The SCMP reports: “LVMH, owner of Louis Vuitton and Christian Dior, posted a 3 per cent decline in first-quarter sales to €20.3 billion (US$23 billion), losing its crown as Europe’s largest luxury group to rival Hermes. Sales across all divisions declined except watches and jewellery, while weaker cognac demand in China and the US led to a 9 per cent sales drop – the steepest across all categories – in its wine and spirits unit. The results reflected the continuing decline in luxury spending in China, which fell around 18 to 20 per cent last year, according to a report by Bain & Co in January.”
The decline in Chinese luxury spending is provoked by the property price crisis and by the fear of the US-China trade war.
The US tariffs have a direct impact on Chinese earnings but also on Chinese consumer sentiment. This may be amplified with a nationalistic sentiment against foreign luxury goods. Recently, social media in China is attacking the Western luxury goods for being overpriced as well a fake dream of status while many of these luxury items are produced in China at very low costs. Of course, some old established European brands defend themselves as being fully produced in Europe at highest quality standards, justifying their absurd high prices – which sometimes have doubled or tripled since the Corona crisis.
Western luxury in China is therefore, more and more regarded as a kind of “Western fashion and lifestyle imperialism” protected by Western IP laws allowing huge profit margins at the expense of China’s population.
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