Chinese market sinks luxury industry
Financial markets/economy
Posted by MoneyController on 19.11.2024
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The luxury market is going through a complicated phase: the problem it faces is a drop in demand from a market that is considered very important, the Chinese market.
The luxury market's problem today is above all China: Danilo Taino writes in the ‘Corriere della Sera’. Rather than competition from Chinese products, the luxury market today fears above all the slowdown in growth in China, where not only average consumption spending, but also luxury consumption spending, is shrinking.
Taino gives the example of fashion giant LVMH: in the third quarter, sales in Asia contracted by 16%. Another figure reported by Taino: Kering's market share in the Far East, excluding Japan, fell from 38% to 32% of total sales.
The reasons for the drop in demand for luxury goods in China are more than one: some relate to market dynamics, namely price increases during and following the pandemic; others concern Chinese society, still burnt by the crisis in the real estate market and - Taino goes on to explain - new generations a little less interested in flaunting luxury goods.
Temporary situation or will it last? Some changes, Taino continues, may be of a lasting nature: for example, beyond the economic situation, the escalating trade clash with the United States is already leading the Chinese Communist Party to induce consumers to favour Chinese over Western brands. It is possible that this trend will also have some success in society, with the consequence that the attractiveness of luxury goods in China may decline even as the economy accelerates.
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