China’s major cities are filing up with luxury brands, leading companies to push further into China at a rate faster than ever before. Louis Vuitton has already speed up its expansion in China’s interior. Just in this past year, LV has opened two more stores in Mainland China: one in Hangzhou’s MixC mall and another one in Chengdu’s Yanlord Square. And by the end of this summer, LV will have opened its first flagship store in Chongqing.
Louis Vuitton in particular is very passionate about the Chinese market. It was one of the first luxury brands to enter China in 1992, when it opened its first store in Beijing’s Peninsula Hotel. Since then, the brand has grown sucessfully and now has over 36 stores in mainland China. LV’s success can be attributed to its strategy. The company “has spent the last several years in China ramping up its inland expansion and rethinking its strategy in top-tier cities ” according to the Chinese magazine Asian Business Leaders. A part of this plan involves visits a planned location at a target city at least 25 times at different times of year to get a better sense of the local climate, culture, market, architecture, and transportation infrastructure before deciding to expand there.
Another component of Louis Vuitton’s strategy is its “big store strategy”, where new flagship stores are positioned at or near city landmarks. This strategy has already been put into action last month, when LV opened its largest store, covering 1,800 square meters, at Guangzhou Taikoo Hui Mall. LV’s first Chongqing flagship, which will open at the end of this summer, is located on the city’s Jiefang Bei Pedestrian Street, which is a popular destination for tourists and shippers. This store will be another behemoth, covering 1,500 square meters. As a part of the “big store strategy”, LV this past April closed its store in Shanghai’s Plaza 66 location for an ambitious remodeling project. Upon completion, this store will become China’s first “House of Louis Vuitton”, which will include an art exhibition space and a library. By carefully picking prime locations and building large stores, LV is building its advantage in China’s luxury market. But luxury brands cannot thrive on just having prominent stores in prime locations. These stores need the right staff and proper management in order to succeed. And in China, hiring the right staff to run these kinds of boutiques and stores is one of the greatest challenges.
A recent article on Red Luxury reports that for companies entering China, finding the right managers is already very difficult. And when these luxury brands push further eastward, it will become even harder. This problem is echoed by Helen Willerton, the managing director of Chole’s Asia Pacific sector, who says that “there are so many positions to fill and not enough people to fill them. Finding staff in China is on everyone’s agenda at the moment.”
So how can it be that in a country with 1.3 billion people, there is a shortage of labor? A part of this problem stems from the Chinese education system, which focuses on memorization. This differs from what Western business need, as they are looking for creative thinkers. And this discrepancy creates a lot of difficulty in the realm of retail. According to Rick Phillips, the chief technology officer at the employment training company Castle Worldwide, Inc., the way that Chinese students are accustomed to learning – through dictation, note taking, and memorization – is not a great way to teach sales skills. In response to the growing luxury market in China and increasing demand for labor from this market, the Chinese have developed new education programs specifically for the fashion industry. For example, Fudan University in Shanghai and Tsinghua Universtiy in Beijing offer luxury training programs.
But at the moment, the shortage of managers can hinder the movement and expansion of luxury brands into China. However, what is a problem for these companies is a great job opportunity for qualified candidates. Both Chinese students who have studied abroad, as well as international candidates who speak Chinese and have had experience in China are in high demand. And this intense demand is driving up the compensation of these positions.
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