Burberry China's Market Faces Cold Spell Closing Its Guangzhou Plant

This year, many luxury brands abroad have encountered a "cold wave" in the Chinese market. The growth rate of luxury goods group such as Tiffany and LVMH in China in the second quarter has dropped below 20% for the first time in 3 years. Not long ago, Burberry (Burberry), a luxury retailer in Britain, announced the closure of a factory in Guangzhou.

Luxury retailers in Britain recently Burberry (Burberry) bad news. After the profit warning issued by the brand group in September, it has just announced the closure of a factory in Guangzhou. Industry analysis of Burberry's closure of factories, in addition to the factory workers artificial irregularities, may also be affected by the domestic economic slowdown, resulting in a sharp decline in the brand sales in China, in order to reduce production costs and close the factory.

This year, many luxury brands abroad have encountered a "cold wave" in the Chinese market. The sales growth of luxury goods companies such as Tiffany, LVMH, and Li Feng in China in the second quarter has dropped below 20% for the first time in 3 years. Reporters visited some luxury stores in Guangzhou and found that their sales were indeed not optimistic. Some people in the industry lamented: "luxury brands are no longer in China."

　　 Closed doubts

Burberry (Burberry) has a history of 156 years and is a luxury brand with traditional British style. In March 2007, Burberry put forward the "globalization" plan, moved the production line to Shenzhen, Guangdong, and then successively built factories in other major cities in China. The closure of the Guangzhou factory is one of them.

According to the reporter, the reason for the closure of Guangzhou foundries is that workers' working hours and working environment standards fail to meet the standards, which is against the provisions of the British ethics and Trade Organization. However, some people in the industry have analyzed that the sharp decline in sales in China is also an important reason.

The reporter inquired about Burberry's official website and learned that the brand had three stores in Guangzhou, located in friendship store, Tai Koo Hui and Hai Yin and another city. Reporters visited the friendship store and found that Burberry has three business points here, two of which are perfume counters. One is luxury consumption, which has developed rapidly in China in recent years, and has become one of the engines of the growth of the global luxury brand market. According to Boston consulting company, China is expected to surpass Japan and the United States by 2015 and become the world's largest luxury market. However, since the first quarter of this year, the performance of many luxury brands in mainland China has seen a downward trend of growth.

"The performance of domestic luxury goods is not good this year. Domestic economic situation There is much to do with slowing down, which is mainly reflected in a decline in consumer confidence. " Zhou Ting, director of the luxury goods Research Institute and President of the Institute of wealth quality, told reporters that another reason is that the domestic luxury market has been developing for nearly 10 years, and consumers are turning to a gradually mature and rational process from the stage of buying enthusiasm.

ISI Group believes that the decline in luxury sales in China is mainly due to the decline in assets of the rich and middle class. The assets of this class are mainly stock or real estate. At present, the stock market environment is bleak, and property prices are also stagnant. The rich and middle class are unable to afford luxury goods. According to a survey, about 30% of the domestic tycoons this year said they would reduce their spending on luxury goods.

Some people in the industry believe that the recent issuance of the regulations on organ business administration may also affect the sales of luxury goods. The Ordinance explicitly prohibits the use of public funds by civil servants to purchase luxury goods. Before that, there were also policies to cut down official business meals, public funds to buy cars, and to buy expensive expensive wines.

Xue Shengwen, senior researcher of CIC consultant, said in recent years Luxury consumption Driven by the upsurge, the major luxury enterprises have accelerated the layout of the second tier cities in China. But under the current economic situation, many of these new stores can not achieve their expected performance.

"Luxury goods have entered a period of adjustment in China, which will usher in a new round of shuffling. The brands with weak capacity for crisis will be eliminated. On the one hand, luxury goods enterprises need to seek lower production costs. On the other hand, they need to investigate and understand consumer needs and produce marketable products. Xue Shengwen said.

Despite the decline in China's luxury goods market, there are still a lot of "luxury" brands in China. Burberry's chief financial officer, Cartwright, recently made clear that Chinese consumers still have a strong desire to spend, and there are still huge business opportunities in the Chinese market. It is reported that Burberry has opened 63 stores in China and plans to expand to 100 in the future.