“When I’m abroad, particularly when I’m in Beijing, I realize there is very much respect for German products,” he said. Well-to-do consumers everywhere seem to understand the principle that “less is more” when it comes to living well, and are willing to pay high prices for the quality that Germany provides, he said.
“We increase the most in Asia — first of all, mostly in China,” said Dieter Burmester, chief executive officer of Burmester Audiosysteme GmbH, a celebrated maker of high-end musical sound systems. ” ‘Made in Germany‘ is very well accepted in Asia,” he said, and sales have been brisk in Japan, Taiwan and South Korea as well.
The Asian market has become so important to Burmester that the company goes to great lengths to avoid offending Asian customers by not using the number “four” on any of the sound equipment sold there because that number connotes “death and destruction” in many Asian traditions, he said.
Deutsche WorkStation, a company that designs high-end interiors for yachts, hotels and offices, recently opened an office in Moscow, where it has a number of wealthy clients and expects to find more, said Chief Executive Officer Fritz Straub. The company already has offices in London, Paris and Switzerland.
The company is working on a luxurious yacht interior for a Russian oligarch whom it declined to name. The Middle East, with its oil riches, also has proved fertile ground for the company, which designed a megayacht, “My Abdul Aziz,” owned by the king of Saudi Arabia.
Deutsche WorkStation’s fortunes appear to have become so linked to the wealth in oil states that a look at its revenue flows in the past five years shows they largely rose and fell with fluctuations in oil prices. The company had a particularly bad spell in 2009 when premium crude prices briefly crashed to around $35 a barrel from all-time highs over $150 in July 2008.
“Our clients are rich,” said Mr. Straub. “We make basically toys. We make beautiful homes and yachts, but they are toys.”
Catering to the rich
Luxury goods sales have held their own as well in the U.S. and Europe, where well-heeled customers were not hurt as much by the recession and sluggish economic recovery as were middle-class consumers. But emerging markets are driving a boom in luxury goods worldwide, according to Standard & Poor’s Corp.
“Affluent shoppers have retained their buying power” everywhere, said Standard & Poor’s credit analyst Nicolas Baudouin, who predicts another good year for high-end products in 2012. But in particular, he said, “luxury goods are selling very well in developing countries, such as Russia and China, as well as in Middle Eastern gulf states.”
Peter May, a consultant for small German luxury manufacturers, said that expansion into emerging markets is the future for German industries, from the auto giants Mercedes-Benz and Volkswagen to the smallest family-owned firms.
China already has become the biggest market for one luxury automaker — Audi — and its parent company Volkswagen claims the biggest share of the Chinese auto market, which at 16 million vehicle sales a year is now the world’s largest.
Audi’s luxury sedans line the parking lots of Chinese government agencies in Beijing and elsewhere. They are so heavily favored by China’s well-heeled and well-connected bureaucrats that the government recently moved to require agencies to purchase domestic cars in a bid to boost China’s fledgling car industry.
Because German workers earn high wages by world standards, German companies cannot compete with Chinese competitors on price, so they must earn the high prices they charge by surpassing all the other options in quality, Mr. May said.
“Our products have to be perfect. They have to be masterpieces. That is the criteria” to succeed, he said. While only the wealthiest people in most nations can afford many of these products, as a group they control huge amounts of money and are one of the fastest-growing markets in the world, he said.