In China, The Market Is Still Growing

In 2007, China overtook Germany to become the third largest economy in the world behind second place Japan and leader, the United States. By 2009, China overtook Japan, and is quickly closing the gap to become the most populous country with the biggest economy.

For companies occupied with expanding their bottom line by finding new clients this means that China, with over 1 billion people living in its borders has an up and coming upper-middle  and upper-class that are able to spend money on luxury goods. This explains why luxury brands are busy setting up shop in the communist country's capital Beijing and in its largest and cosmopolitan city, Shanghai.

The accounting firm KPMG in cooperation with Australian Monash University, issued a publication in 2007 titled "Retail Luxury brands in China." In it, the report covers the some of the difficulties western companies are facing as they foray into China. The report's highlight may be that very few companies have made significant returns from their presence in China, and that advertising costs in cities where these companies plan to open stores are very expensive and consumers are hard to reach.

By September 2009, the situation seems very different, at least for luxury brand Cartier. The company is one of many western luxury brands, mainly from Europe, eager to find buyers in a market relatively free from government taxation, and eager to explore labels they could only read about 20 years ago.

In a recent interview to the state owned, English language newspaper, the China Daily, Cartier's new president and chief executive officer, Bernard Fornas, discussed the importance his company places on its presence in China.

"I think cruising speed for Cartier over the next three, four or five years will be about 55 boutiques to cover the country properly. In five years, the country can change further and maybe what I am saying now will be wrong and it could be 75," he said.

The company he manages has 32 stores in 18 cities across the country, making China its fourth largest market. What is impressive is the growth potential he still sees in the country and its importance in the growth potential for Cartier.

"I think China will be the number one market for Cartier in three to four years and that is our aim."