The post-coronavirus consumption recovery in China is becoming the saving grace of international luxury giants, whose businesses are suffering from the pandemic.
In its first quarter financial statement, Geneva luxury group Richemont, the parent company of jewel brands such as Cartier and Van Cleef & Arpels, noted that sales in China surged by 47 percent in the first quarter ending June 30.
The company’s total sales fell 47 percent on a yearly basis to 1.99 billion euros ($2.27 billion) in the first quarter, which the company largely blamed on the “strong impact from COVID-19.”
All of its other markets were hit with double-digit declines, with sales in Japan seeing the largest slump shrinking 62 percent. The drop in sales in the Asia Pacific region was the mildest at only 29 percent, thanks to the booming Chinese market, Richemont said.
Richemont’s sales boom in China is another reflection of China’s consumption recovery, particularly in luxury items.
This is good news for global luxury giants. A senior management executive at Italian luxury group Prada said in an interview that its sales in China rose by 10 percent in May. Italian fashion brand Salvatore Ferragamo disclosed that its sales in China doubled in the same month.
An employee at Cartier told Global Times on Sunday that the sales rebound is a result of a “daigou shift.”
“Domestic daigou (cross-border shopping agents) can no longer go abroad to shop as a result of the pandemic, and have to do so at domestic shopping malls,” the person told Global Times on condition of anonymity.
She said the Chinese tend to purchase luxury products with the help of daigou, which has pushed the domestic luxury market to heat up.
She also said that many domestic shopping malls had rolled out business policies to support the brands, which spurred consumer demand.
Hundreds of Jaeger-LeCoultre watches were sold in one day at a Shanghai shopping mall after they went on a discount in May.
The rebound also came at a time when international brands attach more importance to China market.
A Beijing-based white-collar worker surnamed Jia told the Global Times on Sunday that she found many popular styles of luxury-branded bags like Louis Vuitton can be bought at brick-and-mortar stores in Beijing, which is “a big surprise.”
“Before the coronavirus outbreak, it was quite difficult to purchase a popular bag on the spot. You had to book in advance, and might get it two or three months later,” Jia said.
Zhang Yi, The CEO of Shenzhen-based iiMedia Research, predicted that luxury goods sales in China would increase by 35-45 percent in 2020.
“I bet China would be the only market to see a sales increase for many international luxury brands, as it is almost the only place that does not totally count on overseas tourists for high-end shopping,” he told the Global Times.
People gather near a giant model watch made by watchmaker A. Lange & Soehne, part of the luxury goods group Richemont, on Monday during the opening day of the Salon International de la Haute Horlogerie, a professional fair for fine watchmaking, in Geneva. Photo: AFP
