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China's Luxury Brand Maotai Rejects Luxury Label (and Apple)

Posted by Abe Sauer on January 19, 2012 11:07 AM

The 8th annual Hurun 'Best of the Best' Awards ranks 2011's Top Ten Gifts for the Chinese Luxury Consumer 2012 "based on the choices of 503 Chinese millionaires interviewed face to face" and the Most Valuable Luxury Brands in the World "ranked by the dollar value of the brands."

But the findings of the luxury brand study from China's chronicle of the luxury market and "rapid changes amongst China’s high net worth individuals" is being rejected… by some of the very brands listed.

Louis Vuitton tops both lists and shares space in the top ten with fellow fashion brands Cartier, Chanel and Hermes. Finishing fourth and seventh, respectively, in the World’s Most Valuable Luxury Brands list are Chinese names Moutai (茅台酒) and Wuliangye (五粮液).

But in a move that may seem foreign to luxury brand practice, both brands of Chinese baijiu, or "white wine," have rejected the findings.

A Maotai spokesman told the press, "In regards to being included in Hurun’s luxury brand list, Maotai has never claimed itself eligible to be considered a luxury brand. We don’t know anything about Hurun’s list, and wish to distance ourselves from it.”

Unlike in the West where a "luxury" brand is determined by a combined agreement of positioning and consumer sentiment, in China luxury brands apply to be officially considered "luxury." Indeed, Maotai's best-selling "53 Degrees Feitian" label sells for around 2,000 yuan (approx. $320). Maotai's reputation also spans modern Chinese history with numerous anecdotes lending to its brand history, which it claims can be traced back 2,000 years. For example, Premier Zhou Enlai shared a bottle with President Richard Nixon during the latter's historic visit. The liquor was a favorite of Zhou's, a man who once said “The Long March was a success in large part due to Maotai." Appropriate then that it has become the beverage of the long march away from communism.

One reason Maotai might be loathe to accept its luxury moniker may be China's recent war on the term. In 2010, a Beijing law imposed a $4,500 fine for any public advertisement that employed the term "luxury" (or variants thereof). The law aimed to cool the growing awareness of a widening wealth gap made all the most obvious by conspicuous luxury consumption.

Hurun does not provide its specific methodology beyond "based on the present net value of the brand equity," so its claim that "The Moutai brand is now worth more than household names in the West such as Mercedes-Benz and Chanel" is suspect. But cross-referenced with the study's other findings that Maotai is, just behind Chanel, the fifth rated "Gift for the Chinese Luxury Consumer" as determined by those 500-plus Chinese millionaires proves that, at least within China, Maotai's luxury status is unquestionable, if not official.

A noteworthy detail lost in the Maotai haze is that Apple finished sixth on the survey of "Top 10 Gifts for the Chinese Luxury Consumer 2012." According to Chinese millionares, Apple is a more desirable luxury gift than Prada, Dior, Rolex and Armani. No wonder, then, that in China Apple's product releases  cause riots.

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