LV And Other Luxury Goods Are Cautious About The Chinese Market.

The Chinese market, once the engine of global luxury growth, is also facing a risk of decline.

Affected by the economic downturn, some luxury brands that have made a lot of money in the Chinese market in the past few years have been decadent.

Luxury experts predict that there will be a lot of uncertainty in China's luxury market this year, and the luxury brands are also cautious about the Chinese market.

French MOET & CHANDON Hennessy Louis Weedon group (LVMH) said in April 18th that its LV brand sales grew by a two digit figure in the first quarter, writing a new record in the long term trend of growth of over 10%.

However, LVMH group revealed that sales of LV (micro-blog) brand in mainland China were relatively slow.

At the same time, Asia is the slowest area in the first quarter of the LVMH clothing and leather products sector, which includes LV and CELINE (Celine) and Fendi (Fendi) brand.

Generally speaking, Asia is the fastest growing area of LV, which makes the market more mature.

Coincidentally, Cartwright, chief financial officer of British luxury goods company Burberry, said in a conference call held in April 17th that sales revenue in China slowed down from 30% in the third quarter (October 2011 to December) to 20% in the second half of the fiscal year.

In response to the press, Prada spokesman also said that it is difficult for the luxury market to maintain its growth in the past.

It was too strong before.

Zhou Ting, director of the luxury research center of the University of foreign trade and economics, said that through a series of surveys last year, as early as last October, it had predicted that the performance of China's luxury market this year would be optimistic and cautious.

"Last year, we surveyed 2005 wealthy people who had over ten million assets, and found that 1/3 of them said they would reduce their spending on luxury goods, while another 1/3 said they were not sure. Only 1/3 said they would increase spending on luxury goods."

Zhou Ting said that in communication with the leaders of luxury brands and the media, they also found that brands were more cautious about the market advertising and showed uncertainty about the market.

Zhou Ting believes that the slowdown in the growth of the luxury market has much to do with the slowdown in the domestic economy.

"Because of the downturn in the real estate market and the downturn in the stock market, the cash flow of some consumers is decreasing. The middle class who bought luxury goods in the past paid more attention to the input of basic daily necessities, while the other part was more willing to buy luxury goods with investment and collection value."

In addition, the slowdown of some brands has something to do with the rapid growth of these brands in China in the past.

Referring to the slowdown in the Chinese market, Stacey Cartwright, chief financial officer of boboley, also believes that the market has been very strong in the past.

"Whether LV or Burberry (micro-blog), these brands have grown too fast in the past, and too many people buy these brands, making their attractiveness to core consumers decreasing."

Zhou Ting said.

Ouyang Kun, China's chief executive of the World Luxury Association, has previously revealed that "LV stores in Beijing and Shanghai, where high-end consumers are concentrated, store sales down 5% to 10% a year."

"Not pessimistic".

With the positioning of higher and relatively small luxury brands and niche brands have poured into the Chinese market, competition among brands has intensified.

The difference between luxury and domestic markets has also diverted some Chinese consumers in the European market.

Reported that, because the mainland's luxury goods tax, the mainland's LV products are 45% to 47% higher than the French price. Tourists can save a lot of money by shopping abroad.

Jacques, chief financial officer of LVMH, said in a 18 day conference call that half of LV's sales growth in Europe came from tourists, while the Chinese were the largest group of tourists shopping.

On the contrary, Guilloni said the consumption of Italy, Spain and Greece is very low.

The three countries were severely hit by the European sovereign debt crisis.

It is pointed out that the Chinese luxury goods consumption is shifting from China to Europe and coincides with the Spring Festival.

Many Chinese travel abroad during the Spring Festival and rush to buy luxury goods.

The United States is also trying to speed up the visa process, hoping to attract more Chinese tourists to the United States to spend shopping.

Prada stressed that the importance of Chinese consumers is not only for China's local retail industry, but also for developed country stores.

But for now, the luxury market in China is not pessimistic. The demand for luxury goods in Chinese consumers is still growing.

Some brands even grow very strongly.

It is understood that in recent years, Dior and Bao Tejia (Bottega Veneta), which are making great efforts in the Chinese market, are now growing very clearly.

"Po Tejia's growth in global sales last year was 40%, while sales in China exceeded 50%."

Zhou Ting said that Dior, which had lost some markets in the past because of its small momentum, has recently increased its investment in the Chinese market and has made a good response. "This year, the price increases of their products have reached 20% to 30%, while luxury brands usually have a 5% to 15% price increase each year."

Some luxury brands have begun to shift from China's first tier cities to two or three tier cities, and continue to seek growth.

It is understood that since 2007, the speed of opening LV stores in China has significantly accelerated, and most of its new stores are located in two or three line cities, such as Changsha, Xiamen, Wuxi, Wenzhou and so on.