Hong Kong-listed Lamborghini distributor aims to grow high-end electronics brand Bang and Olufsen in China
- B&O brand in China will be our focus in coming years, Sparkle Roll’s chairman and CEO says
- Danish firm was the largest contributor to company’s revenue besides its car brands, according to its midyear report for 2019
Sparkle Roll Group, the Hong Kong-listed distributor of Lamborghini, Rolls-Royce and Bentley cars in mainland China, is developing a presence for high-end luxury Danish consumer electronics company Bang and Olufsen (B&O) as part of a new strategy to capitalise on the country’s improving living standards and spending habits.
It currently holds a 12.79 per cent stake in B&O, having acquired 6.5 million of its shares in late 2016. The Danish company was the largest contributor to Sparkle Roll’s revenue besides its car brands, according to its midyear report for 2019. Revenue from sales at B&O increased by 1.05 per cent to HK$116.1 million (US$14.85 million) in the six months ending September 30, Sparkle Roll said.
“While the luxury car business is still our top priority, running the B&O brand in China will be our focus for the coming few years,” Zheng Haojiang, the company’s chairman and chief executive, said in an exclusive interview.
The company is banking on China’s rising middle class. Urban households with more than 140,000 yuan in disposable income had grown from 8 per cent in 2010 to about half of the mainland’s population in 2018, US consultancy McKinsey said in its China Consumer Report 2020. Spending by these urban consumers now accounted for 60 per cent of the country’s GDP growth, the report said.
Moreover, Beijing has introduced a series of tax cuts to boost domestic consumption. Starting on October 1, 2018, individual taxpayers’ annual tax-free threshold was increased to 5,000 yuan a month (60,000 yuan annually) from 3,500 yuan a month, expanding the income range for lower tax brackets.
“This is a consumption upgrade. It’s not that consumers don’t like the B&O brand, but it might be too expensive for them. Once they are [better off], they are willing to spend more money to buy it,” Zheng said. “We have made sufficient preparations in the past two or three years to grow the brand in mainland China, and have seen stable and rapid development.