China Europe International Business School

The Prestige Brands Forum

(2008~2014)

Summary Report

The 6thPrestige Brands Forum 2014

Contents

u Organisers

u Theme

u Speakers

u Participant Analysis

u Media Exposure

u Display Area

Organizers

3

Forum Partners：

Premium Media

Partner

Annual Strategic

Partner

Annual Forum Support Co-sponsor

Forum Support

Partner

CEIBS is a not-for-profit joint venture, established in 1994 with the financial and political

support of the Chinese government and the European Commission. As a “special education

zone”, CEIBS has risen to become one of the best business schools in the world and has been

instrumental in nurturing the types of leaders who have navigated the challenges of China’s

economic transformation with distinction. Premier Wen Jiabao once spoke highly of CEIBS as

“an incubator for excellent business leaders”.

Located in the heart of downtown Shanghai, Jing’an District is home to renowned brands

from home and abroad. At present, over 1,300 brand names, including more than 800

international ones, congregate along Nanjing Road, Jing’an District. Plaza 66, CITIC Square,

and Westgate Mall, the so-called “Golden Triangle”, attract the greatest number of famous

international brands in Shanghai.

Forum Cooperate

Partner

Forum Organisers：

Strategic Support

Association

Support Association

The financial tsunami which erupted in 2008 did not turn out to be the ‘coldest winter’ for world renowned luxury brands that had already withstood the test of even the Great Depression. In fact, even before the challenges brought by the global downturn that spilled over into 2009, these brands had successfully dodged market saturation through conglomerate diversification. Now, more importantly, they are increasingly turning to China to cushion them against the collapse in demand from other countries. Fuelled by a three-decade-old economic boom that created a still-growing urban elite, China's appetite for luxury goods is surviving one of the sharpest ever global economic slumps and propping up weaker growth elsewhere. However, in a dynamic market with 50 million potential consumers eager to spend on luxury items, China has very few brands of its own. Will China, with its fascinating culture rooted in thousands of years of history, be moving up the global supply chain to luxury goods that can compete in quality, style and prestige with anything from Paris, Milan or New York?

Forum 2010 “Luxury – The China Games in a Time of Global Challenges”

Forum 2008 “Winning Consumers with Luxury as a Value Added Service”

“Luxury Brands Forum ” will become an annual gathering of luxury executives to exchange their views, discuss the common concerns and the hottest issues, and share the spectacular insights. China has become the third most important customer base for the luxury goods industry, accounting for an estimated 12% of total sales of the biggest brands. Luxury brands are responding to more sophisticated customers in China and elsewhere with exclusive products that offer a personal touch. This requires adapting different cultures appropriately. The world’s luxury industry leaders are now competing to strengthen their premium brands and win-over increasingly fickle consumers in the key international markets as well as in the vast China market. Meanwhile, emerging Chinese competitors are making headway in both the domestic and global markets.

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Forum 2011 “ Collaboration and Differentiation: Diversify Core Competitiveness for Prestige Brands ”

Democratization of luxury which has been brought about by globalization, wealth-creation opportunities, new market segments, digital communications, international travel and culture convergence is changing the landscape of the luxury universe. On the one hand, classic luxury brands have become visible, recognizable, and accessible to the public. Seeking synergies within luxury powerhouses, employing modern management tools, extending brand equity over a spectrum of products and the emphasis on show-buzz marketing have resulted in the fundamental change of “luxury heritage”. On the other hand, the unprecedented opportunity of the luxury sector encourages firms who are struggling with low margins to consider trading up. Manufacturers are looking for ways to differentiate their intangible assets: premium value and brand power. However, is there a universal gospel to create value for prestige brands? Or will different business models lead to varied brand types which can satisfy the highly diversified customers? Attend the 3rd Prestige Brands Forum for your front-row seat as some of the world most influential trend setters participate in a frank and informed discussion of the critical challenges facing the industry and offer their solutions.

Theme

Forum 2012 “China – Inevitable Battleground for Luxury Brands”

China is now not only the No.2 market for western luxury brands but also becoming a battleground, shaping the future of the luxury industry. Domestic entrepreneurs started the “industry of privilege” to create a “right” brand as self-expression. Pioneers can be seen in the distinguished architectures of free standing stores, in major fashion shows around the world, in A-list celebrities’ blogs and even in movies and magazines. In light of their far-reaching success, we couldn’t help but wonder: “How do they develop brands with such unprecedented speed while remaining competitive with their peers with hundred-year heritage? What manner of interaction exists between well established brands and new-comers and what is the best way to invest in a cross-border context? And finally, what’s the influence of the robust development of social media in China and across the world?” In recent years, CEIBS has been a keen observer of the development of western luxury brands in China..At the 4th Prestige Brands Forum, it will bolster its presence at the forefront of matters facing the luxury industry through debates on the major issues aforementioned.

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Theme

7

Forum 2013 “China – Inevitable Battleground for Luxury Brands”

Craftsmanship and quality are one of the essential dimensions of luxury. In the 19th century when luxury brands were created in France, Italy, Switzerland and the UK, their products were manufactured by gifted craftsman and were bought by the elites of the time: royalty, aristocrats, high bourgeoisie, and successful businessmen…With the development of their customer base since the 1980s, most luxury brands had lost this uniqueness. Some brands even lost touch with their craftsmanship and quality roots. A disenchantment of luxury took place, which has hurt it. In this context, three major things happened: craftsmen with exquisite taste have decided to distribute their creations and launch their luxury brands; former executives of luxury brands have decided to create new brands respecting this spirit of quality, craft and exclusivity; established luxury brands have realized this and have entered a new era: they are looking back to their roots and refocusing on craftsmanship and quality. This leads to a second important question: the “Made in…” issue. Customers of French luxury brands buy both the brand and France. The same can be said of customers of Italian, Swiss, British brands. This gives a major importance to the place where the products are created and manufactured. “Made in France”, "Made in Italy”, "Made in Switzerland”, "Made in the UK” have become issues that the luxury professional organizations have been defending for years. In each case, it is synonymous with quality in the mind of customers. These two critical issues are food for thought for the upcoming prestige brands: How can they ensure that “Made in China” becomes a symbol of quality and craftsmanship? How can they protect and develop the exquisite crafts that have been born in China? CEIBS Prestige Brand Forum has decided to explore all these topics.

Theme

8

Forum 2014 “China – Inevitable Battleground for Luxury Brands”

The luxury industry is now grappling with many challenges brought about by rapid changes in both business environment and consumer behaviour. When the global financial crisis hit in 2008, Asia – and in particular China – became a key revenue driver for global luxury brands. Encouraged by soaring sales, most began expanding their presence in the Chinese market. In 2012, with economic recovery in the US still moving at a snail’s pace and the Eurozone economies paralyzed by a debt crisis, luxury companies continued to rely on sales revenue from China to keep them in the black. Most were caught off guard that year when austerity and anti-corruption campaigns were introduced by China’s new leaders and had a noticeable impact on sales. Some product categories, such as watches, have seen their sales in China decrease by as much as 30%. New regulations are expected to continue having an impact; many expect China will soon introduce a luxury consumption tax.

In addition, Chinese consumers are becoming savvier and more sophisticated, and their purchasing behaviours are changing. Many now flock to Hong Kong and Europe to buy luxury goods at better prices. Some prestige brands that had been focusing on logo-centred products were perceived as being overexposed. To regain their premium brand cache they are now rapidly repositioning themselves towards higher-priced leather goods and putting the brakes on store expansion. Meanwhile brands considered more niche and sophisticated are developing a growing following. Chinese luxury consumers are also beginning to expand their spending into new product categories such as gourmet food, furniture, yachts, and airplanes.

All these changes have had important consequences for luxury groups and brands, who are responding by changing their traditional organizations, and trying to become more nimble and get closer to their customers. In some cases new business models have appeared – developed mainly by Chinese brands in the luxury segment. How are these recent changes reshaping the future of the global luxury industry? The 6th Annual Prestige Brand Forum, supported by four of the major European luxury associations: Altagamma (Italy), Walpole (UK), Meisterkreis (Germany), Fortuny (Spain), brings together leading scholars, experts and senior executives from world renowned luxury companies to share their insights on the new trends that are reshaping the industry, and the lasting impact they will have on the future of the global luxury business.

Theme

Chief Executives from Global Luxury Industry

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Jean-Claude Biver CEO & Chairman

Hublot

Daniel Talens Managing Director

La Montre Hermes, Asia Pacific

Georges Kern CEO

IWC, Baume & Mercier and Roger Dubuis

Philippe Leopold-Metzger CEO

Piaget group

Emanuele Aliotti Visdomini President Vhernier

Michele Norsa CEO & Group

Managing Director Salvatore Ferragamo

Paolo Regna President

Ermenegildo Zegna Holditalia SpA

Speakers

10

Andrew Wu Director

LVMH Group, China

Leo Liu President

Hermès China

Christian Gobber Managing Director

Maserati, China

Edoardo Vittucci General Manager of China DIstrict

Tod's

Raphael Le Masne de Chermont Executive Chairman

Shanghai Tang

He BIN Director of China District

Kiton

Yue-Sai Kan Chairwoman

House of Yue-Sai

Benjamin Bilteryst President of Asia Pacific Region

Christofle

Chief Executives from Global Luxury Industry

Speakers

11

Ms Agatha Ruiz de la Prada Designer of Agatha Ruiz de la Prada

Mr. Fernando Aguirre General Manager of Agatha Ruiz de la Prad

Agatha Ruiz de la Prada

Mrs. Rosa and Mr. Salvador Tous Co-Presidents

Tous

Cetin sekercioglu Vice President

Shangri-La Group

Umberto Angeloni Former Partner & CEO

Brioni Group

Elliott Yuen Former Co- founder

Shanghai Tang

Jiang Qionger Art Director&CEO 「Shang Xia」

Harry Wang CEO & General Manager

SHIATZY CHEN

Chief Executives from Global Luxury Industry

Miguel Torres President

Torres

Speakers

12

Zhu Xiaojie

Chairman & Chief Designer Opal-Funiture

Frank Rexach Vice President

Howorth

Gao Feng Former Managing Director

of China Bottega Veneta

Sun Zhaoguo General Manager & Chef

No. 5 XiJiao

Chief Executives from Global Luxury Industry

Thibault Villet CEO and Founding Partner

China Glamour-Sales

Francis Gouten Founder

Gouten Consulting Ltd.

Edward Lu Former Managing director

MONTBLANC, China

Wang Yunhe

Chairman Zhao Yi (Beijing) Co., Ltd.

Francis Chen

President Seagull Group

Xia Hua President

EVE Enterprise Group

Zheng Yonggang President

Shanshan Group

Zhang Zhifeng Chairman & Art Director

NE.TIGER

Speakers

13

Han Zhijie Media Business Group

General manager Tencent

Zhong Lei Senior Managing Director

Fosun

Chief Executives from Global Luxury Industry

Tom Doctoroff CEO of North Asia

J. Walter Thompson

Bruno Lannes Partner

Bain & Company

Rupert Hoogewerf Chairman & Chief Researcher

Hurun Report

George Singleton Chief Strategy Officer Publicis Greater China

Dickson Sezto President

Insite Asset Management Group Ltd.

Wang Xingzheng Chairman

Shanghai Yongfoo Elite Investment Management

Zhong Gang Chairman

Shanghai Zendai Himalayas Real Estate

Chen Zhi Chairman

CasewayBay Group

Speakers

Gao Zhen Managing Partner

Mandarin Capital Partners

CAI Mingpo Chairman

Cathay Capital Private Equity

Sam Flemming Founder and Chairman

CIC

Sheena Jeng CEO

Publicis Greater China

Jonathan siboni Director

Deluxe Society

Jose Manuel Villanueva Co-founder & CEO

Privalia.com

Augusto Cagnardi CEO

Gregotti Associati International

Eric Lee Managing Director

J. Walter Thompson

Chief Executives from Global Luxury Industry

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Prof. Pierre Lu Assistant Professor Fudan University

Prof. Michel Chevalier Professor

Paris Dauphine University

Prof. Mark Ritson Associate Professor of

Marketing Melbourne Business School

Prof. Michel Gutsatz Director of the MBA & EMBA

Programme Euromed Marseille Ecole de

Management

Jiang Jiongwen Professor of Marketing

China Europe International Business School

Jean-Noël Kapferer Pernod Ricard Chair on the

Management of Prestige Brands HEC Paris

Anne Michaut Distinguished Professer of

Marketing HEC Paris

Academia & Speakers from Industry Association

Speakers

Forum 2014 saw almost 600 participants, with the following charts showing attendance details:

Industry

Position

16

15%

17%

25%

16%

15%

8% 4% Finance

Luxury Brands

Other Brands

Media

Government

Research Instiution

Academia

Participant Analysis

0

50

100

150

200

250

300

350

400 362

125

45 34 67

17

Participants are from……

The feedback from Participants was very positive. The majority of participants were

happy with the networking opportunities the conference provided – a closed-door

seminar and welcome Dinner is organised to facilitate further sharing and exchanging of

information. 96% of the participants were willing to recommend the Forum to their

colleagues and friends.

2014 Satisfaction：

Participant Analysis

18

Special Thanks To：

Media Exposure

Strategic Media Partners

Media Partners

19

Print Media Coverage

Every year, the Prestige Brands Forum draws much attention from mainstream media both

local and abroad. The Forum 2014 has generated 134 pieces of relevant coverage, namely, 2 TV

interviews, 14 pieces of print media coverage, 11 news agency reports and 107 pieces of online

media coverage, and has created advertising value of RMB 2,640,000 .

14 pieces of print media coverage: advertising value of RMB 1,740,000.

- 6 pieces of in-depth print media coverage (of over 1,000 characters each) by the Modern

Weekly, Shanghai Financial News and China Business Journal;

- 5 pieces of print media coverage by financial newspapers like the China Business News and

21st Century Business Herald and high-end fashion magazines like the ELITE, MANGAZINE and

TATLER;

Media Exposure

20

TV Coverage

2 TV interviews: advertising value of RMB 580,000 ; more than two minutes of coverage to

the 5th Prestige Brands Forum 2013 by both CCTV2 and CBN Channel;

Media Exposure

21

Internet Live Coverage

81 pieces of online media coverage: advertising value of RMB 280,000 , including:

- 11 news reports by Hexun.com on April 27;

- 4 news agency reports from Chinanews.com; - National mainstream websites like China.com.cn, ifeng.com, sohu.com and sina.com.cn; - Local major websites, such as jschina.com.cn, eastday.com and kaixian.tv; - Major financial websites, such as cb.com.cn, 21cbh.com and eastmoney.com; - Other types of websites like mbachina.com, chinabyte.com and gucheng.com.

Media Exposure

22

Campus Display

As part of the event,an exhibition was staged in the magnificent setting of CEIBS's state-of-the-art campus (designed by Pei Cob & Freed) with luxury companies from around the world showcasing their latest designs. The exhibition generated a high level of interest, not only among conference participants, but also among CEIBS alumni and students.

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CEIBS Industry Forum