HONG KONG — Consumers with buying power and expensive tastes are fueling a boom in the luxury goods industry across Asia — shoppers like Chen Zhuhang and Lin Xing, who were out on a spending spree along Canton Road here this week.
“My favorite brands are Prada and Gucci,” said Mr. Lin, who was visiting from Fujian province, on the southeastern coast of China. “Today, I bought a pair of shoes and a bag for myself from Gucci.”
His friend, Mr. Chen, was carrying a Gucci shopping bag containing a light brown leather purse that he had bought for his girlfriend for about 9,000 Hong Kong dollars ($1,155).
Shoppers like these are the reason that Prada, the Italian luxury fashion house, chose to hold its initial stock market listing in Hong Kong, where shares began trading to much fanfare on Friday.
With much of the West struggling to revive weak economies, Paris, Milan, London and New York are no longer the dominant centers of global luxury spending. Increasingly, the activity is shifting eastward, to booming cities like Seoul, Shanghai, Mumbai and Hong Kong, whose glitzy malls rival Bond Street, the Champs Élysées or Fifth Avenue in terms of high-end shopping opportunities.
“We are positive that the Greater China region is going to be one of the most interesting markets for the future of the luxury industry,” Patrizio Bertelli, Prada’s chief executive, said Friday at a ceremony to celebrate the company’s stock market debut. “This is a very important moment for our company.”
Prada’s decision to list in Hong Kong, rather than in Milan, where it has been based for nearly 100 years, signals its desire to tap into a deep-pocketed group of Asian investors — both funds and wealthy individuals — who feel more comfortable putting their money into stocks listed here.
But it also reflects a desire to be front and center in a region rapidly gaining significance for the industry as a whole. For some luxury and consumer goods companies, the Asian market now contributes a third or even half of global sales and earnings, a sharp increase from a decade or two ago.
Many brands have responded with a rapid expansion of their store networks, turning what were once economic and fashion backwaters in China and Southeast Asia into high-end shopping havens.
LVMH Moët Hennessy Louis Vuitton, the biggest luxury group in the world, is a prime example. Last year, it generated about 6.9 billion euros ($9.7 billion) in revenue in Asia, where it operates more than 800 stores. That compares with 4.6 billion euros in revenue, and 570 stores, in the United States.
Ermenegildo Zegna, the Italian men’s wear company, which opened its first shop in Beijing in 1991, is also increasing its presence. It now has more than 70 stores in Greater China — mainland China, Hong Kong and Taiwan — making it Zegna’s biggest international market.
Prada has lagged some other companies in terms of expansion in mainland China. But about half of its 319 outlets around the world are in the Asia-Pacific region, more than a dozen of them in Hong Kong.
Prada, whose handbags and Miu Miu dresses can cost more than $1,000, plans to open dozens more stores, using some of the proceeds from the $2.1 billion it raised in its initial stock offering.
Market nervousness about the debt crisis in Greece and the prospect for global economic growth diminished Prada’s debut on Friday, the same way it did for the luggage maker Samsonite earlier this month.
Prada shares edged up 0.3 percent, closing at 39.6 Hong Kong dollars ($5.08) on the first day of trading. The modest rise contrasts with the large jumps in share prices of Internet companies like LinkedIn that recently have listed in New York.
Analysts say the current market uncertainty is unlikely to deter other Western luxury and consumer goods companies from following in the footsteps of Prada, Samsonite and the French cosmetics maker L’Occitane, all of which sought listings in Hong Kong.
It will be a handful in the beginning, rather than a stampede, said Pradeep Rao, head of Asia-Pacific consumer and health care investment banking at Citigroup. “But long term, there is definitely an appetite from investors here for such companies,” he said.
The biggest driver of luxury buying is the increasing affluence of emerging Asian economies, which has catapulted millions of people into the ranks of the wealthy. Traditional luxury markets like the United States, Japan and Europe remain important. But these regions are mature and, for the most part, still recovering only haltingly from the global financial crisis.
For example, a study by Merrill Lynch and Capgemini, published Thursday, estimated that the number of millionaires (in United States dollars) in North America and Europe remained more or less unchanged in recent years, while the number in the Asia-Pacific region had increased tremendously.
With growth rates like these — and despite recent worries that China’s economic prospects are not as rosy as they once seemed — Asia’s population of millionaires is likely to top that in North America “very soon,” said Wilson So, a managing director of Merrill Lynch wealth management.
The expansion in the 170-billion-euro-a-year luxury goods market has closely mirrored this trend. In 2008, Europe accounted for 38 percent of the global luxury market, according to Bain & Company. That figure dipped slightly to about 37 percent last year.
During the same period, Asia, including Japan, rose to 28 percent in 2010 from 25 percent in 2008.
The consulting firm McKinsey & Company estimates that China alone could account for a fifth of the global luxury market by 2015.
“China is where the main battleground for the global luxury industry is,” said Yuval Atsmon, a partner at McKinsey who follows the luxury market. “The center of gravity is shifting.”
Prada, for one, seems to be on the uptake, judging by shoppers like Kevin Chen. Visiting Hong Kong last week, Mr. Chen bought a Prada handbag as a wedding gift for a friend.
“I’ve done this many, many times now,” he said.
“My friends in Shenzhen said they would like a Prada bag or maybe some shoes as a wedding gift, so I picked a bag for them.”
1. What can explain why Koreans, who were rather poor just one generation ago now have very expensive tastes in clothes and luxury goods? What has caused them to change so much so fast? Tell why you think so.
2.It has been said that Koreans, like the Chinese, like to show off how much money they have by buiing expensive things. Do you agree with that? If so, why do they think like that?What is the historical bachground for that kind of thinking?
3.The accumulation of credit card debt has reached a crisis level in Korea in recent years. Why have Koreeans, who used to prefer to save money rather than spend it, become so dependent on credit cards? Why have so many Koreans allowed themselves to fall into debt? Tell why you thnink so
4. What is your own experience with credit card? Do you often charge things, or do you prefer to buy things with cash? Tell why you thing so.
