Economic chill weighs on China’s appetite for luxury brands
426 views · Published 9 December 2018 · 3:01 · Indexed 22 October 2026
Channel: AP Archive · 2018 · News & Politics
(4 Dec 2018) The designer boutiques of Manhattan and Paris are feeling the chill of a Chinese economic slowdown that has hammered automakers and other industries. It's jolting brands such as Louis Vuitton and Burberry that increasingly rely on Chinese customers who spend 90 billion (US dollars) a year on jewelry, clothes and other high-end goods. The industry is already facing pressure to keep up as China's big spenders, mainstays for American and European retailers, shift to buying more at the spreading networks of luxury outlets in their own country. Forecasters say Chinese customers will be the luxury industry's main growth engine over the next decade. But this year, shoppers are skittish amid cooling economic growth, trade tension with Washington and weak real estate and stock markets. Even before the economy cooled, the industry was under pressure from shifts in Chinese tastes and buying habits. The incentive to shop abroad eroded as major brands opened their China stores and prices fell closer to US and European levels. Alex Bi, who was visiting Hong Kong from the mainland city of Guangzhou, said many brands have shops in first-tier mainland cities. He and his sister, Jessica, were window-shopping in the bustling Kowloon district. At the same time, Beijing stepped up efforts to reduce reliance on trade and encourage self-sustaining economic growth based on consumer spending. Import taxes on luxury goods were cut to lure shoppers home. Meanwhile, the customs agency is cracking down on informal imports by searching the luggage of travelers returning from Europe and other shopping destinations. In November, a trader was sentenced to 10 years in prison for smuggling designer clothing from Hong Kong without paying the mainland's higher import duty, according to news reports. Market researcher Li Chengdong of Donge Investment Management Co. in Beijing said the industry was shocked by the sentence, which had an "immediate impact on the sales of the overseas retailers." Li Chengdong also said global luxury brands are not doing enough to explore the market inside China. Find out more about AP Archive: http://www.aparchive.com/HowWeWork Twitter: https://twitter.com/AP_Archive Facebook: https://www.facebook.com/APArchives Instagram: https://www.instagram.com/APNews/ You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/12706149bda11084bb95a5fda0503abc
