Ged Carroll

Category: luxury | 奢華 | 사치 | 贅沢

Over the space of 20 years, luxury changed enormously. The Japanese had been a set of new consumers for luxury, but in terms of numbers they hadn’t eclipsed the US as the biggest market for luxury.

China’s ascent into the WTO (World Trade Organisation) made a lot of business people and politicians a lot richer. China challenged the US in terms of luxury market size. On their rise, Chinese consumers changed a lot in their sophistication as they educated themselves on luxury consumption.

These new consumers picked up new traits such as wine drinking. This also meant that luxury goods became new asset classes as Chinese money looked to acquire only the best. Chinese culture in turn impacted luxury design. Chinese new year became more important than Christmas.

Then there was the second generation money. Young rather than old consumers. Consumers who were looking for something less formal, either because they didn’t wear anything but streetwear or they worked in the creative classes rather than the traditional professions and high finance.

The industry had traditionally avoided rap artists and R&B singers, now Jay Z and Beyonce are the face of Tiffanys and Fendi had collaborated with Rihanna.

They no longer wanted to have to wear a jacket and tie to have afternoon tea at the Mandarin. They took an eclectic look more attuned to the Buffalo Collective than Vogue Italia.

You had hybridisation with the street to create a new category of luxe streetwear in a way that also owes a debt to football casual terrace wear and the pain.

Now you have Zegna badge engineering approach shoes from alpine brand La Sportiva and Prada has done a similar thing with adidas’ iconic Stan Smith tennis shoes. Balenciaga with their Speed Sock looks like a mix between Nike’s flyknit football boots and the Nike Footscape sole.

As I have written elsewhere on this blog:

Luxury has traditionally reflected status. Goods of a superior nature that the ‘wrong sort’ of people would never be able to afford. Luxury then became a symbol that you’d made it. In Asian markets, particularly China, luxury became a tool. People gifted luxury products to make relationships work better. It also signified that you are the kind of successful business person that partners could trust. You started to see factory managers with Gucci man bags and premium golfwear to signal their success. Then when the scions of these business people and figures in authority were adults, luxury has become about premium self expression.

  • Apple and Jaguar Land Rover in China

    Apple and Jaguar Land Rover blamed the Chinese economy for their recent financial results. The truth is probably more complex. What factors are affecting affecting Apple and Jaguar Land Rover that aren’t directly related to the Chinese economy?

    The reality is that Apple and Jaguar Land Rover are being buffeted by very different forces, some of which are their own making.

    Apple

    China is a unique mobile environment and in some ways it mirrors the hopes (and fears) for the internet in the late 1990s. Oracle and Sun Microsystems spent a lot of time during the dot com boom developing technologies that would allow applications to run on the web. Enterprise software sudden had a user experience that could be accessed via a web browser. Java allowed applications to be downloaded and run as needed. Netscape had a vision of the internet replicating the operating system as a layer that would run applications. Microsoft also realised this which was why they developed Internet Explorer, integrated it into Windows and killed off Netscape. The Judge Jackson trial happened and that was the start of the modern tech sector allowing Google and Apple to rise.

    Move forwards two decades and most computing is now done on mobile devices. In China, WeChat have managed to achieve what Netscape envisioned. Their app as a gateway to as many services as a consumer would need including a plethora of mini applications. It doesn’t suffer the problems that native web apps have had in terms of sluggish user experiences. In addition, WeChat has invested in a range of high-performing start-ups to built a keiretsu of businesses from cab services, e-commerce, property companies and even robotics. In the meanwhile Tencent who own WeChat have a range of consumer and business services as well.

    What this means for Apple is that many of its advantages in other markets are negated in China. The OS or even performance of a smartphone doesn’t matter that much, so long as it can run WeChat and a couple of other apps. The look and feel of the app is pretty much the same regardless of the phone OS. Continuity: where the iPhone and a Mac hand-off seamlessly to each other doesn’t matter that much if many consumers use their smartphone for all their personal computing needs.

    This has been the case for a few years now in China – but Apple haven’t found a way around it.

    As for phone industrial design – Apple lifted the game in manufacturing capability by introducing new machines and new ideas. To make the iPhone 5, Apple helped its suppliers buy thousands of CNC machines. This grew the manufacturers capability to supply and the amount of pre-owned machines that eventually came on the marketplace. It meant that other manufacturers have managed to make much better phone designs much faster.

    That meant Chinese consumers can buy phones that are indistinguishable from an iPhone if you ignore the logo and function the same because of China’s app eco-system. Again this has been the same for a few years and has accelerated due to the nature of the dominant smartphone form factor. The second iteration of the iPhone X form factor is what really changed things. The phones were different to what has come before, but they weren’t demonstrably better. They were also more expensive.

    In the mean time Huawei and others have continued to make progress, particularly in product design and camera technology – the two areas where Apple led year-on-year. Huawei devices can be expensive for what they are, but they gave domestic manufacturers ‘brand permission’ in the eyes of many Chinese consumers to be as good as the foreigners.

    This wasn’t helped by Samsung’s missteps in the Chinese market that started with the global recall of the Samsung Galaxy Note7 battery recall. Samsung hasn’t managed to make that gap back up and seems to make marketing missteps regularly such as its recent tie-in with the ‘fake’ Supreme brand holder China. If you’re a Chinese consumer the additional value or status that you used to see in foreign handset brands is now diminished. This seems to be a wider theme as domestic brands are also making similar gains in market share compared to foreign FMCG brands. Although there are also exceptions like baby formula.

    Domestic brands have done a good job marketing themselves. BBK in particular are very interesting. Whilst Huawei makes lots of noise and bluster at how big they are, BBK creeps up. It has a number of brands in China and abroad OnePlus, Oppo, Vivo and RealMe going after particular segments. The brands are focused but run separately like companies in their own right. Apple’s marketing riffs on its global marketing (though it did a great Chinese New Year themed ad last year). This reinforces the perceived common view that foreign businesses are full of hubris and don’t sufficiently localise for China. Apple’s recent pricing strategy in a market where this is so little to show in value provided looks like the epitome of hubris.

    180120 - China smartphone market

    Finally, there has been a massive amount of consolidation of brands in the China smartphone market over the past four years. That provides for scale in terms of logistics, supply chain, design, component sourcing and marketing.

    Jaguar Land Rover

    If we move to the automotive sector and look at Jaguar Land Rover – their problems in China look self inflicted. China’s car market has declined for the first time in 20 years. But it seems to have mostly affected brands like Hyundai rather than prestige brands like Mercedes Benz or BMW. The reasons why aren’t immediately apparent. Yes diesel cars are less popular, but BMW, Audi and Mercedes make diesel cars.

    Jaguar Land Rover aren’t the only foreign brand suffering: Toyota has had problems in China since the last round of strong anti-Japanese sentiment exploded in 2012.

    More information

    Why Does WeChat Block Competitors, While Facebook Doesn’t? | Walk The Chat

    Apple’s China Problem | Stratechery

    Samsung recalls Galaxy Note 7 worldwide due to exploding battery fears | The Verge

    Samsung angers hypebeasts by partnering with fake Supreme brand in China | The Verge

    Fake News: Samsung China’s Deal With Supreme “Knock-off” Spurs Drama | Jing Daily

    Chinese car sales fall for first time in more than 20 years | World news | The Guardian

  • ICYMI | 당신이 그것을 놓친 경우

    Ogilvy consulting – the digital transformation arm of ad agency Ogilvy put together their annual trends presentation, which is worth going through. Ogilvy Consulting came out of Social@Ogilvy, Ogilvy Red and OgilvyOneMore related content here.

    About Placement asset customization on Facebook, Instagram and Audience Network | Facebook Ads Help Center – via James Whatley

    Evaluating the GCHQ Exceptional Access Proposal – Lawfare
    – great piece by Bruce Schneier and dangerous ideas. Once it can be done, it won’t be just the good guys that will be demanding it

    Jury awards T-Mobile $4.8M in trade-secrets case against Huawei | The Seattle Times – this has been going for years

    Navigating luxury in China: advice from the front line | Campaign Asia – 2018 was an interesting year for brands in China. It was the year of the WeChat pop-up mini program, and also the co-branded limited edition KOL collection. Standouts included collaborations between Mr Bags (the pseudonym of fashion blogger Tao Liang) with Tod’s—a collection that sold out in seven minutes—and Longchamp, for whom Liang made RMB 5 million [US$738,000] in two hours; and top KOL Fiona Xu’s collaboration with Roger & Gallet, which saw 500 limited edition pieces sell out online in minutes.

    Transformation | PMI – Philip Morris International – interesting regulatory push Philip Morris is making around smoke-free cigarettes

    Swiss Watchmakers Brace for Slowing Chinese Demand | BoF – they are are remarkably more resilient than I was expecting

    WSJ City | Poland tries to balance reliance on Huawei with spy fallout – just wait until they get into the water, electricity and railways….

    CES 2019: A Show Report – Learning By Shipping – Sit back and think for a minute that it actually got easier to turn off your lights in New York by tapping a button on smartphone and sending the off command into outer-fricking-space and back through a datacenter in Idaho than to simply send 4 bytes worth of infrared 12 feet across the room.

  • Vein verification + more things

    Hackers Make a Fake Hand to Beat Vein Verification | Motherboard – another biometric standard weakens. The big question is the cost of the hand versus the benefit gained fooling vein verification. I am quite impressed by the vein verification hack. More on biometric authentication here.

    9 Chinese Fashion Labels to Watch in 2019 | RADII Media – there are also legion of domestic streetwear brands to keep an eye on due to the popularity of hip-hop culture in China

    Apple’s “Color Flood”: like Picasso said | Ken Segall – interesting analysis on the influences on Apple’s iPhone X/XR/XS advertising. All I can say is thank goodness Qualcomm aren’t in the ad business or Apple would be screwed

    Can Luxury Brands Tap Into China’s ‘Virtual Avatar’ Fever? | Jing Daily – reminds me of the Adidas promotion Yahoo! did as a tie into to the 2006 World Cup in Germany. Yahoo! was a FIFA sponsor (for online sports content, part of the bigger Terry Semel – ‘lets build a media company’ ethos along with ‘Kevin Sites in The Hot Zone’ – a proto-Vice TV documentary series. Often ideas have to come around a number of times before they have their day…

    Geoffrey Hinton and Demis Hassabis: AGI is nowhere close to being a reality | VentureBeat – general AI is nowhere near reality, but the amount of people who talk as if it is are legion

    Chinese regime ‘intimidates critics in intellectual war against Britain’ | News | The Times – you can feel a Cold War brewing – the key difference in Chinese and western influence operations is that they lack subtlety and go harder. Which makes sense when they are used to getting their way at home

    China restarts video game approvals after months-long freeze | Reuters – what’s more interesting is the degree of flexing going on by the Chinese government against Tencent. No Tencent games were in the batch of 80 approved titles

    Japan’s Prisons Are a Haven for Elderly Women – Bloomberg – prisons are taking up the slack of community care

    QR Codes are dead — long live Bluetooth beacons! – YNAP Tech – Medium – not convinced:

    • QRcodes are now supposed in the core OS of iOS
    • Support and familiarity in Asian apps (WeChat, LINE etc) and even the hand off between WhatsApp mobile and desktop clients
    • Bluetooth beacons size and broadcasting nature vs print materials and European privacy regulations

  • Smooth jazz & things that made last week

    I tried to keep the crazy in the week under control listening to smooth jazz. However the week has been just as insane as last week. Huawei’s Meng Wanzhou is out on bail, but Donald Trump cast a shadow on the whole process by a saying that he was quite prepared to use her freedom as a pawn in his trade dispute with China. Telling China that the rule of law is malleable isn’t a good move from a strategic point-of-view. Suddenly everything is negotiable, which incentivises bad actor behaviour. 

    As for Brexit, the words of Danny Dyer still ring true:

    Who knows about Brexit? No one has got a fucking clue what Brexit is… You watch Question Time, it’s comedy. No one knows what it is. It’s like this mad riddle…

    Danny Dyer, Good Morning Britain – ITV (June 28, 2018)

    How smooth jazz originated and took off

    How habit-forming products are made by Nir Eyal. This is all pretty dark and illustrates how modern apps are and web services are made habit forming.

    There are a series of Christmas themed adverts at the moment that riff on Christmas animation The Snowman by Barbour and Irn Bru’s original and belated sequel ad.

    Uber has got into the Christmas spirit by putting a limited amount of toy themed cars out on to the streets of Paris.

    Matt Farah’s Watch and Listen podcasts is one of the better YouTube channels out there. Their interview with Jean-Marc Pontrué, the CEO of Panerai is a level of insight that you wouldn’t normally have. One key observation is that Richemont has turned SIHH into a fan event for their brands as other houses have withdrawn. It is part of a wider more engaged attitude that Panerai takes with its fans compared to the likes of Rolex. I think that its a smart move as luxury is still about experiences.

  • Aston Martin classics + more things

    Aston Martin Will Make Old Cars Electric So They Don’t Get Banned From Cities – Slashdot – surprised more companies like Porsche aren’t doing this. This upgrade process reminded me of the service that Bristol Cars have provided for years. Like Aston Martin has planned, Bristol Cars has steadily upgraded cars with better brakes, handling, electronic fuel injection and more emissions friendly engines. Their purchase by Fraser Nash is now looking at an Aston Martin like electric upgrade service. More luxury related content here.

    Exclusive: Amazon’s Alexa begins crowdsourcing answers to common quest – reminds me of the original thinking behind Yahoo! Knowledge Search (what begat Yahoo! Answers) when I first heard Jeff Weiner articulate it

    Mark Ritson: The story of digital media disruption has run its course – Marketing Week – It’s hard to get emotional or feel any of the romance of news media from a home page, but the paper edition carries with it the great cultural power of journalism. Print editions will become the ‘couture’ offering of the news brands – loss-making but important assets for building and retaining authority and influence over the market

    WSJ City | Britain’s stock link to China falls flat – many larger foreign institutions can already access mainland-listed Chinese stocks via trading accounts in Hong Kong. – Not terribly surprising. The big problem is how much hope had been pinned on it from a Brexit point of view

    Unilever’s rules for influencer marketing | WARC – that its influencer efforts focus not just on a product, but on attempts to covey a brand’s purpose – as shown by Dove, the personal care line, focusing on “real beauty”. “We are using influencer marketing for Dove across the whole spectrum. In some cases, we use influencers to talk about the features and benefits of the products,” Di Como said. “But, more and more, we are using them to talk about the idea to buy into – to talk about the brand value, of why the brand exists, and the purpose of the brand.” “There is an obsession that the only KPIs out there are ‘reach’ or ‘number of followers’,” said Di Como. “We need to talk about what the real impact is on brand equity – the real impact on the values of the brand.” – which is interesting as I heard that there were efforts to move away from brand tracking surveys and instead interpolate the equivalent data from social listening

    Apple Offers New iPhone Promo Deals, Trade-Ins to Boost Sales – Bloomberg – I think the market in general for smartphones is over-baked

    Bose Global Press Room – Bose Announces Frames — A Revolutionary New Wearable – this looks interesting, if they get it to work and you have enough connectivity to the cloud

    46 insurgent brands shake up China’s FMCG market – Kantar – the redefinition of consumers, merchandise and stores known collectively as“New Retail.” China’s consumers have growing expectations for tailored and specific offerings, which creates many niche opportunities for insurgent brands to capture. The traditional scale advantages of incumbents, such as large sales forces and large retail shelf space, have in some ways turned into disadvantages by digital disruption. For example, the e-commerce channel can reach millions of consumers without a single sales rep, and online platform advertising can reach millions of consumers with much lower budgets than traditional brands typically spend

    Volvo & Ericsson – Scroogled? – Radio Free Mobile – interesting article looking at Google’s move into automotive systems