China is known to be the most densely populated country in the world. As time passes, this country consisting of a billion people has a growing thirst for luxury goods. At present the demand for luxury goods is increasing not only in China but worldwide and due to this many distributors have begun on a larger scale around the globe.
Sparkle Roll Group Ltd is a Hong Kong listed distributor of luxury goods in China. Their deals include the distribution of various luxury goods, from watches to cars. When it comes to automobiles, Sparkle roll is a record holder for having sold 223 Rolls-Royce and 253 Bentleys last year from its Beijing dealership. This is more than any other dealership has ever sold in the world which is pretty impressive.
This also showcases China’s growing interest in luxury products. On September 30th, the statistics and increase in revenue was looking good for the dealership. The company made a profit of 142 million Hong Kong dollars, an obvious increase from the 82 million dollars of the previous year. The company claimed that sales were particularly strong and that it constituted 93% of the revenue made.
Chairman of the dealership, Ivan Tong recently spoke with The Wall Street Journal’s Jason Chow about China’s growing thirst for luxury. Mr. Tong spoke to WSJ about the buyers he caters to and said how they have a diversified portfolio of clientele some of whom are industrialists and others who are into mining, real estate, government, financial services, etc. Tong also stated how the rich his company supplies to in China is a lot younger than the rich in the west. As his company deals mainly in sports cars, the audience he caters too are most definitely younger than others. This is something that helps up his sales. These rich buyers in China are ready to buy cars for millions, without hesitating. The average price for all brands is 5 million to 6 million yuan, excluding value-added tax, which is paid by the car owners.
Another major difference between the rich buyers in China and that in the west other than age is their lifestyle choices which also up their need for such high end goods. Even though the Chinese market for luxury goods is booming, the company still seeks quicker penetration into the marker. After sale services is another obstacle that they much tend to and perfect.
Other than cars, the dealership also deals , jewelry and wine. When it comes to retail goods like jewelry and watches the company is known to distribute 3 to 4 brands which is pooled together and sold in a shopping mall of sorts. The company owns one such shopping mall, namely Sparkle Roll Luxury World which was launched in February in Beijing.
In the case of wines, the company distributes authentic and exclusive wine directly from Bordeaux, France. They also own a private label called Ex Chateau and thus cater to other needs of the rich Chinese buyers. The Sparkle Roll Group Ltd would like to expand their non-auto business as much as the auto business.
Recently, Morgan Stanley Private Equity purchased a $42 million stake in their company. This has helped enhance the company’s business and also endorse its products to an extent. This definitely showcases how even luxury brand marketing is becoming more and more popular these days.
The most important question that we can ask at this point is that can the Chinese luxury market sustain this growth or are we witnessing a bubble? Mr. Tong dismisses this question and says that the rich are spending only part of their wealth on enjoying life after 10 to 15 years of hard work. Mainland China people have accumulated a lot of wealth over time and hence there’s nothing to worry about. All we can do for now is wait and see whether Tong is proved right and that the Chinese can stand the test of time.