China is becoming home to the biggest number of millionaires in the world and their taste for über-luxuries is expected to save the luxury industry from the Western economy’s downfall and plummeting dollar. That is where Sparkle Roll has the top hand in the People’s Republic of China (PRC) as an exclusive distributor and luxury brand manager who knows exactly how to seduce the increasing number of hight net-worth Chinese. With a portfolio of brands including the best of automobiles, luxury time-pieces, jewelry and fine wines the company has built a strong customer base. Sparkle Roll Chairman Ivan Tong said “we expect mainland China to represent half of global luxury-goods growth over the next 10 years” and the company is already well set on its course with its most recent half-year revenue nearly tripling to 1.3 bln HK$ and 90% of earnings deriving from its three super luxury car brands Lamborghini, Rolls-Royce and Bentley.
“China’s millionaires are becoming increasingly sophisticated in the way they spend their money, and at a remarkable pace. According the Wealth Report released in 2010 by Hurun Report: There are 875,000 millionaires in China, a rise of 6.1% on last year; Beijing is home to more of China’s rich than anywhere else, with 151,000 millionaires. Guangdong occupies 2nd position, and Shanghai is 3rd.” Next Insight
Last year, Sparkle Roll set their own world record with their Beijing dealership selling the biggest number of Bentley and Rolls-Royce. But the board wants to diversify its earnings mix a little more, hoping to achieve an 80% auto – 20% non-auto in order to be less dependent of the automobile market. Their strategy has the approval of Morgan Stanley who’s private equity arm purchased a $42 million stake in Sparkle Roll last September. The endorsement will also enable many synergies and create new opportunities for the firm, from a larger pool of shareholders to a global network of affiliated partners.
Beijing is where they earn most of their revenue, but the company is already branching out to second and third-tier cities in the PRC. “Mainland China’s per-capita disposable income will grow 11% annually in the next 5 years” (Euromonitor) accompanied by rapid urbanization and an appetite for indulgence. Sparkle Roll has an advantage over foreign multinationals who are aggressively expanding in the PRC in the conquest of China’s newly wealthy middle class. The firm has already gained the trust of its clientele and perfectly understand Chinese mentality, both of which can sometimes be a shortcoming for its Western competitors. Additionally:
“Sparkle Roll differs from regular luxury brand dealers in various ways, including: Database information on 16,000 millionaires in China to ease business engagement; Diversified product line (including automobiles, watches, jewelry, and red wine) not limited to selling a single luxury item which prompts the likelihood of adopting cross-selling marketing strategy; Capitalizes on extensive business connections to negotiate distributorship deals of world-wide top-tier luxury brands; A strong sales team familiar with the requirements and lifestyles of ultra-wealthy customers, and: The status of being a listed company in Hong Kong that gives confidence to our foreign brand owners regarding our financial transparency and corporate management.” Next Insight
Sparkle Roll can teach a lot to foreign luxury marketers about the taste and habits of Chinese consumers. On average the luxury customers in China are younger with the average sports car buyer in his 30s, who can spend $1.5-$2.3 million without thinking about it twice. They have acquired their wealth recently and very quickly, and contrary to their European counterparts they make luxury a lifestyle and want to show it off. They take interest in the brands they are purchasing and are looking for value in the form of history and heritage. But on top of that they are expecting to be treated as the elite and to get service above average:
“Also important is the shopping experience they receive and the attached implication. It is not enough to be rich. Being a VIP and being witnessed shopping at an uptown luxury shop is just as valuable and being recognized by the sales staff in luxury stores is especially appreciated.” Next Insight
Right now Sparkle Roll mostly brings foreign luxury brands to China, but they are venturing towards development as well, starting with their own wine and shopping mall. “Ex Chateau“, their private label is produced in Bordeaux and is exclusively available at Sparkle World Luxury World in Beijing, their shopping mall. There, they created the perfect space to showcase their brands and even rent retail space to other high-end labels like Burberry attracting more consumers. Strategically, having their own space means more control over the shopping experience and the brand images. In the long-term, I think that this new expertise can also turn into new Chinese brand developments and a chain of luxury shopping malls or lifestyle complexes. Some industry observers still remain cautious about the Chinese market wondering if it has real long-term potential or if it just a luxury bubble and that the new PRC millionaires’ lifestyle will eventually spend-itself out. Chairman Tong tells naysayers not to worry, as the market has yet to show its full potential.
“I don’t think there’s a bubble. Mainland Chinese people have accumulated so much wealth. These rich people are spending only a small portion of their wealth on enjoying life after working so hard for 10 to 15 years.” Wall Street Journal
For the interviews of Chairman Ivan Tong quoted above:
Next Insight: SPARKLE ROLL Making Fortune From China’s Millionaires
Wall Street Journal: Supplying Luxury to Wealthy Chinese
Sparkle Roll’s corporate website: www.hk970.com
Sparkle Roll’s brand portfolio
Watches: Richard Mille, DeWitt, Parmigiani and deLaCour BiTourbillon
Jewelry: Boucheron and Federico Buccellati
Wines: Duclot Export, Maison Joanne Bordeaux, Ulysse Cazabbonnie,
Compagnie Medocaine des Grands Crus, Domaine D’Eugenie
Automobile: Lamborghini, Rolls-Royce and Bentley