Can the luxury industry defy the laws of geopolitical gravity and continue to fall in love with the Chinese market? Can she continue to fantasize about the myth of a Chinese “middle class” eager for consumption, shattered by the political reality of the country? After Kering and LVMH, it is the turn of Richemont to publish, on November 8, disappointing half-year results and to confirm the slump of the sector’s former El Dorado: revenues recorded in China collapsed by 27%. Thus, the parent company of Cartier is sliding down the same slope as the Kering group, whose 30% of global sales came from Chinese customers and whose shares have fallen by 50% in one year, while that of LVMH, weighed down by the slowdown in its activities in China, posted a drop in results of more than 16% in Asia in the third quarter. The visits of François-Henri Pinault and Bernard Arnault to the Middle Kingdom as soon as the country reopens in 2023 may well have demonstrated the confidence of French luxury in the purchasing power of local customers, they are tightening their grip more than ever. purse strings. Even the multiple recovery plans launched since the end of September by Beijing with billions of yuan have not succeeded in raising the consumption curve. Optimism turned blind The cooling of the Chinese market has contradicted the many analysts who had predicted a bright future for the luxury giants in the country governed by the Communist Party (CCP). With hindsight, we can smile at the studies by McKinsey, BCG or Bain & Company, which declared many times before 2020 that China would represent 40% of the global luxury market in 2025. No luxury group, it was said , could not do without a market of 1.4 billion consumers, of whom 400 million would constitute a “middle class” with a monthly income estimated between 75,000 and 280 000 yuan (between 12,000 and 43,000 dollars), according to The Economist (special issue “China’s middle class”, July 2016). Read also: Article reserved for our subscribers “In China, the party-state wants to silence any voice announcing bad financial news” Read later But didn’t optimism become blindness when, after the Shanghai lockdown in the spring of 2022, the country of Xi Jinping continued to be designated as the engine of global luxury? As if, with the stroke of a pen, we could erase the damage of the absurd zero Covid policy from the collective memory of the Chinese, and bury the unbearable trauma experienced by Shanghai, the city with a plethora of clothing stores. the most bling-bling luxury items in the world? You have 64.81% of this article left to read. The rest is reserved for subscribers.
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