Is China starting to turn its back on bling?
Friday 09 November 2012
What have Tiffany, Burberry, Mulberry and Hugo Boss got in common? Yes, they all make expensive products for the global wealthy. But they also all recently warned of a slowdown in sales in once-booming China.
Chinese consumers have been the reason luxury goods brands have enjoyed up to 20 per cent annual growth rates throughout the darkest days of the recession. But the desire for diamond-encrusted watches and handbags has started to weaken. Even the mighty luxury superstar LVMH, home to TAG Heuer watches and Krug champagne, reported lower-than-expected sales growth of 6 per cent last month, well below its previous growth rate of 10-15 per cent.
But is it a desertion of luxury goods, a logical stabilisation after three years of exceptional growth, or just a change in style? Erwan Rambourg, a luxury goods expert at HSBC in Hong Kong, said: "We have seen that gifting has changed in China. We have also noted a change in how people display wealth, with more subtlety. Logo-heavy brands like Louis Vuitton and Gucci have been toning down their logos while Prada is much more focused on leather than on canvas/fabric and logo-adorned products. The more discreet brands like Bottega Venata and Tod's are doing very well in Asia these days and never really had a logo to speak of."
Brokers at CA Cheuvreux think Louis Vuitton and Gucci could be suffering from "overexposure" in China. The two were among the first to enter the region in the 1990s and Cheuvreux's brokers think "Chinese consumers are now looking for very exclusive brands… We understand Louis Vuitton and Gucci are suffering."
However, the latest Chinese manufacturing index beat expectations last week, showing for the first time in three months that the Chinese economy is expanding again. Some analysts think the worst could be past.
- 1 Expert urges cat lovers to own just one animal each
- 2 Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
- 3 The Simpsons death: Creator Al Jean would 'kill himself' before character like Homer or Lisa
- 4 British man raped while urinating in bushes at Oktoberfest beer festival in Germany
- 5 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Expert urges cat lovers to own just one animal each
Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
Isis an hour away from Baghdad - with no sign of Iraq army being able to make a successful counter-attack
Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
British man raped while urinating in bushes at Oktoberfest beer festival in Germany
Isis, we are told, is a 'clear and dangerous threat to our way of life'. I’m sorry, but I just don’t buy it
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
'Women, walk wherever you want' posters taken down in Stamford Hill following 'unacceptable' signs separating men and women
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Mark Reckless becomes second Tory MP to defect to Ukip in a month
Should gay sex be illegal? 16% of Britons think so
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...