy fake products.

"But it's a little embarrassing when those vendors tout fake Montblanc goods to our customers outside our stores," he said.