Luxury Goods Are No Longer Easy To Do Business In China.

At present, the general view is that the sale of luxury goods will deteriorate further only if the stock market volatility causes the overall economic situation in China to deteriorate or the overall wage level falls.

One reason for optimism is that Chinese consumers are different from American consumers. The former relies much less on the stock market in terms of wealth preservation and appreciation.

In addition, although the stock market has been volatile in the past few weeks, the Shanghai composite index is still up 45% over the same period.

No matter how painful the short-term pain is, the prospect of China's luxury market is still bright because of the huge population.

Bocca El, chief financial officer of the world's second strong liquor and wine group, France, said recently: "as China's stock market has plummeted in the past month, the luxury consumption of the Chinese people has decreased."

The consumption of Martell XO Cognac brandy in the Chinese market has also decreased.

Usually, a bottle of Martell XO Cognac brandy sells for more than 150 euros. As of June 30th, this decline in Cognac sales reached two digits.

Other Martell products, which are relatively cheap, sell better.

The sharp fall in China's stock market and the market's concern about the slowdown in the economic situation will hit the future sales of the company in its second largest global market.

Prior to that, it seems that the company has come out of a series of "Prohibition of luxury orders" such as China's eight regulations.

Although the sales volume of 2014 in the Chinese market dropped by 2%, it was much better than that in 2013. In 2013, the sales of the liquor in the Chinese market dropped by 23%.

However, the luxury goods manufacturers who have suffered a significant drop in sales in China are not only in the company of the company.

Swiss watch exports to China also declined sharply, down 40% in July compared to the same period last year.

The head of the Swiss watch industry federation said that compared with the watches with a price of less than 200 Swiss francs, the more expensive watches had a greater impact on China's exports.

LV group

Tiger has recently said that it will close a store in Hongkong because of a decrease in demand from Hongkong.

Earlier, the price of imported luxury goods brought about by the depreciation of the renminbi has already added to the situation of luxury goods producers.

In recent weeks, some investors have reduced shares of Western luxury goods manufacturers including French LV, Remy Martin's Royal Group, Hermes and Gucci brand holders, Kai Yun group.

The price of these luxury goods giants has fallen by 13.1% on average since August 1st.

In addition, the shares of the Swiss luxury goods company, the peak group, fell by 11.7%, while the British Boboli company fell 11.9%.

Analysts are assessing the impact of luxury sales.

Luca Solca, an authoritative analyst at the luxury Analysis Department of Paris bank, France, pointed out that if the US stock market plummeted, it would seriously affect the non essential category of residents.

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"Objectively, considering that China's stock market is showing a blowout before, we think that China's non essential consumption expenditure will grow at an alarming rate, but the fact is not what we expected."

However, in the face of slowing sales growth of many peers, sales of jeweller Tiffany in New York, the United States, went up against the market, and sales in the two quarter increased by two digits.

Tiffany said he could not predict the impact of the fall of China's stock market on its sales.

Mark Aaron, vice president of investor relations at Tiffany, said: "in the past few years, we can not quantify the impact of the stock market increase on our market in China.

Similarly, the recent adjustment of China's stock market or the depreciation of the renminbi will have no effect on us. "

Alexander Riga, chairman and chief executive officer of the board of directors of the company, admitted that the sales of the company in July did not improve, and that it would not be clear until February of next year.

Because the Spring Festival is the peak season for luxury goods sales.

In addition, the fact is that the vast majority (about 70%) of Chinese consumers buy luxury goods outside the country, rather than at home.

In Europe, the same Boboli double row button coat or LV handbag is at least 30% cheaper than China.

China

Usually, luxury goods are purchased when traveling abroad.

In addition, purchasing agents and overseas direct mail are also common ways.

Consumer data analysis firms CEO Buch Wald said that in order to adapt to this trend, luxury companies should reduce the cost of opening stores in China and increase investment in e-commerce channels.

As John Rupert, chairman of the group, said earlier this year, "this has happened many times in the past.

We did get into trouble in China, and so did many of our peers.

In the long run, we will always face this kind of problem. "