2011 Bain China Luxury Market Study

Implications for luxury brands in Chinal A B C D E Organic growth/ exclusivity Digital marketing Superior service Talent building Explosion of social media • Main challenges ahead As more brands have established broad presence through expansion, there is increasing need for of ensuring availability while maintaining exclusivity Digital platforms getting more crowded, and difficult for brands to fully engage consumers and maintain luxury image/experience online. • More sophisticated Chinese consumers demanding services (shopping & after-sales) that are consistent across China and more personalized • Talent shortage remain major obstacles for brand expansion and organic growth, especially in Tier 2 & 3 cities • Multiple cases of luxury brands being exposed to an extent that's unheard of before · Exposure/vulnerability to PR risks Implications for luxury brands • Be selective on locations for geo expansion • Focus on improving shopping experience, offering differentiated products/services, etc to boost organic store growth and stay exclusive • Choose media and formats carefully • Maintain clear brand positioning and personality • Ensure sufficient training and tracking/ incentive mechanism to deliver professional service • Maintain consistent service level across shops in all city tiers • Continue to invest in talent management: recruiting, training, career management and retention • Actively monitor and manage potential PR risks exacerbated by online media exposure This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent SHA 2011 Bain China Luxury Market Study_Media release_vf 25

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