Radu Rizea, senior editor of CPP-LUXURY.COM, a luxury news portal specialising in the CEE markets, ponders whether there is a future for indigenous luxury brands from Central and Eastern Europe.

Despite its position as opening for the global luxury surplus, the Central and Eastern Europe (CEE) is, in fact, quite poor when it comes to proprietary luxury brands. A company here and there, making a name around the globe in a few cases but that’s all. One could not find a dozen significant names on the luxury market, except maybe for some brands tightly connected to history and heritage, brands that not even the Communist regime dared to shut down. Herend porcelain and the Bohemian glass are the two names that come to mind approaching the issue.

A chronic lack of luxury

The absence of luxury in this area has its grounds. Beyond the historical lack of fortune that placed all CEE states in the way of migratory campaigns and wars of all sorts, the Eastern Europe found it difficult to assume a noble identity until the late 18th century. The only country where the influence of a certain nobility still stands is Hungary, once part of the Austrian – Hungarian empire.

In the late 19th century and the first decades of the 20th, a middle class is born. Youngsters return to their native lands after getting an education in Paris, Sorbonne, London or Berlin. The average level of education is at a peak. Meanwhile, on the market, tailors and their custom-made suits, jewelers and perfume makers become an elite among craftsmen. The aristocrats start longing for “Paris-like fashion”. Freeways built to serve for war purposes contribute to the exchange of knowledge, fashion and information. A few products generated in the East acquire international recognition.

The dawn of the Communist era, after the second world war and its subsequent crisis, brings along the persecution of noblemen and their families, the nationalization of all production facilities and, since luxury and the “proletarian dictatorship” can’t live together, the end of any production of premium or luxury items. Several countries in the CEE area struggle for independence from Moscow, only to bring famine and darkness over their people. The West is cautious in its relationship with Russia – satellite states. The road towards Socialism aims at full independence, from both the East and the West, targeting a fully functional autonomous society. Nothing is destined for consumption unless it is a national product.

The consumer’s point of view

In the ‘80’s, luxury meant for Romanians (and other Communist states) nothing but a plastic bag with a tobacco brand printed on it, a plastic bottle or a BIC lighter. A pack of cigarette (Kent or Rothmans) and a bottle of Johnnie Walker were the top achievable luxury. Their symbols remained in force quite a few years after 1989, the official date for the fall of the Communist regime.

After 1989, as any new market, the CEE state were flooded with cheap products, mainly from China, Turkey, Russia and Ukraine. From elementary households to t-shirts, dealers made a fortune on market lacking elementary financial regulations, such as excises, VAT or other taxes.

The middle class products (entry level / some quality) entered the market with cheers, horns and drums. Advertising budgets and the new “free” TV stations made average consumers that the Consumerist God has just rented a studio down the street and became one of theirs. A couple of products with warranties still valid, a few clerks under-55 and everything became heaven.

The first attempts to sell true luxury came around the dawn of the new millennium. CEE states had produced a handful of “new rich” – people in real estate, football, state employees in charge of privatizations and so on. They had already assumed the main Western luxury symbols – brands like Hermes, Vacheron Constantin, Rolex, Gucci, Vuitton, John Lobb, Hugo Boss, Armani, Versace and others. It was time for their executives and top management to afford such products. Instead of them going to Milan or Paris, watches, jewelry and some fashionable street wear brand arrived in Romania.

Some had a good start and begun selling significant amounts – be it via franchises, multibrand or monobrand stores. Others lost the consumers’ confidence by first importing the cheap, entry-level lines. A few lost control of the market, already flooded by fakes wearing their brand name. The most important brands, though, refused to make any important move in the area (with a few notable exceptions) and thus failed to gain recognition before the financial crisis. Those who approached the market before the crisis have a break now, finding opportunities to consolidate their position with little expense.

From a production point of view

Industrialization by force and urbanization by governmental decree (a huge migration from the rural to the urban areas, dictated by the Communist party) had long-term side effects. For the luxury industry, the most important fact is that craftsmanship in traditional production was lost. Bound in “production cooperatives”, all former enterprises lost their identity. Efficiency and politics denied the very existence of private initiative.

After 1989, the “cooperatives” lost their last seniors, long passed their retirement age. In Bucharest, even the ancient glass furnace downtown became a beer and sports pub. Textiles, shoes, embroideries – all was in the past now. Cheap products reigned in an underpaid society.

Political clients only aimed at taking over industrial and tourism assets. Luxury was only something to be bought from abroad and no Eastern millionaire ever even considered launching a local luxury brand, regardless the object. After 2000, when the first personal loans were approved by banks, a new paint on the wall, a microwave oven and a branded TV were the extreme affordable luxury (for an interest rate 4 times higher than anywhere in Europe).

Adopting any symbols, from luxury brands to Valentine’s Day, Halloween and Christmas turkeys, the CEE citizens realized that their traditions mattered only after their accession to the European Union. Still, only a couple of goods were brought back to life, ranging from plum jam to salami, with a few cosmetic products and… that’s about it.

The only brands to be resurrected were those that even the Communist regime failed to burry – such as the already mentioned Bohemian glass and Herend porcelain.

A few quality producers became suppliers for foreign brands. Eastern clothing, furniture and top-of-the-class fabrics were exported and then sold under the name of major brands. All luxury producers found fit to employ cheap Eastern labor force, without caring for the market itself – an attitude that led to a wave of fakes and stolen design products.