Some of the most prestigious luxury brands in the world are feeling the effects of China’s economic slowdown and Beijing’s crackdown on displays of wealth.
According to LVMH, its sales in Asia, which includes China but not Japan, decreased by 14% in the three months ending in June, which was worse than the 6% decline it experienced in the first quarter.
The company with its headquarters in Paris is not the only one experiencing a decline in sales in the world’s second-largest economy.
It comes as censors shut down the social media accounts of influencers who have shown off their luxury goods online and Chinese shoppers cut back on expensive purchases.
The largest luxury conglomerate in the world, LVMH, also stated that its overall revenue growth for the period had slowed to 1%.
Bernard Arnault, the group’s chairman and chief executive, nevertheless maintained a cautious optimism.
“In a climate of economic and geopolitical uncertainty, the results for the first half of the year reflect LVMH’s remarkable resilience,” the statement reads.
He stated to investors, “The Group approaches the second half of the year with confidence, while remaining vigilant in the current context.”
The company, which is home to 75 high-end brands like Louis Vuitton, Dior, and Tiffany & Co., has seen its stock price decline by almost 20% over the past year.
Luxury goods sales in China are not just slowing down for big names like LVMH.
The posh British fashion house Burberry reported in its most recent financial statements that its sales in mainland China had decreased by more than 20% in comparison to the previous year.
Swatch Group, the Swiss watchmaker that owns Omega, Longines, and Blancpain, said that weak demand in China contributed to a 14.4% decline in sales for the first six months of 2024 compared to the same period last year.
In the quarter that ended on June 30, Richemont, which owns Cartier, saw sales decrease by 27% year-over-year in China, Hong Kong, and Macau.
Hugo Boss, a German fashion giant, also downgraded its year-end sales projections due to concerns about weak consumer demand in China and the UK.
This week, Hermes and Gucci-owner Kering, two other major players in the luxury goods industry, are scheduled to release their most recent financial results.
China’s second-quarter growth and June retail sales figures fell short of expectations, indicating that the economy is still recovering from the pandemic.
Chinese authorities have also looked into online displays of luxury brands.
An internet celebrity known as Wanghongquanxing was banned from social media “amid a crackdown on online wealth show-offs,” as reported by the state-controlled newspaper Global Times in May.
His record on Douyin, China’s likeness TikTok, had multiple million devotees.
A few other famous forces to be reckoned with have likewise seen their records erased in a mission that China’s web guard dog has said was pointed toward prohibiting “disgusting” and purposely gaudy substance.