Is China driving European luxury?
Last November, Swiss Watch exports fell by 0.4%. However, in China, they rose by 40%. That’s the biggest jump in nearly three years, and signals a recovery after President Xi Jingping’s austerity drive dried up the Chinese luxury market. In America, the economy’s booming, but people aren’t buying luxury watches. The U.S. is out of step – a survey by Deloitte shows that, worldwide, Millennials have more in common with the Chinese when it comes to watches.
Luxury giant Richemont’s share price has appreciated 12% in the last 12 months
SOURCE: Yahoo Finance
Rene Weber, an analyst at Bank Vontobel AG, said: “Americans are an underdeveloped country in terms of luxury watches. Whereas brands play an important role for the Chinese, Americans are familiar with a smaller range of labels and also understand a lot less about watches.”
American consumers are enamoured by tech – they want their accessories to be smart, like Apple Watch, rather than classic, like a signature piece from one of luxury conglomerate Richemont’s high-end Swiss Watch brands. While sales in China seem to have fallen and recovered cyclically, there are signs that U.S. sales are changing structurally: in America, luxury doesn’t mean what it used to. Now, it’s connected to the internet.
Jean-Claude Biver, watch chief at LVMH, said: “For Asians in general the watch is much more a status-symbol instrument than in any other part of the world. As a consequence, ‘Swiss Made’ plays a bigger role and the fashion aspect of the watch a smaller role in Asia compared to America.”
With recent news that Chinese titan Fosun has taken control of France’s oldest fashion house, Lanvin, and apparel group Shandong Ruyi saying it wants to be “the Chinese LVMH” is China now the biggest driver of the European luxury legacy?
Dominion holds Richemont an LVMH in its Global Trends Luxury Fund.
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