Chinese Spend Five Hundred Billion On Luxury Goods A Year, But Market Growth Is Slowing Down.

Recently, a number of first tier luxury brands have fallen in share prices.

In the US, many stocks of light luxury Brand Company also suffered a sell-off.

Meanwhile, Prada on the Hong Kong stock market fell by nearly 42% compared with the previous high, while the Hang Seng Index dropped by only about 12% during the same period.

In this context, how is the performance of the luxury group? What kind of layout does the local garment enterprises have?

Luxury companies' share prices tumbled

The McKinsey report shows that Chinese luxury consumers spend more than 500 billion yuan per year, accounting for nearly 1/3 of the global luxury goods market.

Bain consulting predicts that by 2025, Chinese consumers will contribute nearly half of the global luxury sector sales.

Affected by the uncertainty of domestic consumption environment, investment institutions have also downgraded the international luxury group.

However, from the three quarter's performance, the revenue of Lu Wei Ming Xuan group, Kai Yun group and Hermes group still maintained double-digit growth.

Tianfeng securities and textile and garment industry researcher Yu Jian: gross margin is relatively stable, and is relatively high maintenance, the three giants are between 63% to 70%, operating net interest rate is relatively stable, from the recent quarters, all are steadily rising, if the country is divided by price, for example, casual wear is about 40% to 50% or so, this is a relatively normal gross profit margin.

It is noteworthy that in the past two years, many designers, such as Jiangnan cloth, fashion, fashion and so on, have landed in the capital market successively.

Among them, the gross profit margin of Di Su fashion reached 74%, ranking first in the A share apparel industry listed companies, followed by Vigna S, Song Li Si, an Zheng fashion, and high-end brands such as bibrin and so on, and the margin of gross margin between the international luxury group and the international luxury group is not large.

Wang Sijia, a retail manager in Shanghai, focuses on the design style, and the sense of quality. It is very difficult to balance these two points. Now, there are more than 1000 stores in the country. Apart from domestic sales, they are also actively developing overseas markets.

While promoting local brands, Chinese enterprises also showed strong interest in acquiring overseas brands.

Ruyi group, Fosun international, Anta, Semir apparel, and song and so on, Chinese garment enterprises have acquired foreign high-end clothing brands.

Through acquisitions, Chinese enterprises have the ability to operate in the international market and the layout of the global supply chain, and their influence in the global fashion area is improving.

Overall, the growth rate of A share apparel industry listed companies showed a quarterly decline in the four quarter of 2018.

Up to now, a total of 41 listed companies in the A share textile and apparel sector have released their 2018 performance forecasts.

From the perspective of stock price performance, the share price of the textile and garment sector dropped most in 2018, and only the three companies of Semir clothing, daily fashion and Baron East maintained a positive growth.

In terms of valuation, the price earnings ratio of the major brand clothing listed companies is less than 20 times.

Luxury brand growth slows down market concerns high cost performance products

According to the data, the average annual compound growth rate of China's adult clothing market in the past five years is 6.8%. It is estimated that the market scale will reach 1 trillion and 400 billion yuan by 2020, and the clothing industry still has huge business opportunities.

With the declining popularity of luxury brands, the high cost performance clothing market will occupy more market share in the future.

The clothing brands in the domestic market can be roughly divided into commercial brand, fast fashion brand, luxury brand and designer brand.

In the field of fast fashion and luxury brands, foreign brands still dominate, while domestic brands are breaking through by changing design concepts and improving product quality.

At the Bosideng fabric testing center, the reporter saw the down samples that were being tested.

Bosteng fabric Lab Director Tan Li Gang: when the normal suppliers send fabric, they will first sample and make a velvet bag after sampling.

After finishing, all the needles around the needle must be blocked up. 2700 times on a piece of equipment, then the pile of cloth will come out of the pile, and the remaining amount of the pile inside the equipment, the total number of roots represents the performance of the fabric.

The person in charge told reporters that according to the national standard, the number of pile in the test process was within 50, but Bosideng asked her product to drill not more than 30.

There are many indications that at the moment, Chinese consumers' consumption concept tends to be rational, focusing on product quality instead of blindly pursuing high priced brands, and products with high performance price ratio are more favored by the market.

Shanghai consumers: generally choose a simple, generous, wearing a little temperament, like their own good, whether it is domestic or foreign brands, will like to buy.

Shanghai consumers: like domestic brands, the brand of Chinese enterprises is very good.

According to the interview results, most consumers spend less on purchasing luxury brands. When they choose clothes, they will consider their income level and personal preferences. Some small and personalized local designer brands often become the first choice.

UBS expects that in the second half of 2018, China's luxury spending increased by about 10%, compared with the 16% growth rate in the first half of 2018, a significant slowdown has already appeared.

Yu Jian, researcher of Tianfeng securities textile and garment industry: high performance price ratio has long term logic in the economic growth of China's new normal.

At present, China's M consumption structure is quite obvious, and people's consumption tends to polarization between price performance and luxury goods.

Under the current consumption environment, there will be a leading enterprise similar to high cost performance in China.