Health: Asia's new luxury product

Chinese consumers’ growing emphasis on wellness and lifestyle is creating a wave of new investment opportunities, say luxury brand executives.

Chinese consumers’ growing emphasis on wellness and lifestyle is creating a wave of new investment opportunities, say luxury brand executives.

The cultural shift is transforming swathes of industry: demand for vitamins has sparked a wave of Chinese outbound M&A while brokerage CLSA expects the ranks of Chinese tourists abroad to swell to 200 million by 2020.

“Anyone that doesn’t embrace the change from a business perspective is going to get lost,” said Bruce Rockowitz, the chief executive of Hong Kong-headquartered wholesale apparel firm Global Brands.

Part of it is a generational shift in attitudes.

“Health and fitness and wellbeing is a part of this new generation,” said Rockowitz who talked at the Milken Asia Summit about his daughters eating kale like he eats pizza.

Businesses are having to adapt to swift changes in taste and food fads across the world’s second largest economy.

Five years ago China imported about 150 tonnes of avocado; that surged to around 258,000 tonnes last year.

“Today the new luxury is looking after yourself,” said Ravi Thakran, president of LVMH Asia and the managing partner of LVMH-backed private equity firm, L Catterton Asia.

The size of the market opportunity has prompted many consumer-facing businesses to expand in the region. Consultants at PwC estimate China's health food market, for one, will grow by RMB100 billion ($14.6 billion) in the next five years.

“Last year, Asia’s middle class became bigger than the Americas and Europe put together,” said LVMH’s Thakran.

Brand it like Beckham

However building brand recognition is tricky and can take upto 15 to 20 years said Rockowitz.

This is why Global Brands, a spin-off from apparel sourcing giant Li & Fung, has teamed up with soccer superstar David Beckham to help established businesses such as British menswear retailer Kent & Curwen open stores in China.

Business leaders see plenty of room for further growth. Many in Asia have in the back of their mind the impact pollution is having on their health.

A new study shows how much pollution in China is curtailing its citizens’ lives.

In the US, 20% of the population have a fitness club membership, in Hong Kong it is less than 4%,  in China it is less than 2%, said Rockowitz, who  founded yoga and food firm Pure in Hong Kong about 16 years ago.

Pure now has about 30 outlets across Hong Kong, Shanghai, Singapore, Taipei and New York.

“It’s a change in culture out here, health has become the No. 1 thing that people are concerned about. That industry is the luxury industry right now,” said Rockowitz.

To be sure Chinese tourists’ vorascious demand for travel and new experiences can create problems, but they can be good problems to have.

“We don’t want 200 million tourists, we don’t have the infrastructure, we don’t have the workforce to repair all the damage. We want to the top 5% who are willing to pay a premium for good service, pay for a seminar on culture,” said Serge Pun, chairman of the SPA Group, which operates companies in Myanmar spanning real estate development to luxury travel and tourism.

For many luxury global brands, Asia is already critical to their growth strategy.

“The Singapore Grand Prix, I would argue, is the most on the important grand prix on the calendar,” said Zak Brown, executive director at McLaren Technology Group, who was speaking on the first day of the Formula One motor racing spectacular in the Lion City.

But still even such popular entertainment that can command huge audiences needs to adapt. McLaren is looking to attract a younger audience in Asia.

“They want a hands on experience,” said Brown. “What is going to make a real big difference for our sport moving forward is this thing called eSports.”

The 2016 League of Legends World Championship in October reportedly attracted a larger audience than baseball's World Series or the deciding tie of basketball's NBA finals.

Its growing importance is underscored by the inclusion of eSports in the programme for the 2022 Asian Games in Hangzhou, China.

A number of Asian companies are finding their ways to public markets. The closest is Razer, which has already applied for an initial public offering in Hong Kong. Garena Interactive, a Singapore-headquartered digital content and video gaming platform, is also tipped to conduct an initial public offering in the US as soon as this year.

“That is what is going to drive a younger more experiential audience for us,” Brown said.

¬ Haymarket Media Limited. All rights reserved.
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