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Fashion Market in China | PPT
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class="SearchForm_submit__U8kPR" id="search-submit" data-cy="search-submit"><span class="Icon_root__AjZyv" style="--size:24px"><span class="Icon_icon__4zzsG" style="mask-image:url(https://public.slidesharecdn.com/_next/static/media/search.844a289d.svg);background-color:currentColor"></span><span class="sr-only">Submit Search</span></span></button></form></div><div class="HeaderActions_root__11_ai undefined"></div></header><div class="SlideshowScreen_root__k9j1_ SlideshowScreen_withKeyMoments__RbHLe"><!--$--><div class="metadata Metadata_root__oCstk" data-cy="metadata"><h1 class="Heading_heading__3MAvZ Heading_h1__3k7S2 title Title_root__svkHQ">Fashion Market in China </h1><div class="stats Stats_root__p_BoZ"><div class="Stats_leftContent__588PR"><time dateTime="2015-11-17 01:06:13 UTC"><span class="skeleton Skeleton_root__U4QqL Skeleton_rounded__BLBq2" style="width:75px;height:24px"></span></time><span class="Text_root__is73U Text_medium__rk8Tn text" style="-webkit-line-clamp:0">•</span></div><div class="Stats_rightContent__8d0AF"><span class="Text_root__is73U Text_weight-strong__yEO2S Text_secondary__EPWj0 Text_medium__rk8Tn Likes_root__WVQ1_ text" style="-webkit-line-clamp:0" tabindex="0">76 likes</span><span class="Text_root__is73U Text_medium__rk8Tn text" style="-webkit-line-clamp:0">•</span><span class="Text_root__is73U Text_weight-strong__yEO2S Text_secondary__EPWj0 Text_medium__rk8Tn Likes_root__WVQ1_ text" style="-webkit-line-clamp:0" tabindex="0">41,629<!-- --> <!-- -->views</span></div></div><div class="author Author_root___6Bx5"><a data-cy="author-link" class="Author_link___lVxw ellipsis" title="Sami Muneer" href="https://www.slideshare.net/samimuneer"><div class="Avatar_root__GNWHY" style="width:24px;height:24px;line-height:24px"><img class="Avatar_image__Bbtll" src="https://cdn.slidesharecdn.com/profile-photo-samimuneer-48x48.jpg?cb=1639691580" alt="Sami Muneer" loading="lazy" decoding="sync"/></div><span>Sami Muneer</span></a></div><div class="description Description_root__kt4uq Description_clamped__PaV_1"><div class="Description_wrapper__hYE9_" data-cy="document-description"><p>This research analyzes the retail and fashion market in China, the growth and needs of the luxury segment, and the implications for both fashion brands and online players endeavoring to enter the market<button type="button" class="Button_root__i1yp0 Button_primary__K25Gq Button_text__ZT_3O Button_small__sqsEx Description_less__BvWbY Description_hidden__a9QZJ" data-testid="button" aria-label="Read less"><span>Read less</span></button></p></div><button type="button" class="Button_root__i1yp0 Button_primary__K25Gq Button_text__ZT_3O Button_small__sqsEx Description_more__ChrRK" data-testid="button" aria-label="Read more" data-cy="read-more-button"><span>Read more</span></button></div><div class="actions Actions_root__00yIC"><button type="button" class="Button_root__i1yp0 Button_secondary__hHiHI Button_text__ZT_3O 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class="Text_root__is73U Text_secondary__EPWj0 Text_xsmall__vYp9p text" style="-webkit-line-clamp:0">Downloaded 138 times</span></div></div><div class="MetadataToolbar_underline__QQn0C"></div></div></div><!--/$--><!--$--><!--/$--><div class="player Player_root__L1AmF"><div id="new-player" class="vertical-player VerticalPlayer_root__K8_YS" data-slideshow-id="55184657"><div><div id="slide1" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-0" alt="INTERNAL Fashion Market in China Sami Muneer, SAP " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="eager" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-1-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-1-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-1-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-1-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide2" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-1" alt="© SAP AG 2010. All rights reserved. / Page 2 China Luxury Market • Growth, Demographics, Archetypes The Retail Challenge in China The Role of the Internet in Luxury Shopping in China Ecommerce Players So What? " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-2-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-2-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-2-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-2-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide3" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-2" alt="© SAP AG 2010. All rights reserved. / Page 3 Growth of the China Luxury Market " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-3-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-3-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-3-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-3-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide4" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-3" alt="© SAP AG 2010. All rights reserved. / Page 4 Luxury Segment* is Growing Driven by 3 Factors 1. Wealth Increase Within largest cities Rapid urbanization in new areas 2. First-hand Experience Overseas travel Local stores 3. Access to Information Internet: social forums, editorials Source: McKinsey, 2011 World Luxury Association Blue Book 15% online purchase in 2011 ($2.5B) " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-4-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-4-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-4-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-4-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide5" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-4" alt="© SAP AG 2010. All rights reserved. / Page 5 Driven by Wealthy and Upper Middle Class Spending is Concentrated in Top 5M Households 80 B 50% 2010 2015 > 1 MM (700K households; 20% growth) 180 B Luxury Goods Consumption by Income Class* (RMB, US$ = 6.3RMB) Ø 200K- 1MM (4MM households; 15% growth) Ø 100K-200K (13 MM household; fastest growth) 12% 33% 40% 22% 26% Source: McKinsey, BCG *% don’t add to 100% due to other small segments Very Wealthy Own assets greater than 10MM RMB Well-traveled Wealthy Growing number residents in lower-tier cities Upper Middle Class Stretch budgets for occasional purchase " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-5-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-5-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-5-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-5-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide6" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-5" alt="© SAP AG 2010. All rights reserved. / Page 6 But the Very Wealthy Travel and Spend There 60% of Luxury Spend is Overseas Luxury Goods Spend Bln RMB, 2010 (% CAGR) 40% China (27% CAGR) 35% HK & Macau (45% CAGR) 25% Overseas (38% CAGR) Drivers for Overseas Spend • Higher prices on mainland • Increased overseas travel by the wealthy • RMB appreciation 212 Bln Total Source: McKinsey, 2011 World Luxury Association Blue Book, Bain Survey of 2000 consumers " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-6-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-6-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-6-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-6-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide7" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-6" alt="© SAP AG 2010. All rights reserved. / Page 7 Most Local Spend is on Accessories, Cosmetics 70% of Mainland Purchase Source: Bain & Co. " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-7-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-7-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-7-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-7-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide8" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-7" alt="© SAP AG 2010. All rights reserved. / Page 8 Growth of the China Luxury Market 1. Market is growing 2. Most shopping by the wealthy is overseas 3. 70% of luxury shopping on mainland is accessories, cosmetics " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-8-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-8-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-8-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-8-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide9" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-8" alt="© SAP AG 2010. All rights reserved. / Page 9 Demographics and Archetypes " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-9-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-9-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-9-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-9-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide10" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-9" alt="© SAP AG 2010. All rights reserved. / Page 10 China’s Luxury Consumer is Young Almost Half under 35 73% 50% 60% 55% China: % of luxury shoppers under 45 (and under 35) US: % of luxury shoppers under 45 (and under 35) Under 35 Trading Up: 35% traded up to more expensive brands last 2 years Seeking New Experiences: Spending on luxury services (spas, wellness, etc.) growing faster than that on luxury goods " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-10-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-10-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-10-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-10-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide11" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-10" alt="© SAP AG 2010. All rights reserved. / Page 11 2 Categories of the Young Population Impulsive “Yu Guang Zu” and Tech Savvy China Population Structure in 2010 400MM 25% Ages 15-24 35% Ages 25-34 60% of consumers buying foreign brand perfumes are under 34 Source: Accenture " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-11-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-11-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-11-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-11-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide12" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-11" alt="© SAP AG 2010. All rights reserved. / Page 12 Growth of Mid and High-End Brands Influence of The Post-1980’s and Post-1990s Post 1980s Born after “Cultural Revolution” Good jobs Sense of optimism Post 1990s Fast growth Fashion and Tech- Savvy More outdoor activities requiring “right” outfits " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-12-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-12-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-12-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-12-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide13" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-12" alt="© SAP AG 2010. All rights reserved. / Page 13 Emergence of 3 New Archetypes Differing Emphasis on Luxury % luxury households Source: McKinsey, BCG 40% 22% % luxury consumption 51% 45% 3% 1% 10% 65% 5% 20% Role Models: Shape fashion trends Fanatics: Strong influence on consumers; online influence Core Buyers: Spends 12-20% of income on luxury goods (US$ 3K – 9K annually) Middle Class Aspirants: Infrequent buyers, cautious spenders Household Distribution and Luxury Goods Consumption by Archetype Emergence of 3 New Archetypes Differing Emphasis on Luxury " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-13-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-13-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-13-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-13-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide14" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-13" alt="© SAP AG 2010. All rights reserved. / Page 14 Role Models (20% Spend) Rich, Young and Fashionable Socio-Income Profile: Corporate executives or self-employed Lives in Shanghai and Beijing Studied or worked overseas Buying Behavior: 10% of disposable income on luxury Most buying for at least 5 years Spontaneous Why they Buy: Feel unique rather than display wealth To indulge themselves What they Care About: Good service in stores is important Prefers to shop outside China " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-14-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-14-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-14-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-14-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide15" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-14" alt="© SAP AG 2010. All rights reserved. / Page 15 Fashion Fanatics (5% Spend) Not Rich, But Researches and Spends More Socio-Income Profile: Earns $15K – 30K Incomes rising steadily Buying Behavior: 40% of disposable income on luxury Spends most free time on fashion trends Will buy on credit to be on cutting edge Why they Buy: Social acknowledgement of purchase Strong influence on others, sharing purchases and opinions online What they Care About: Planning and research: window shopping, online, editorials, celebrities, friends Cares less about store service " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-15-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-15-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-15-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-15-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide16" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-15" alt="© SAP AG 2010. All rights reserved. / Page 16 Middle Class Aspirants (10% Spend) Occasional and Cautious Shopper Socio-Income Profile: Earns $9K – 30K Mid-level position in local or multinational Lives in Tier 2 or Tier 3 cities Buying Behavior: 9% of disposable income on luxury Less knowledge & experience Considerable research (2-3 months) Why they Buy: Aspire to higher social circles; feel successful Stand out from the crowd What they Care About: Price (hence fine with local brands) " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-16-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-16-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-16-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-16-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide17" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-16" alt="© SAP AG 2010. All rights reserved. / Page 17 Top 5 Brands Account for 50% Sales Many Consumers Not Aware of Other Brands " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-17-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-17-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-17-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-17-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide18" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-17" alt="© SAP AG 2010. All rights reserved. / Page 18 Demographics and Archetypes 1. Young consumers are vital and relate to more and varied (price) brands 2. Role Models primary shop overseas 3. Fashion Fanatics should be targeted for adoption/promotion – they will attract the Aspirants " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-18-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-18-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-18-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-18-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide19" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-18" alt="© SAP AG 2010. All rights reserved. / Page 19 The Retail Challenge " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-19-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-19-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-19-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-19-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide20" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-19" alt="© SAP AG 2010. All rights reserved. / Page 20 36 Cities Constitute 75% of Luxury Market But This Will Change with Emerging Cities 75% 75% of luxury market captured by top 36 cities 25% Other 620 cities Top 36 cities Breakdown within the top 36 cities 28% 2 mega cities 32% 25 developed cities2 40% 9 large markets1 1. Chongqing, Dongguan, Foshan, Guangzhou, Hangzhou, Nanjing, Shenzen, Tianjin, Wenzhou 2. Includes cities as Xian, Taiyuan, Yantao Source: McKinsey, BCG, Reuters TODAYBUTINCOME DISTRIBUTION WILLCHANGE 0 20 40 60 80 100 120 2010 2020 Distribution of Upper Middle Class Top 100 Cities Next 300 Cities 85% 65% 10% 30% " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-20-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-20-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-20-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-20-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide21" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-20" alt="© SAP AG 2010. All rights reserved. / Page 21 Retail Stores Need to Catch Up Particularly Difficult for Those W/ No Presence 45 20 57 38 50 8 Japan China Difference in Retail Presence between China and Japan Hermes Louis Vuitton Chanel ‘00s 20 ‘00s 70 ‘000s 5 USA China Difference in Retail Presence between China and USA Benetton Zara Gap Example Brands with No Presence " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-21-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-21-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-21-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-21-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide22" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-21" alt="© SAP AG 2010. All rights reserved. / Page 22 But Brands Need to Strike a Balance Between Growth and Exclusive Experience Source: Bain & Co. " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-22-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-22-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-22-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-22-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide23" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-22" alt="© SAP AG 2010. All rights reserved. / Page 23 The Brand Experience Matters The Brands Differentiate on This Factor Commercial Premium Market Upper Premium Market Designer Haute Couture Marco Polo Ralph Lauren, Boss, Seven Akris, Burberry Armani, Gucci, Prada Dior, Gaultier Luxury Market Source: h&p " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-23-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-23-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-23-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-23-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide24" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-23" alt="© SAP AG 2010. All rights reserved. / Page 24 Difference in Exclusivity and Presentation Such Focus is Slowing Store Growth in China " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-24-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-24-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-24-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-24-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide25" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-24" alt="© SAP AG 2010. All rights reserved. / Page 25 Exceptional Service In-Store Matters Primary Driver for Buying Decision in China 44% In-Store 14% Word-of-Mouth 21% Internet 13% Traditional Media 7% Direct Marketing Activities In-Store • Evaluated product • Spoke to salesperson • Window shopping • Read catalog Relative Importance in Buying Decision for Luxury Apparel Source: McKinsey, BCG " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-25-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-25-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-25-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-25-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide26" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-25" alt="© SAP AG 2010. All rights reserved. / Page 26 Need to Position to Emerging Emotional States in China And be Perceived as Such Pursue Success and Status Professional Achievement, Social Status 60-70% of consumers relate More pronounced in high-tier cities Balanced Lifestyle/ Laid-Back Spend more on leisure and fun, “enjoy life” More pronounced in lower-tier cities Be Classic (Female) or Blend In (Male) Be comfortable More males skew toward laid-back Be Trendy (Female) or Stand Out (Male) Visible and Edgy More females skew toward being expressive More in high-tier cities " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-26-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-26-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-26-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-26-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide27" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-26" alt="© SAP AG 2010. All rights reserved. / Page 27 The Retail Challenge 1. Brands need insight of consumers in emerging cities 2. Particularly difficult for many brands not yet in market (note: not haute couture) 3. Need to position and be perceived to right emotional state 4. Underscores need of influencers to shape perception " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-27-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-27-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-27-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-27-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide28" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-27" alt="© SAP AG 2010. All rights reserved. / Page 28 The Role of Internet " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-28-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-28-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-28-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-28-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide29" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-28" alt="© SAP AG 2010. All rights reserved. / Page 29 Role of Internet in Creating Awareness Unique Circumstances 21% Internet 52% Saw an ad43% Checked reviews online 10% Brand’s website • 25% of e-commerce demand for products not found in physical stores • Country size limits the coverage of physical retailers. • For many consumers, especially younger ones, first contact with a brand or type of product is online • Most shoppers start their search within Taobao (80% of 2010 volume) • Taobao.com blocks the spider of the top search engine, Baidu.com • Shoppers do not rely on search engine as in other countries • Beyond discounts • Uniqueness, convenience, fun of the discovery process Factors driving first awareness of brand online " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-29-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-29-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-29-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-29-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide30" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-29" alt="© SAP AG 2010. All rights reserved. / Page 30 BUT Frequent Online Research but Fewer will Buy Rather Buy In-Store Source: KPMG study of 1300 respondents They search often Frequency of online search for luxury brands Most will not buy online Intent of purchase 43% Will NOT buy 22% Will consider buying Better deal Easier for comparisons Less time consuming Authenticity concerns After-sales service, returns Payment security Note: online purchase higher for other items " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-30-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-30-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-30-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-30-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide31" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-30" alt="© SAP AG 2010. All rights reserved. / Page 31 Importance of Social Reviews Due to Distrust of Merchants 0 10 20 30 40 50 60 43% Read or posted reviews 20% 52% 19% Visits official brand websites US, Europe China Source: McKinsey, BCG Due to consumer wariness and distrust of merchants Importance of social reviews and “opinion leaders” • Bulletin-board services (BBS) • Social networking sites e.g. RenRen, Youku, Kaixin • 3rd party review sites on Sina • Media firms (CIC) that aggregate comments • Brand sites with BBS " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-31-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-31-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-31-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-31-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide32" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-31" alt="© SAP AG 2010. All rights reserved. / Page 32 Consumer-Generated Content Effective In Influencing Brand Choice Source: KPMG study of 1300 respondents " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-32-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-32-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-32-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-32-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide33" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-32" alt="© SAP AG 2010. All rights reserved. / Page 33 Digital Platforms Getting Crowded But Emphasis on Social Media Attributes Burberry on Kaixin Coach on Ren-Ren Lancome App on iPhone Bottega Veneta on Weibo " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-33-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-33-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-33-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-33-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide34" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-33" alt="© SAP AG 2010. All rights reserved. / Page 34 Mobile Apps in Infancy For Search and Shopping of Lifestyle Purchases Source: KPMG, AdChina 0 20 40 60 80 100 120 % consumers using mobile to search % consumers using mobile to shop 17% 5% " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-34-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-34-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-34-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-34-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide35" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-34" alt="© SAP AG 2010. All rights reserved. / Page 35 The Role of Internet 1. Chinese spend considerable time on research 2. They depend on social influencers for brand awareness, education 3. But will not necessarily purchase high-end luxury items online 4. Mobile is in its infancy for luxury shopping 5. Social app attributes are key " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-35-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-35-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-35-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-35-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide36" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-35" alt="© SAP AG 2010. All rights reserved. / Page 36 The Role of Chinese E-Commerce Players " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-36-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-36-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-36-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-36-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide37" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-36" alt="© SAP AG 2010. All rights reserved. / Page 37 Fashion Brands Differ in their Online Sites On Presentation, Vividness and Information Brands Tie r Online Shoppin g Store availabilit y Vividness Interactiv e social share/ likes Faceboo k page own online communit y Catalog (pricing info) Zoom-in Design Christian Dior 1 No Yes No Yes No No Gaultier 1 Yes No No Yes No Yes Chanel 1 No Yes No Yes No No Versace 1 No Yes Yes Yes No No Armani 2 Yes Yes Yes Yes No Yes Gucci 2 Yes Yes Yes Yes Personal Likes Yes Prada 2 Yes Yes No Yes No Yes Fendi 2 Yes Yes Yes Yes Personal Likes No Dolce & Gabbanna 2 Yes Yes Yes Yes No Yes Burberry 3 Yes Yes Yes Yes No Yes Louis Vuitton 3 Yes Yes Yes Yes No Yes Boss 3 Yes Yes Yes Yes No Yes Calvin Klein 3 Yes Yes Yes Yes No Yes Ralph Lauren 3 Yes Yes Yes Yes No Yes " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-37-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-37-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-37-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-37-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide38" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-37" alt="© SAP AG 2010. All rights reserved. / Page 38 Yet E-tailers Attract Consumers in China Brands Creating Stores on Sites as Taobao Own Site Partner Taobao Glamour Sales Penetration Description Purpose/ Operations Major brands as Armani, Bally $60Bln transactions 500k+ members Own ecommerce site, add-ons to corporate Brand site with own domain name + “Powered by Yoox” Brands establishing official sites for presentation Promotions targeting price- conscious Marketing and consumer education Yoox offers ecommerce solution; same price, products Event-driven promotions and limited inventory MONO BRAND MULTI-BRAND LEADING CHANNEL " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-38-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-38-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-38-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-38-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide39" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-38" alt="© SAP AG 2010. All rights reserved. / Page 39 The Top 2 has 40% Market Share Taobao Mall and 360Buy " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-39-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-39-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-39-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-39-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide40" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-39" alt="© SAP AG 2010. All rights reserved. / Page 40 And They Are Sticky Leading to Growth of over 30% for Leaders Other luxury segment players include: • VIP Store: 500 luxury brand partnerships • 360 Fashion: social media news, new brands, integration to social platforms " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-40-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-40-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-40-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-40-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide41" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-40" alt="© SAP AG 2010. All rights reserved. / Page 41 Examples of companies tremendously successful in China Autos Consumer Goods RetailElectronicsGlobal Internet Players Have Failed While Other Global Brands have Succeeded Internet companies struggled in China failed to failed to BUT failed to failed to " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-41-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-41-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-41-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-41-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide42" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-41" alt="© SAP AG 2010. All rights reserved. / Page 42 Different Social Networks " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-42-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-42-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-42-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-42-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide43" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-42" alt="© SAP AG 2010. All rights reserved. / Page 43 The Role of Chinese E-Commerce Players 1. Multi-label e-tailers are primary access points to consumers 2. They are sticky and growing 3. While foreign companies in other industries have succeeded in China, internet companies have failed " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-43-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-43-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-43-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-43-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide44" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-43" alt="© SAP AG 2010. All rights reserved. / Page 44 Summary SO WHAT? " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-44-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-44-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-44-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-44-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide45" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-44" alt="© SAP AG 2010. All rights reserved. / Page 45 Focus on the Entire Evaluation Process Takes 2-3 Months for Chinese Consumer TouchPoints Time Awareness Info Search Evaluation of Alternatives Price, Avail. & Purchase Post- Evaluation Mono-label Stores: Armani, Burberry High-End Retailer: Neiman Marcus E-Tailers Brand Advertising Endorsements (celebrities) Editorial Stylists Social (friends, family) Window shopping In-Store experiences Focus and Motivate Key Influencers; Sensorial-rich mediated environment " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-45-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-45-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-45-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-45-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide46" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-45" alt="© SAP AG 2010. All rights reserved. / Page 46 Examples of Growing Sites Awareness ! Decision Net-A-Porter: Comprehensive • Catalogs and shopping by designer, • What’s new, • Editorial • Many countries Asos: Engaging (1.6M fb likes) • Virtual wardrobes with tags to share, competitions • daily deals, marketplace for vintage • editorial; community reviews • inventory check from other sites, own labels • Mobile, iPad, PC " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-46-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-46-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-46-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-46-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide47" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-46" alt="© SAP AG 2010. All rights reserved. / Page 47 New Start-Ups Focused on Influencers: Stylists Boutine: New Incentive Model • Financial ncentives for “stylists” to sell items via virtual catalogs • Focused on emerging designers who post items Stylist Pick: Professional Stylists • Popular stylist consultants and handbag/shoes • Fixed price • Own label " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-47-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-47-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-47-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-47-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide48" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-47" alt="© SAP AG 2010. All rights reserved. / Page 48 Summary Target and Position to Consider Young Consumers Multi-Tier Brands Brand Education of Middle Class Tier-2 and Tier-3 Cities Engagement TEST NON- CHINESE MARKETS FIRST Social Guidance: Awareness ! Purchase Influencers as Fashion Fanatics TARGET POSITION " class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-48-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-48-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-48-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-48-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div><div><div id="slide49" class="VerticalSlide_root__jU_9r slide-item" style="aspect-ratio:720 / 540" data-cy="slide-container"><div class="VerticalSlideImage_root__64KSA"><img id="slide-image-48" alt="© 2011 SAP AG. 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" class="vertical-slide-image VerticalSlideImage_image__VtE4p" data-testid="vertical-slide-image" loading="lazy" srcSet="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-49-320.jpg 320w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-49-638.jpg 638w, https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/75/Fashion-Market-in-China-49-2048.jpg 2048w" src="https://image.slidesharecdn.com/fashionmarketinchinafinal-151117010613-lva1-app6892/85/Fashion-Market-in-China-49-320.jpg" sizes="100vw"/></div><!--$--><!--/$--></div></div></div></div></div><!--$--><div class="RelatedContent_root__29Np1"><div class="RelatedContent_wrapper__riU7l"><h2 class="Heading_heading__3MAvZ Heading_h2__f9yvs RelatedContent_title__QUhpL">More Related Content</h2><div></div><div></div><div></div></div></div><!--/$--><div class="Transcript_root__Vrf6Q"><h2 class="Transcript_title__YgAka"><span class="Icon_root__AjZyv" style="--size:24px"><span class="Icon_icon__4zzsG" style="mask-image:url(https://public.slidesharecdn.com/_next/static/media/file.5db1ba24.svg);background-color:currentColor"></span><span class="sr-only"></span></span>Fashion Market in China </h2><div><ul class="Transcript_list__faItj"><div><li>1. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#1">INTERNAL Fashion Market in </a> China Sami Muneer, SAP </li></div><div><li>2. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#2">© SAP AG </a> 2010. All rights reserved. / Page 2 China Luxury Market • Growth, Demographics, Archetypes The Retail Challenge in China The Role of the Internet in Luxury Shopping in China Ecommerce Players So What? </li></div><div><li>3. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#3">© SAP AG </a> 2010. All rights reserved. / Page 3 Growth of the China Luxury Market </li></div><div><li>4. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#4">© SAP AG </a> 2010. All rights reserved. / Page 4 Luxury Segment* is Growing Driven by 3 Factors 1. Wealth Increase Within largest cities Rapid urbanization in new areas 2. First-hand Experience Overseas travel Local stores 3. Access to Information Internet: social forums, editorials Source: McKinsey, 2011 World Luxury Association Blue Book 15% online purchase in 2011 ($2.5B) </li></div><div><li>5. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#5">© SAP AG </a> 2010. All rights reserved. / Page 5 Driven by Wealthy and Upper Middle Class Spending is Concentrated in Top 5M Households 80 B 50% 2010 2015 > 1 MM (700K households; 20% growth) 180 B Luxury Goods Consumption by Income Class* (RMB, US$ = 6.3RMB) Ø 200K- 1MM (4MM households; 15% growth) Ø 100K-200K (13 MM household; fastest growth) 12% 33% 40% 22% 26% Source: McKinsey, BCG *% don’t add to 100% due to other small segments Very Wealthy Own assets greater than 10MM RMB Well-traveled Wealthy Growing number residents in lower-tier cities Upper Middle Class Stretch budgets for occasional purchase </li></div><div><li>6. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#6">© SAP AG </a> 2010. All rights reserved. / Page 6 But the Very Wealthy Travel and Spend There 60% of Luxury Spend is Overseas Luxury Goods Spend Bln RMB, 2010 (% CAGR) 40% China (27% CAGR) 35% HK & Macau (45% CAGR) 25% Overseas (38% CAGR) Drivers for Overseas Spend • Higher prices on mainland • Increased overseas travel by the wealthy • RMB appreciation 212 Bln Total Source: McKinsey, 2011 World Luxury Association Blue Book, Bain Survey of 2000 consumers </li></div><div><li>7. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#7">© SAP AG </a> 2010. All rights reserved. / Page 7 Most Local Spend is on Accessories, Cosmetics 70% of Mainland Purchase Source: Bain & Co. </li></div><div><li>8. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#8">© SAP AG </a> 2010. All rights reserved. / Page 8 Growth of the China Luxury Market 1. Market is growing 2. Most shopping by the wealthy is overseas 3. 70% of luxury shopping on mainland is accessories, cosmetics </li></div><div><li>9. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#9">© SAP AG </a> 2010. All rights reserved. / Page 9 Demographics and Archetypes </li></div><div><li>10. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#10">© SAP AG </a> 2010. All rights reserved. / Page 10 China’s Luxury Consumer is Young Almost Half under 35 73% 50% 60% 55% China: % of luxury shoppers under 45 (and under 35) US: % of luxury shoppers under 45 (and under 35) Under 35 Trading Up: 35% traded up to more expensive brands last 2 years Seeking New Experiences: Spending on luxury services (spas, wellness, etc.) growing faster than that on luxury goods </li></div><div><li>11. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#11">© SAP AG </a> 2010. All rights reserved. / Page 11 2 Categories of the Young Population Impulsive “Yu Guang Zu” and Tech Savvy China Population Structure in 2010 400MM 25% Ages 15-24 35% Ages 25-34 60% of consumers buying foreign brand perfumes are under 34 Source: Accenture </li></div><div><li>12. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#12">© SAP AG </a> 2010. All rights reserved. / Page 12 Growth of Mid and High-End Brands Influence of The Post-1980’s and Post-1990s Post 1980s Born after “Cultural Revolution” Good jobs Sense of optimism Post 1990s Fast growth Fashion and Tech- Savvy More outdoor activities requiring “right” outfits </li></div><div><li>13. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#13">© SAP AG </a> 2010. All rights reserved. / Page 13 Emergence of 3 New Archetypes Differing Emphasis on Luxury % luxury households Source: McKinsey, BCG 40% 22% % luxury consumption 51% 45% 3% 1% 10% 65% 5% 20% Role Models: Shape fashion trends Fanatics: Strong influence on consumers; online influence Core Buyers: Spends 12-20% of income on luxury goods (US$ 3K – 9K annually) Middle Class Aspirants: Infrequent buyers, cautious spenders Household Distribution and Luxury Goods Consumption by Archetype Emergence of 3 New Archetypes Differing Emphasis on Luxury </li></div><div><li>14. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#14">© SAP AG </a> 2010. All rights reserved. / Page 14 Role Models (20% Spend) Rich, Young and Fashionable Socio-Income Profile: Corporate executives or self-employed Lives in Shanghai and Beijing Studied or worked overseas Buying Behavior: 10% of disposable income on luxury Most buying for at least 5 years Spontaneous Why they Buy: Feel unique rather than display wealth To indulge themselves What they Care About: Good service in stores is important Prefers to shop outside China </li></div><div><li>15. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#15">© SAP AG </a> 2010. All rights reserved. / Page 15 Fashion Fanatics (5% Spend) Not Rich, But Researches and Spends More Socio-Income Profile: Earns $15K – 30K Incomes rising steadily Buying Behavior: 40% of disposable income on luxury Spends most free time on fashion trends Will buy on credit to be on cutting edge Why they Buy: Social acknowledgement of purchase Strong influence on others, sharing purchases and opinions online What they Care About: Planning and research: window shopping, online, editorials, celebrities, friends Cares less about store service </li></div><div><li>16. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#16">© SAP AG </a> 2010. All rights reserved. / Page 16 Middle Class Aspirants (10% Spend) Occasional and Cautious Shopper Socio-Income Profile: Earns $9K – 30K Mid-level position in local or multinational Lives in Tier 2 or Tier 3 cities Buying Behavior: 9% of disposable income on luxury Less knowledge & experience Considerable research (2-3 months) Why they Buy: Aspire to higher social circles; feel successful Stand out from the crowd What they Care About: Price (hence fine with local brands) </li></div><div><li>17. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#17">© SAP AG </a> 2010. All rights reserved. / Page 17 Top 5 Brands Account for 50% Sales Many Consumers Not Aware of Other Brands </li></div><div><li>18. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#18">© SAP AG </a> 2010. All rights reserved. / Page 18 Demographics and Archetypes 1. Young consumers are vital and relate to more and varied (price) brands 2. Role Models primary shop overseas 3. Fashion Fanatics should be targeted for adoption/promotion – they will attract the Aspirants </li></div><div><li>19. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#19">© SAP AG </a> 2010. All rights reserved. / Page 19 The Retail Challenge </li></div><div><li>20. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#20">© SAP AG </a> 2010. All rights reserved. / Page 20 36 Cities Constitute 75% of Luxury Market But This Will Change with Emerging Cities 75% 75% of luxury market captured by top 36 cities 25% Other 620 cities Top 36 cities Breakdown within the top 36 cities 28% 2 mega cities 32% 25 developed cities2 40% 9 large markets1 1. Chongqing, Dongguan, Foshan, Guangzhou, Hangzhou, Nanjing, Shenzen, Tianjin, Wenzhou 2. Includes cities as Xian, Taiyuan, Yantao Source: McKinsey, BCG, Reuters TODAYBUTINCOME DISTRIBUTION WILLCHANGE 0 20 40 60 80 100 120 2010 2020 Distribution of Upper Middle Class Top 100 Cities Next 300 Cities 85% 65% 10% 30% </li></div><div><li>21. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#21">© SAP AG </a> 2010. All rights reserved. / Page 21 Retail Stores Need to Catch Up Particularly Difficult for Those W/ No Presence 45 20 57 38 50 8 Japan China Difference in Retail Presence between China and Japan Hermes Louis Vuitton Chanel ‘00s 20 ‘00s 70 ‘000s 5 USA China Difference in Retail Presence between China and USA Benetton Zara Gap Example Brands with No Presence </li></div><div><li>22. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#22">© SAP AG </a> 2010. All rights reserved. / Page 22 But Brands Need to Strike a Balance Between Growth and Exclusive Experience Source: Bain & Co. </li></div><div><li>23. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#23">© SAP AG </a> 2010. All rights reserved. / Page 23 The Brand Experience Matters The Brands Differentiate on This Factor Commercial Premium Market Upper Premium Market Designer Haute Couture Marco Polo Ralph Lauren, Boss, Seven Akris, Burberry Armani, Gucci, Prada Dior, Gaultier Luxury Market Source: h&p </li></div><div><li>24. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#24">© SAP AG </a> 2010. All rights reserved. / Page 24 Difference in Exclusivity and Presentation Such Focus is Slowing Store Growth in China </li></div><div><li>25. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#25">© SAP AG </a> 2010. All rights reserved. / Page 25 Exceptional Service In-Store Matters Primary Driver for Buying Decision in China 44% In-Store 14% Word-of-Mouth 21% Internet 13% Traditional Media 7% Direct Marketing Activities In-Store • Evaluated product • Spoke to salesperson • Window shopping • Read catalog Relative Importance in Buying Decision for Luxury Apparel Source: McKinsey, BCG </li></div><div><li>26. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#26">© SAP AG </a> 2010. All rights reserved. / Page 26 Need to Position to Emerging Emotional States in China And be Perceived as Such Pursue Success and Status Professional Achievement, Social Status 60-70% of consumers relate More pronounced in high-tier cities Balanced Lifestyle/ Laid-Back Spend more on leisure and fun, “enjoy life” More pronounced in lower-tier cities Be Classic (Female) or Blend In (Male) Be comfortable More males skew toward laid-back Be Trendy (Female) or Stand Out (Male) Visible and Edgy More females skew toward being expressive More in high-tier cities </li></div><div><li>27. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#27">© SAP AG </a> 2010. All rights reserved. / Page 27 The Retail Challenge 1. Brands need insight of consumers in emerging cities 2. Particularly difficult for many brands not yet in market (note: not haute couture) 3. Need to position and be perceived to right emotional state 4. Underscores need of influencers to shape perception </li></div><div><li>28. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#28">© SAP AG </a> 2010. All rights reserved. / Page 28 The Role of Internet </li></div><div><li>29. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#29">© SAP AG </a> 2010. All rights reserved. / Page 29 Role of Internet in Creating Awareness Unique Circumstances 21% Internet 52% Saw an ad43% Checked reviews online 10% Brand’s website • 25% of e-commerce demand for products not found in physical stores • Country size limits the coverage of physical retailers. • For many consumers, especially younger ones, first contact with a brand or type of product is online • Most shoppers start their search within Taobao (80% of 2010 volume) • Taobao.com blocks the spider of the top search engine, Baidu.com • Shoppers do not rely on search engine as in other countries • Beyond discounts • Uniqueness, convenience, fun of the discovery process Factors driving first awareness of brand online </li></div><div><li>30. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#30">© SAP AG </a> 2010. All rights reserved. / Page 30 BUT Frequent Online Research but Fewer will Buy Rather Buy In-Store Source: KPMG study of 1300 respondents They search often Frequency of online search for luxury brands Most will not buy online Intent of purchase 43% Will NOT buy 22% Will consider buying Better deal Easier for comparisons Less time consuming Authenticity concerns After-sales service, returns Payment security Note: online purchase higher for other items </li></div><div><li>31. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#31">© SAP AG </a> 2010. All rights reserved. / Page 31 Importance of Social Reviews Due to Distrust of Merchants 0 10 20 30 40 50 60 43% Read or posted reviews 20% 52% 19% Visits official brand websites US, Europe China Source: McKinsey, BCG Due to consumer wariness and distrust of merchants Importance of social reviews and “opinion leaders” • Bulletin-board services (BBS) • Social networking sites e.g. RenRen, Youku, Kaixin • 3rd party review sites on Sina • Media firms (CIC) that aggregate comments • Brand sites with BBS </li></div><div><li>32. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#32">© SAP AG </a> 2010. All rights reserved. / Page 32 Consumer-Generated Content Effective In Influencing Brand Choice Source: KPMG study of 1300 respondents </li></div><div><li>33. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#33">© SAP AG </a> 2010. All rights reserved. / Page 33 Digital Platforms Getting Crowded But Emphasis on Social Media Attributes Burberry on Kaixin Coach on Ren-Ren Lancome App on iPhone Bottega Veneta on Weibo </li></div><div><li>34. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#34">© SAP AG </a> 2010. All rights reserved. / Page 34 Mobile Apps in Infancy For Search and Shopping of Lifestyle Purchases Source: KPMG, AdChina 0 20 40 60 80 100 120 % consumers using mobile to search % consumers using mobile to shop 17% 5% </li></div><div><li>35. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#35">© SAP AG </a> 2010. All rights reserved. / Page 35 The Role of Internet 1. Chinese spend considerable time on research 2. They depend on social influencers for brand awareness, education 3. But will not necessarily purchase high-end luxury items online 4. Mobile is in its infancy for luxury shopping 5. Social app attributes are key </li></div><div><li>36. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#36">© SAP AG </a> 2010. All rights reserved. / Page 36 The Role of Chinese E-Commerce Players </li></div><div><li>37. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#37">© SAP AG </a> 2010. All rights reserved. / Page 37 Fashion Brands Differ in their Online Sites On Presentation, Vividness and Information Brands Tie r Online Shoppin g Store availabilit y Vividness Interactiv e social share/ likes Faceboo k page own online communit y Catalog (pricing info) Zoom-in Design Christian Dior 1 No Yes No Yes No No Gaultier 1 Yes No No Yes No Yes Chanel 1 No Yes No Yes No No Versace 1 No Yes Yes Yes No No Armani 2 Yes Yes Yes Yes No Yes Gucci 2 Yes Yes Yes Yes Personal Likes Yes Prada 2 Yes Yes No Yes No Yes Fendi 2 Yes Yes Yes Yes Personal Likes No Dolce & Gabbanna 2 Yes Yes Yes Yes No Yes Burberry 3 Yes Yes Yes Yes No Yes Louis Vuitton 3 Yes Yes Yes Yes No Yes Boss 3 Yes Yes Yes Yes No Yes Calvin Klein 3 Yes Yes Yes Yes No Yes Ralph Lauren 3 Yes Yes Yes Yes No Yes </li></div><div><li>38. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#38">© SAP AG </a> 2010. All rights reserved. / Page 38 Yet E-tailers Attract Consumers in China Brands Creating Stores on Sites as Taobao Own Site Partner Taobao Glamour Sales Penetration Description Purpose/ Operations Major brands as Armani, Bally $60Bln transactions 500k+ members Own ecommerce site, add-ons to corporate Brand site with own domain name + “Powered by Yoox” Brands establishing official sites for presentation Promotions targeting price- conscious Marketing and consumer education Yoox offers ecommerce solution; same price, products Event-driven promotions and limited inventory MONO BRAND MULTI-BRAND LEADING CHANNEL </li></div><div><li>39. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#39">© SAP AG </a> 2010. All rights reserved. / Page 39 The Top 2 has 40% Market Share Taobao Mall and 360Buy </li></div><div><li>40. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#40">© SAP AG </a> 2010. All rights reserved. / Page 40 And They Are Sticky Leading to Growth of over 30% for Leaders Other luxury segment players include: • VIP Store: 500 luxury brand partnerships • 360 Fashion: social media news, new brands, integration to social platforms </li></div><div><li>41. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#41">© SAP AG </a> 2010. All rights reserved. / Page 41 Examples of companies tremendously successful in China Autos Consumer Goods RetailElectronicsGlobal Internet Players Have Failed While Other Global Brands have Succeeded Internet companies struggled in China failed to failed to BUT failed to failed to </li></div><div><li>42. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#42">© SAP AG </a> 2010. All rights reserved. / Page 42 Different Social Networks </li></div><div><li>43. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#43">© SAP AG </a> 2010. All rights reserved. / Page 43 The Role of Chinese E-Commerce Players 1. Multi-label e-tailers are primary access points to consumers 2. They are sticky and growing 3. While foreign companies in other industries have succeeded in China, internet companies have failed </li></div><div><li>44. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#44">© SAP AG </a> 2010. All rights reserved. / Page 44 Summary SO WHAT? </li></div><div><li>45. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#45">© SAP AG </a> 2010. All rights reserved. / Page 45 Focus on the Entire Evaluation Process Takes 2-3 Months for Chinese Consumer TouchPoints Time Awareness Info Search Evaluation of Alternatives Price, Avail. & Purchase Post- Evaluation Mono-label Stores: Armani, Burberry High-End Retailer: Neiman Marcus E-Tailers Brand Advertising Endorsements (celebrities) Editorial Stylists Social (friends, family) Window shopping In-Store experiences Focus and Motivate Key Influencers; Sensorial-rich mediated environment </li></div><div><li>46. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#46">© SAP AG </a> 2010. All rights reserved. / Page 46 Examples of Growing Sites Awareness ! Decision Net-A-Porter: Comprehensive • Catalogs and shopping by designer, • What’s new, • Editorial • Many countries Asos: Engaging (1.6M fb likes) • Virtual wardrobes with tags to share, competitions • daily deals, marketplace for vintage • editorial; community reviews • inventory check from other sites, own labels • Mobile, iPad, PC </li></div><div><li>47. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#47">© SAP AG </a> 2010. All rights reserved. / Page 47 New Start-Ups Focused on Influencers: Stylists Boutine: New Incentive Model • Financial ncentives for “stylists” to sell items via virtual catalogs • Focused on emerging designers who post items Stylist Pick: Professional Stylists • Popular stylist consultants and handbag/shoes • Fixed price • Own label </li></div><div><li>48. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#48">© SAP AG </a> 2010. All rights reserved. / Page 48 Summary Target and Position to Consider Young Consumers Multi-Tier Brands Brand Education of Middle Class Tier-2 and Tier-3 Cities Engagement TEST NON- CHINESE MARKETS FIRST Social Guidance: Awareness ! Purchase Influencers as Fashion Fanatics TARGET POSITION </li></div><div><li>49. <a class="Transcript_link__MLbGS" href="https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657#49">© 2011 SAP </a> AG. 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It begins with an analysis of the growing Chinese retail and jewelry markets. It then profiles the target customer as young, urban professional women ages 24-30. The document outlines Edblad's strengths in quality design and meaning. It proposes an entry strategy into China using online stores on TMALL and JD and popup stores in Shanghai and Beijing. It suggests marketing through social media platforms like Weibo and Wechat. Cooperation with celebrities and brands like JNBY are presented as ways to boost the brand's profile in China.","tags":[],"url":"https://www.slideshare.net/slideshow/edblad-chinese-marker-plan-from-mia/63353907","userLogin":"miawang35574","userName":"Mia Wang","viewCount":242},{"algorithmId":"3","displayTitle":"Hogan Digital Marketing Plan for Asia Pacific","isSavedByCurrentUser":false,"pageCount":73,"score":0.4951,"slideshowId":"48551950","sourceName":"cm_text","strippedTitle":"hogan-digital-planning","thumbnail":"https://cdn.slidesharecdn.com/ss_thumbnails/hogandigitalplanning-150525032213-lva1-app6892-thumbnail.jpg?width=600\u0026height=600\u0026fit=bounds","description":"Hogan Digital Marketing Plan\r\n- Customized strategies through digital communication planning with global extension. \r\n- The strategies tailored with different merchandising in Asia Pacific market\r\n- Enlarging the brand awareness and visibility. \r\n- Targeting young generation with a creative approach.","tags":["apac market","hogan","digital"],"url":"https://www.slideshare.net/slideshow/hogan-digital-planning/48551950","userLogin":"JhangYuting","userName":"Jhang Yuting","viewCount":2167},{"algorithmId":"3","displayTitle":"E-commerce_Report_2016","isSavedByCurrentUser":false,"pageCount":17,"score":0.4949,"slideshowId":"68267340","sourceName":"cm_text","strippedTitle":"ecommercereport2016","thumbnail":"https://cdn.slidesharecdn.com/ss_thumbnails/9be346d2-09ef-41c4-90e9-a3d1905b425c-161106201719-thumbnail.jpg?width=600\u0026height=600\u0026fit=bounds","description":"This document discusses e-commerce trends in packaged goods (FMCG) globally and by region. It finds that while e-commerce is growing steadily overall, rates of adoption vary significantly between countries. Asia has seen the most rapid adoption, led by South Korea where nearly 100% of younger consumers shop online and e-commerce accounts for 16.6% of FMCG sales. China also has very high rates of online shopping. In contrast, e-commerce remains less developed in the US and Latin America. The document examines factors driving different levels of online shopping adoption around the world and predicts that e-commerce will account for 9% of global FMCG sales by 2025.","tags":[],"url":"https://www.slideshare.net/slideshow/ecommercereport2016/68267340","userLogin":"MiquetHumphryes","userName":"Miquet Humphryes","viewCount":721},{"algorithmId":"3","displayTitle":"Ed Jett Mspa Conf Nov09 China","isSavedByCurrentUser":false,"pageCount":17,"score":0.4908,"slideshowId":"3040138","sourceName":"cm_text","strippedTitle":"ed-jett-mspa-conf-nov09-china-3040138","thumbnail":"https://cdn.slidesharecdn.com/ss_thumbnails/edjett-mspaconfnov09-china-100131073332-phpapp01-thumbnail.jpg?width=600\u0026height=600\u0026fit=bounds","description":"1. The document discusses the mystery shopping industry landscape in China, noting both opportunities and challenges. It provides an overview of the Chinese consumer market and economy. 2. 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Without innovation companies are risking losing ground to more dynamic, digitally savvy players.\" -Roberto Bonacina","tags":["ey","cosmetics market","consulting"],"url":"https://www.slideshare.net/ChristopherCadden/luxury-and-cosmetics-market-and-consumer-trends","userLogin":"ChristopherCadden","userName":"Chris Cadden","viewCount":2467},{"algorithmId":"3","displayTitle":"Presentation On Future Of Indian Retail Sector","isSavedByCurrentUser":false,"pageCount":45,"score":0.4865,"slideshowId":"733824","sourceName":"cm_text","strippedTitle":"presentation-on-future-of-indian-retail-sector-presentation","thumbnail":"https://cdn.slidesharecdn.com/ss_thumbnails/presentation-on-future-of-indian-retail-sector-1226160001512313-8-thumbnail.jpg?width=600\u0026height=600\u0026fit=bounds","description":"The document discusses trends in the Indian retail sector. It notes that retail currently makes up 8% of employment in India compared to 16% in the US. 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","tags":["ecommerce institute","comercio electronico","negocios por internet"],"url":"https://www.slideshare.net/slideshow/presentacin-kati-suominen-ecommerce-day-buenos-aires-2016/65280911","userLogin":"einstituto","userName":"eCommerce Institute","viewCount":1074},{"algorithmId":"3","displayTitle":"Zara Online product \u0026 operational Analysis","isSavedByCurrentUser":false,"pageCount":39,"score":0.4855,"slideshowId":"32509591","sourceName":"cm_text","strippedTitle":"zara-online-product-and-operational-analysis-for-chinese-market-final","thumbnail":"https://cdn.slidesharecdn.com/ss_thumbnails/zaraonlineproductandoperationalanalysisforchinesemarketfinal-140319171016-phpapp01-thumbnail.jpg?width=600\u0026height=600\u0026fit=bounds","description":"Jan,2014 , helped them to analyse their digital online market base in China and improve their online traffic \u0026 social media offering and provided recommended digital online operation strategies","tags":["digital marketing","zara","fashion"],"url":"https://www.slideshare.net/slideshow/zara-online-product-and-operational-analysis-for-chinese-market-final/32509591","userLogin":"JingH","userName":"Jing Huang","viewCount":11454}],"moreFromUser":[],"featured":null,"latest":[]},"secretUrl":"5AY8IJjvzXfHF2","shouldShowAds":true,"slides":{"host":"https://image.slidesharecdn.com","title":"Fashion-Market-in-China","imageLocation":"fashionmarketinchinafinal-151117010613-lva1-app6892","imageSizes":[{"quality":85,"width":320,"format":"jpg"},{"quality":85,"width":638,"format":"jpg"},{"quality":75,"width":2048,"format":"webp"}]},"smsShareUrl":"sms:?body=Check out this SlideShare : https://www.slideshare.net/slideshow/fashion-market-in-china-55184657/55184657","strippedTitle":"fashion-market-in-china-55184657","thumbnail":"https://cdn.slidesharecdn.com/ss_thumbnails/fashionmarketinchinafinal-151117010613-lva1-app6892-thumbnail.jpg?width=640\u0026height=640\u0026fit=bounds","title":"Fashion Market in China ","totalSlides":49,"transcript":["INTERNAL\nFashion Market in China\nSami Muneer, SAP\n ","© SAP AG 2010. All rights reserved. / Page 2\nChina Luxury Market\n• Growth, Demographics, Archetypes\nThe Retail Challenge in China\nThe Role of the Internet in Luxury\nShopping in China\nEcommerce Players\nSo What?\n ","© SAP AG 2010. All rights reserved. / Page 3\nGrowth of the\nChina Luxury Market\n ","© SAP AG 2010. All rights reserved. / Page 4\nLuxury Segment* is Growing\nDriven by 3 Factors\n1. Wealth Increase\nWithin largest cities\nRapid urbanization in\nnew areas\n2. First-hand Experience\nOverseas travel\nLocal stores\n3. Access to Information\nInternet: social forums,\neditorials\nSource: McKinsey, 2011 World Luxury Association Blue Book\n15% online\npurchase in\n2011\n($2.5B)\n ","© SAP AG 2010. All rights reserved. / Page 5\nDriven by Wealthy and Upper Middle Class\nSpending is Concentrated in Top 5M Households\n80 B\n50%\n2010 2015\n\u003e 1 MM\n(700K households;\n20% growth)\n180 B\nLuxury Goods Consumption by Income Class*\n(RMB, US$ = 6.3RMB)\nØ 200K- 1MM\n(4MM households;\n15% growth)\nØ 100K-200K\n(13 MM household;\nfastest growth)\n12%\n33%\n40%\n22%\n26%\nSource: McKinsey, BCG\n*% don’t add to 100% due to other small segments\nVery Wealthy\nOwn assets greater than 10MM RMB\nWell-traveled\nWealthy\nGrowing number residents in lower-tier\ncities\nUpper Middle Class\nStretch budgets for occasional purchase\n ","© SAP AG 2010. All rights reserved. / Page 6\nBut the Very Wealthy Travel and Spend There\n60% of Luxury Spend is Overseas\nLuxury Goods Spend\nBln RMB, 2010 (% CAGR)\n40%\nChina\n(27% CAGR)\n35%\nHK \u0026 Macau\n(45% CAGR)\n25%\nOverseas\n(38% CAGR)\nDrivers for Overseas Spend\n• Higher prices on mainland\n• Increased overseas travel by\nthe wealthy\n• RMB appreciation\n212 Bln Total\nSource: McKinsey, 2011 World Luxury Association Blue Book, Bain Survey of 2000 consumers\n ","© SAP AG 2010. All rights reserved. / Page 7\nMost Local Spend is on Accessories, Cosmetics\n70% of Mainland Purchase\nSource: Bain \u0026 Co.\n ","© SAP AG 2010. All rights reserved. / Page 8\nGrowth of the\nChina Luxury Market\n1. Market is growing\n2. Most shopping by the wealthy is\noverseas\n3. 70% of luxury shopping on\nmainland is accessories, cosmetics\n ","© SAP AG 2010. All rights reserved. / Page 9\nDemographics and\nArchetypes\n ","© SAP AG 2010. All rights reserved. / Page 10\nChina’s Luxury Consumer is Young\nAlmost Half under 35\n73% 50%\n60% 55%\nChina: % of luxury shoppers under 45\n(and under 35)\nUS: % of luxury shoppers under 45\n(and under 35)\nUnder 35\nTrading Up: 35% traded up to more expensive brands last 2 years\nSeeking New Experiences: Spending on luxury services (spas, wellness,\netc.) growing faster than that on luxury goods\n ","© SAP AG 2010. All rights reserved. / Page 11\n2 Categories of the Young Population\nImpulsive “Yu Guang Zu” and Tech Savvy\nChina Population Structure in 2010\n400MM\n25%\nAges 15-24\n35%\nAges 25-34\n60% of consumers buying foreign\nbrand perfumes are under 34\nSource: Accenture\n ","© SAP AG 2010. All rights reserved. / Page 12\nGrowth of Mid and High-End Brands\nInfluence of The Post-1980’s and Post-1990s\nPost 1980s\nBorn after “Cultural\nRevolution”\nGood jobs\nSense of optimism\nPost 1990s\nFast growth\nFashion and Tech-\nSavvy\nMore outdoor\nactivities requiring\n“right” outfits\n ","© SAP AG 2010. All rights reserved. / Page 13\nEmergence of 3 New Archetypes\nDiffering Emphasis on Luxury\n% luxury\nhouseholds\nSource: McKinsey, BCG\n40%\n22%\n% luxury\nconsumption\n51%\n45%\n3%\n1%\n10%\n65%\n5%\n20% Role Models: Shape fashion trends\nFanatics: Strong influence on consumers;\nonline influence\nCore Buyers: Spends 12-20% of income on\nluxury goods (US$ 3K – 9K annually)\nMiddle Class Aspirants: Infrequent buyers,\ncautious spenders\nHousehold Distribution and Luxury\nGoods Consumption by Archetype\nEmergence of 3 New Archetypes\nDiffering Emphasis on Luxury\n ","© SAP AG 2010. All rights reserved. / Page 14\nRole Models (20% Spend)\nRich, Young and Fashionable\nSocio-Income Profile:\nCorporate executives or self-employed\nLives in Shanghai and Beijing\nStudied or worked overseas\nBuying Behavior:\n10% of disposable income on luxury\nMost buying for at least 5 years\nSpontaneous\nWhy they Buy:\nFeel unique rather than display wealth\nTo indulge themselves\nWhat they Care About:\nGood service in stores is important\nPrefers to shop outside China\n ","© SAP AG 2010. All rights reserved. / Page 15\nFashion Fanatics (5% Spend)\nNot Rich, But Researches and Spends More\nSocio-Income Profile:\nEarns $15K – 30K\nIncomes rising steadily\nBuying Behavior:\n40% of disposable income on luxury\nSpends most free time on fashion trends\nWill buy on credit to be on cutting edge\nWhy they Buy:\nSocial acknowledgement of purchase\nStrong influence on others, sharing\npurchases and opinions online\nWhat they Care About:\nPlanning and research: window shopping,\nonline, editorials, celebrities, friends\nCares less about store service\n ","© SAP AG 2010. All rights reserved. / Page 16\nMiddle Class Aspirants (10% Spend)\nOccasional and Cautious Shopper\nSocio-Income Profile:\nEarns $9K – 30K\nMid-level position in local or multinational\nLives in Tier 2 or Tier 3 cities\nBuying Behavior:\n9% of disposable income on luxury\nLess knowledge \u0026 experience\nConsiderable research (2-3 months)\nWhy they Buy:\nAspire to higher social circles; feel successful\nStand out from the crowd\nWhat they Care About:\nPrice (hence fine with local brands)\n ","© SAP AG 2010. All rights reserved. / Page 17\nTop 5 Brands Account for 50% Sales\nMany Consumers Not Aware of Other Brands\n ","© SAP AG 2010. All rights reserved. / Page 18\nDemographics and\nArchetypes\n1. Young consumers are vital and\nrelate to more and varied\n(price) brands\n2. Role Models primary shop\noverseas\n3. Fashion Fanatics should be\ntargeted for adoption/promotion\n– they will attract the Aspirants\n ","© SAP AG 2010. All rights reserved. / Page 19\nThe Retail Challenge\n ","© SAP AG 2010. All rights reserved. / Page 20\n36 Cities Constitute 75% of Luxury Market\nBut This Will Change with Emerging Cities\n75%\n75% of luxury market captured by\ntop 36 cities\n25%\nOther\n620\ncities\nTop 36\ncities\nBreakdown within the top 36 cities\n28%\n2 mega\ncities\n32%\n25 developed\ncities2\n40%\n9 large markets1\n1. Chongqing, Dongguan, Foshan, Guangzhou, Hangzhou, Nanjing, Shenzen, Tianjin, Wenzhou\n2. Includes cities as Xian, Taiyuan, Yantao\nSource: McKinsey, BCG, Reuters\nTODAYBUTINCOME\nDISTRIBUTION\nWILLCHANGE\n0\n20\n40\n60\n80\n100\n120\n2010 2020\nDistribution of Upper Middle Class\nTop 100 Cities\nNext 300 Cities\n85%\n65%\n10%\n30%\n ","© SAP AG 2010. All rights reserved. / Page 21\nRetail Stores Need to Catch Up\nParticularly Difficult for Those W/ No Presence\n45\n20\n57\n38\n50\n8\nJapan\nChina\nDifference in\nRetail Presence\nbetween China\nand Japan Hermes Louis Vuitton Chanel\n‘00s\n20\n‘00s\n70\n‘000s\n5\nUSA\nChina\nDifference in\nRetail Presence\nbetween China\nand USA Benetton Zara Gap\nExample\nBrands with No\nPresence\n ","© SAP AG 2010. All rights reserved. / Page 22\nBut Brands Need to Strike a Balance\nBetween Growth and Exclusive Experience\nSource: Bain \u0026 Co.\n ","© SAP AG 2010. All rights reserved. / Page 23\nThe Brand Experience Matters\nThe Brands Differentiate on This Factor\nCommercial\nPremium\nMarket\nUpper Premium\nMarket\nDesigner\nHaute\nCouture\nMarco Polo\nRalph Lauren,\nBoss, Seven\nAkris, Burberry\nArmani, Gucci,\nPrada\nDior, Gaultier\nLuxury\nMarket\nSource: h\u0026p\n ","© SAP AG 2010. All rights reserved. / Page 24\nDifference in Exclusivity and Presentation\nSuch Focus is Slowing Store Growth in China\n ","© SAP AG 2010. All rights reserved. / Page 25\nExceptional Service In-Store Matters\nPrimary Driver for Buying Decision in China\n44%\nIn-Store\n14%\nWord-of-Mouth\n21%\nInternet\n13%\nTraditional\nMedia\n7%\nDirect\nMarketing\nActivities In-Store\n• Evaluated product\n• Spoke to salesperson\n• Window shopping\n• Read catalog\nRelative Importance in Buying Decision\nfor Luxury Apparel\nSource: McKinsey, BCG\n ","© SAP AG 2010. All rights reserved. / Page 26\nNeed to Position to Emerging Emotional States in China\nAnd be Perceived as Such\nPursue Success and Status\nProfessional Achievement, Social Status\n60-70% of consumers relate\nMore pronounced in high-tier cities\nBalanced Lifestyle/ Laid-Back\nSpend more on leisure and fun, “enjoy life”\nMore pronounced in lower-tier cities\nBe Classic (Female)\nor Blend In (Male)\nBe comfortable\nMore males skew\ntoward laid-back\nBe Trendy (Female) or\nStand Out (Male)\nVisible and Edgy\nMore females skew\ntoward being\nexpressive\nMore in high-tier cities\n ","© SAP AG 2010. All rights reserved. / Page 27\nThe Retail Challenge\n1. Brands need insight of consumers\nin emerging cities\n2. Particularly difficult for many\nbrands not yet in market (note: not\nhaute couture)\n3. Need to position and be perceived\nto right emotional state\n4. Underscores need of influencers\nto shape perception\n ","© SAP AG 2010. All rights reserved. / Page 28\nThe Role of Internet\n ","© SAP AG 2010. All rights reserved. / Page 29\nRole of Internet in Creating Awareness\nUnique Circumstances\n21%\nInternet\n52%\nSaw an ad43%\nChecked\nreviews\nonline\n10%\nBrand’s\nwebsite\n• 25% of e-commerce demand for products\nnot found in physical stores\n• Country size limits the coverage of\nphysical retailers.\n• For many consumers, especially\nyounger ones, first contact with a brand\nor type of product is online\n• Most shoppers start their search within\nTaobao (80% of 2010 volume)\n• Taobao.com blocks the spider of the\ntop search engine, Baidu.com\n• Shoppers do not rely on search engine\nas in other countries\n• Beyond discounts\n• Uniqueness, convenience, fun of the\ndiscovery process\nFactors driving first\nawareness of brand online\n ","© SAP AG 2010. All rights reserved. / Page 30\nBUT\nFrequent Online Research but Fewer will Buy\nRather Buy In-Store\nSource: KPMG study of 1300 respondents\nThey search often\nFrequency of online search for luxury\nbrands\nMost will not buy online\nIntent of purchase\n43%\nWill NOT buy\n22%\nWill consider\nbuying\nBetter deal\nEasier for\ncomparisons\nLess time consuming\nAuthenticity concerns\nAfter-sales service,\nreturns\nPayment security\nNote: online purchase higher for other items\n ","© SAP AG 2010. All rights reserved. / Page 31\nImportance of Social Reviews\nDue to Distrust of Merchants\n0 10 20 30 40 50 60\n43%\nRead or\nposted\nreviews\n20%\n52%\n19%\nVisits official\nbrand\nwebsites\nUS, Europe\nChina\nSource: McKinsey, BCG\nDue to consumer wariness\nand distrust of merchants\nImportance of social\nreviews and “opinion\nleaders”\n• Bulletin-board services\n(BBS)\n• Social networking sites e.g.\nRenRen, Youku, Kaixin\n• 3rd party review sites on\nSina\n• Media firms (CIC) that\naggregate comments\n• Brand sites with BBS\n ","© SAP AG 2010. All rights reserved. / Page 32\nConsumer-Generated Content Effective\nIn Influencing Brand Choice\nSource: KPMG study of 1300 respondents\n ","© SAP AG 2010. All rights reserved. / Page 33\nDigital Platforms Getting Crowded\nBut Emphasis on Social Media Attributes\nBurberry on Kaixin Coach on Ren-Ren\nLancome App on\niPhone\nBottega Veneta on Weibo\n ","© SAP AG 2010. All rights reserved. / Page 34\nMobile Apps in Infancy\nFor Search and Shopping of Lifestyle Purchases\nSource: KPMG, AdChina\n0\n20\n40\n60\n80\n100\n120\n% consumers\nusing mobile to\nsearch\n% consumers\nusing mobile to\nshop\n17% 5%\n ","© SAP AG 2010. All rights reserved. / Page 35\nThe Role of Internet\n1. Chinese spend considerable time\non research\n2. They depend on social influencers\nfor brand awareness, education\n3. But will not necessarily purchase\nhigh-end luxury items online\n4. Mobile is in its infancy for luxury\nshopping\n5. Social app attributes are key\n ","© SAP AG 2010. All rights reserved. / Page 36\nThe Role of Chinese\nE-Commerce Players\n ","© SAP AG 2010. All rights reserved. / Page 37\nFashion Brands Differ in their Online Sites\nOn Presentation, Vividness and Information\nBrands\t\n \nTie\nr\t\n \nOnline\nShoppin\ng\t\n \nStore\navailabilit\ny\t\n \nVividness\t\n \nInteractiv\ne\t\n social\nshare/\nlikes\t\n \nFaceboo\nk page\t\n \nown\nonline\ncommunit\ny\t\n \nCatalog\n(pricing\ninfo)\t\n Zoom-in Design\nChristian Dior\t\n 1\t\n No\t\n Yes\t\n No\t\n Yes\t\n No\t\n No\t\n \nGaultier\t\n 1\t\n Yes\t\n No\t\n No\t\n Yes\t\n No\t\n Yes\t\n \nChanel\t\n 1\t\n No\t\n Yes\t\n No\t\n Yes\t\n No\t\n No\t\n \nVersace\t\n 1\t\n No\t\n Yes\t\n Yes\t\n Yes\t\n No\t\n No\t\n \nArmani\t\n 2\t\n Yes\t\n Yes\t\n Yes\t\n Yes\t\n No\t\n Yes\t\n \nGucci\t\n 2\t\n Yes\t\n Yes\t\n Yes\t\n Yes\t\n \nPersonal\nLikes\t\n Yes\t\n \nPrada\t\n 2\t\n Yes\t\n Yes\t\n No\t\n Yes\t\n No\t\n Yes\t\n \nFendi\t\n 2\t\n Yes\t\n Yes\t\n Yes\t\n Yes\t\n \nPersonal\nLikes\t\n No\t\n \nDolce \u0026\nGabbanna\t\n 2\t\n Yes\t\n Yes\t\n Yes\t\n Yes\t\n No\t\n Yes\t\n \nBurberry\t\n 3\t\n Yes\t\n Yes\t\n Yes\t\n Yes\t\n No\t\n Yes\t\n \nLouis Vuitton\t\n 3\t\n Yes\t\n Yes\t\n Yes\t\n Yes\t\n No\t\n Yes\t\n \nBoss \t\n 3\t\n Yes\t\n Yes\t\n Yes\t\n Yes\t\n No\t\n Yes\t\n \nCalvin Klein\t\n 3\t\n Yes\t\n Yes\t\n Yes\t\n Yes\t\n No\t\n Yes\t\n \nRalph Lauren\t\n 3\t\n Yes\t\n Yes\t\n Yes\t\n Yes\t\n No\t\n Yes\t\n \n ","© SAP AG 2010. All rights reserved. / Page 38\nYet E-tailers Attract Consumers in China\nBrands Creating Stores on Sites as Taobao\nOwn Site Partner Taobao Glamour Sales\nPenetration\nDescription\nPurpose/\nOperations\nMajor brands as\nArmani, Bally\n$60Bln\ntransactions\n500k+ members\nOwn ecommerce\nsite, add-ons to\ncorporate\nBrand site with\nown domain\nname + “Powered\nby Yoox”\nBrands\nestablishing\nofficial sites for\npresentation\nPromotions\ntargeting price-\nconscious\nMarketing and\nconsumer\neducation\nYoox offers\necommerce\nsolution; same\nprice, products\nEvent-driven\npromotions and\nlimited inventory\nMONO BRAND MULTI-BRAND\nLEADING CHANNEL\n ","© SAP AG 2010. All rights reserved. / Page 39\nThe Top 2 has 40% Market Share\nTaobao Mall and 360Buy\n ","© SAP AG 2010. All rights reserved. / Page 40\nAnd They Are Sticky\nLeading to Growth of over 30% for Leaders\nOther luxury segment players include:\n• VIP Store: 500 luxury brand partnerships\n• 360 Fashion: social media news, new brands, integration to social platforms\n ","© SAP AG 2010. All rights reserved. / Page 41\nExamples of companies\ntremendously successful in China\nAutos\nConsumer\nGoods\nRetailElectronicsGlobal Internet Players Have Failed\nWhile Other Global Brands have Succeeded\nInternet companies\nstruggled in China\nfailed to\nfailed to\nBUT\nfailed to\nfailed to\n ","© SAP AG 2010. All rights reserved. / Page 42\nDifferent Social Networks\n ","© SAP AG 2010. All rights reserved. / Page 43\nThe Role of Chinese\nE-Commerce Players\n1. Multi-label e-tailers are primary\naccess points to consumers\n2. They are sticky and growing\n3. While foreign companies in other\nindustries have succeeded in\nChina, internet companies have\nfailed\n ","© SAP AG 2010. All rights reserved. / Page 44\nSummary\nSO WHAT?\n ","© SAP AG 2010. All rights reserved. / Page 45\nFocus on the Entire Evaluation Process\nTakes 2-3 Months for Chinese Consumer\nTouchPoints\nTime\nAwareness\nInfo Search\nEvaluation of\nAlternatives\nPrice, Avail.\n\u0026 Purchase\nPost-\nEvaluation\nMono-label Stores:\nArmani, Burberry\nHigh-End Retailer:\nNeiman Marcus\nE-Tailers\nBrand Advertising\nEndorsements (celebrities)\nEditorial\nStylists\nSocial (friends, family)\nWindow shopping\nIn-Store experiences\nFocus and\nMotivate Key\nInfluencers;\nSensorial-rich\nmediated\nenvironment\n ","© SAP AG 2010. All rights reserved. / Page 46\nExamples of Growing Sites\nAwareness ! Decision\nNet-A-Porter: Comprehensive\n• Catalogs and shopping by designer,\n• What’s new,\n• Editorial\n• Many countries\nAsos: Engaging (1.6M fb likes)\n• Virtual wardrobes with tags to share, competitions\n• daily deals, marketplace for vintage\n• editorial; community reviews\n• inventory check from other sites, own labels\n• Mobile, iPad, PC\n ","© SAP AG 2010. All rights reserved. / Page 47\nNew Start-Ups\nFocused on Influencers: Stylists\nBoutine: New Incentive Model\n• Financial ncentives for “stylists” to sell items via\nvirtual catalogs\n• Focused on emerging designers who post items\nStylist Pick: Professional Stylists\n• Popular stylist consultants and handbag/shoes\n• Fixed price\n• Own label\n ","© SAP AG 2010. All rights reserved. / Page 48\nSummary\nTarget and Position to Consider\nYoung\nConsumers\nMulti-Tier\nBrands\nBrand\nEducation of\nMiddle Class\nTier-2 and\nTier-3 Cities\nEngagement\nTEST NON-\nCHINESE\nMARKETS\nFIRST\nSocial\nGuidance:\nAwareness !\nPurchase\nInfluencers as\nFashion\nFanatics\nTARGET POSITION\n ","© 2011 SAP AG. All rights reserved. 49Internal\nNo part of this publication may be reproduced or transmitted in any form or for any purpose\nwithout the express permission of SAP AG. 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