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Sunday, June 26, 2011

The Annals of Luxury: A Warm Reception for Cold Cash

Joy comes not through possession or ownership
but through a wise and loving heart
– Buddha

Tell that to the new money, logo-crazed strivers of Ulan Bator.

The latest luxury shopping mecca just may be this booming if remote capital of Mongolia. Or so opines The Wall St. Journal Magazine.

Vuitton: It's everywhere you don't want to be, like downtown Ulan Bator

Louis Vuitton opened a store there in 2009. It shares the same Central Mall location with Burberry, Zegna, Hugo Boss and Emporio Armani. Dunhill and Ferragamo are expected to be there soon.

"How could it be that luxury retailers have come to Mongolia?" wonders author Maureen Orth. "The country has only 2.8 million people, almost half of them living in a capital built [in the 1940s by the Russians] for 500,000, including 700,000 destitute former nomads whose gers [huts] crowd the surrounding hills."

Paris of the Steppes it's not.

Ulan Bator by day...

...and by night.

Orth goes on to explain that democratic Mongolia – independent for 21 years now after seven centuries of Soviet rule – has entered into multi-billion dollar deals to exploit its vast deposits of gold, copper, coal and other natural resources. The burgeoning nation's $7 billion GDP is projected to increase 20% annually over the next decade.

But luxury retailers don't require a large number of customers, even in this heady fiscal environment.

"One to two thousand is all you need," says Vuitton CEO Yves Carcelle in the Journal report.

That is because Mongolians culturally like to display their wealth; they are willing to spend a lot on jewelry and other luxury goods to let their neighbors know how well they are doing. Of course, while the upper classes flaunt their prosperity, most working class Mongolians barely make ends meet by toiling in mines, herding livestock, driving taxis or selling imported goods from China.

And never mind that Ulan Bator was founded in 1639 as a Buddhist monastic center. That was then. Today's boom town is another story.

Read Orth's article here.


If you're planning to go Ulan Bator, better think twice. While your shopping excursion to Mongolia will earn you major bragging rights at any dinner party, be aware that the city is noted for it's extreme isolation. It's not close to anywhere and hard to get to. It's also the coldest capital city of any nation in the world.