The Chinese are fast becoming more affluent. In a report by China Merchants Bank and consulting group Bain & Co, research confirms that the world’s most populous nation now has 500,000 high-net-worth individuals with at least Rmb10 million ($1.5 million) in investable assets.
This swell of wealth means the Chinese are becoming even more brand-conscious. Take, for example, the surge in demand for luxury cars. In the first quarter, Mercedes Benz saw its sales jump 112% year-on-year in China, while Ferrari’s sales climbed 50% in 2010 versus the previous year.
It’s not just the motor industry that is realising the huge potential of China’s wealth market. Louis Vuitton has unveiled its 'Louis Vuitton Voyages' exhibition in China’s National Museum. The gallery showcases suitcases through the ages and holiday outfits in glass cases. This is the latest ploy by the French luxury brand to charm Chinese consumers.
So with China’s surging passion for high-end western brands, should western private banks and wealth managers not also expect a rising tide of client demand?
Bain’s research does suggest that brand is the most important factor for Chinese high-net-worth individuals when selecting wealth-management institutions – ahead of both expertise and relationship-management skills. Yet it also reports that foreign institutions are not trusted to the same extent as domestic banks.
This is not altogether surprising, nor is it unique to the Chinese market. Foreign bank brands face an uphill struggle whenever they go onshore in a new territory for the first time.
Unlike luxury brands, where ultimate product quality and performance can be engineered, the investment-management and human elements of the private-banking service always pose a challenge. The rise and fall of markets, combined with the personal nature of relationships, make it difficult to achieve consistency.
Add to this the fact that people are naturally cautious when it comes to managing their money, especially if it is to be managed by foreigners, and the scale of the challenge becomes clear.
Leading financial services providers recognise that effective brand strategies are critical to success away from their home market. In particular, creating emotional equity in the brand is critical to breaking down cultural barriers. Here it is possible to learn from some of the best luxury providers. The top luxury brands set expectations and then exceed them to create stand-out moments.
But emotional equity can only be built on firm foundations. For a wealth-management firm to be successful outside its home market, all aspects of brand strategy must be nailed down.
In recent research that Scorpio Partnership completed with 20 senior marketing professionals in the global wealth-management industry, we identified five steps that successful wealth-management firms use to create a positive impression of their brand. These are:
- Searching for alignment: they pull together all the data they hold on clients and articulate how the firm’s vision and aims link to clients and what this means for the behaviour of the organisation.
- Segmenting for clarity: they are clear about who their target clients are, how the value proposition supports them and how the brand will reach and influence them.
- Messaging for passion: they define their brand personality and use language that engages customers clearly and directly.
- Building an experiential culture: they are clear about the experience they want to deliver to clients, when they want to reach out to clients and how. They have a strategy in place to make sure each interaction gives clients the best possible experience of the brand.
- Leading from the front: they make sure the brand strategy is backed by senior management and regard it as a strategic issue and a catalyst for change.
These steps are far from simple to achieve, but they are essential to creating an image and identity that clients can warm to and trust with their hard-earned savings. Nowhere is this more important than in new markets, far from home.