Guext column

Is India the next China for luxury brands?

Author Radha Chadha emphatically responds to this burning question

Retail space crunch. Sky high rentals. Stiff tariffs and taxes. Steep expenditure on décor. Lack of trained staff. The ground realities of India’s nascent luxury industry are daunting.A nd while China marches sure-footedly on its way to becoming the world’s number one luxury market in just another seven-eight years, the question that many luxury brands grapple with is: Will India be the next China?

Despite the challenges, my answer is an emphatic yes. Here’s why.

Firstly, every new luxury market in Asia has gone through the same growing pains and come out shining–and so will India. China did not have swanky luxury retail space to begin with–just like India, luxury brands started in five-star hotels and expanded to shopping malls and high-street options as they became available. Take Shanghai. Plaza 66, the poster boy of luxury shopping malls in China, opened its doors in 2001, a full decade after luxury brands entered China. If DLF Emporio opens in 2008, five years after luxury brands came to India, that’s not so bad.

Two, just like China, there’s a ton of new wealth being created in India, and that is the foremost driver of luxury brand consumption. ‘Old money’ is nice, it is polished, it wears luxury well, but do not forget that India is essentially a ‘new money’ story. As we rise in the millions, we will form a luxury consumer base as large as China’s. Old money is a very significant segment today–by all means, cater to them–but the real prize is India’s new money in all its guises: the businessmen, the professionals, the NRI (non-resident Indian), the women climbing up the corporate ladder.

Three, luxury in China is for the guys with the big bucks, of course, but the luxury brand culture has spread to the everyday Jane Changs and Joe Wangs, that great underbelly of secretaries and junior executives that happily chuck a month’s salary at a logo bag. You may wag your finger in disapproval at this sort of indiscriminate spending, but the reality is that young India is just like its Chinese brethren. Young India doesn’t give a damn about Gandhian austerity. It is unashamedly materialistic. Give it time to come of age and it will inevitably slip into Jimmy Choos and Rohit Bals.

Four, the cult-building machinery is just falling into place. Vogue magazine launched in China 15 years after luxury brands had been there; by contrast, it is in India a mere five years into the game. Vogue and its ilk of glossies shape the collective fashion sense of a nation, building desire and providing knowledge, and that process has already begun. Many new fashion and lifestyle titles have been launched in the last couple of years, both international and local, and as their numbers and influence grows, so will the cult of the luxury brand (China’s glossy titles run in the hundreds.)

But India’s trump card is Bollywood–by far the most powerful cult-building machinery. China didn’t have an entertainment industry to begin with, and still doesn’t have anything close to the high wattage ‘star power’ that Bollywood provides. Think of what the red carpet at the Oscars does for luxury brands, and multiply that a thousand times over–that is the power Bollywood potentially wields on the Indian market. As the luxury industry harnesses that star power–as they surely will–expect the culture of luxury to spread far and wide in India.

Radha Chadha is the author of the bestseller ‘The Cult of the Luxury Brand: Inside Asia’s love Affair with Luxury’. She is also the founder of Hong Kong-based brand consultancy Chadha Strategy Consulting.