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Luxury Firms Lavish Perks on China VIP

BEIJING—Luxury companies have grown in China, and so have the lengths to which they will go to make Chinese consumers feel special.
Burberry PLC says it is targeting people it calls "very important clients" to develop cozy relationships. It recently invited one of its most-prized Chinese customers on an all-expense-paid trip to Beijing from Shanghai for a sneak peek at Peruvian fashion photographer Mario Testino"s "Private View" exhibit.
Burberry also made available its chief creative officer, Christopher Bailey, for a personal meeting and gave the top-dog shopper, whose identity Burberry declined to disclose, an exclusive tour of its Beijing store.
Louis Vuitton has taken some of its Chinese VIP clients to camel-polo tournaments in Mongolia.

The British fashion company wanted to show appreciation in an intimate way that left an impression, says Jancu Koenig, director of marketing for Burberry"s Asia business. "We"ve, of course, given exclusive opportunities to other customers around the world, but this was designed specifically for this customer," says Mr. Koenig. "The personal experience is becoming very important in the China market."
He says he couldn"t disclose how much of the company"s revenue in China comes from such heavyweight clients. "We can only say that it is valuable to put the effort into going above and beyond for them," he adds.
Burberry is among a number of high-end brands that are rolling out the red carpet for China"s gest spenders, offering VIPs exclusive perks, such as custom-made products or exclusive experiences to win their love and loyalty.
Christian Dior SA plans to fly its top-spending Chinese clients to its Paris fashion show in the fall. High-end property company Jinlin Group is launching a jet service to shuttle in potential buyers and guests of its resorts.
Luxury companies have used such tactics globally to attract spenders, but the strategy is heating up in China as the number of luxury stores has proliferated and the battle for buyers has intensified.

While China"s luxury market continues to grow strongly overall, some segments—such as watches and jewelry—have been slipping. Watchmakers" sales rose 15% in the first quarter of this year, slowing from 40% sales growth in the first quarters of 2010 and 2011, according to the most recent data available from U.S. consulting firm Bain & Co.
Wang Ying, a 26-year-old fashion lover in Shanghai, has been a fan of Louis Vuitton and Gucci for the past few years, following in her mother"s footsteps, she says. But in recent months she has taken to shopping at Shanghai"s Villa boutique, where she says the sales staff has become her close friends, offering her long chats and first glimpses at the work of lesser-known designers, such as Alexander Wang.
"Not everyone wears these designers, so I feel I stand out more," says Ms. Wang.
Still, she says, her old standby brands often call her in for personalized shopping tours, during which she has a store guide to help her pick out outfits to mix and match with purses and shoes.
"I always end up spending more when I shop with their help than when I try it myself," she says, noting that she spends around 20,000 yuan, or about $3,150, shopping every two months.
Louis Vuitton, part of LVMH Moët Hennessy Louis Vuitton, has taken 10 of its most valued Chinese clients to Mongolia for a helicopter tour, landing at luxury resorts to watch private camel-polo tournaments.
The French luxury giant is planning more events like this to "provide an experience to customers that they wouldn"t necessarily think of," a company spokesman says.
In July, Louis Vuitton opened the doors of a four-story Shanghai outlet equipped with an apartment for private-client events and a parlor where VIPs can custom-design their own bags and leather shoes.

Analysts say the rapid expansion of stores, coupled with growing wealth, has made luxury more attainable and more mass-market in China, alienating some customers who once felt unique when donning a Gucci belt or carrying a Dior handbag.
In June, Italian luxury company Giorgio Armani SpA announced plans to add 100 stores to its current 289 on China"s mainland. In May, Germany"s Hugo Boss said it would have nearly 150 stores in the country in the next three years.
"Luxury companies are asking themselves: How can I make customers feel special again?" says Max Magni, a principal at consulting firm McKinsey & Co."s Greater China division.  The question is particularly critical because China"s richest consumers are driving luxury spending. Households with income exceeding 300,000 yuan a year make up 70% of luxury spending in the market, according to McKinsey.

Catering to VIPs highlights the importance of "giving face," which is critical in China, says Aaron Fischer, an analyst with brokerage CLSA Asia-Pacific Markets. Chinese consumers want to know they are prized and want others to know it too, he says.
New York-based Affinity China runs luxury shopping tours for groups of high-level Chinese consumers, offering them exclusive experiences. In January it organized a private fashion show at Bergdorf Goodman"s Fifth Avenue store and a meet-and-greet session with wig designer Oscar de la Renta.
Chris Noble, co-founder of Affinity China, says the company has found that many well-heeled Chinese shoppers prefer not to buy in groups and will leave special events empty-handed. Mr. Noble has now started organizing special events for just six to eight Chinese VIPs.

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