Recovering Chinese market a highlight for luxury brands
Published: Jul 19, 2020 04:08 PM

China is the world's top consumption market for luxury products and contributes over half of global sales. Photo: cnsphoto

The post-coronavirus consumption recovery in China is becoming the biggest highlight for the finances of international luxury giants, whose businesses are largely suffering great losses as a result of the pandemic. 

In its Q1 financial statement, the Geneva luxury group Richemont, the parent of jewel brands including Cartier and Van Cleef & Arpels, noted that its sales in China surged by 47 percent in the first quarter ending July 20. 

In total, the company's sales fell 47 percent on a yearly basis to 1.99 billion euros ($2.27 billion) in the first quarter, which the company state was largely caused by the "strong impact from COVID-19." 

All of its sales regions were hit with double-digit decreases in income, with sales in Japan seeing the largest slump of 62 percent. The sales decrease in the Asia Pacific region was the mildest, only 29 percent, thanks to the booming Chinese market, according to Richemont's financial statement. 

Richemont's sales boom in China is another reflection of China's consumption recovery, particularly in the luxury sector, as shops reopen and people resume their regular shopping habits.

And for international luxury giants, this is certainly good news. A senior management executive at Italian luxury group Prada recently said in an interview that its sales in China rose by a significant 10 percent in May. Italian fashion brand Salvatore Ferragamo also disclosed in overseas media that its sales in China doubled for the month of May.

An employee at jewel brand Cartier told Global Times on Sunday anonymously that the sales rebound is a result of a "daigou shift."

"Domestic daigou (informal cross-border shopping agents) can no longer go abroad to shop for luxuries as a result of the pandemic and have to shop more at domestic shopping malls," the person told Global Times on condition of anonymity. 

According to her, compared with cheaper products, Chinese customers tend to purchase luxury products with the help of daigou, which has pushed the domestic luxury market to heat up after coronavirus waned in the country. 

She said that many domestic shopping malls also rolled out business policies to support brands, which stimulated consumers' shopping enthusiasm.

Hundreds of Jaeger-LeCoultre watches were sold in one day in a Shanghai shopping mall after it rolled out a discount campaign in May, according to media reports.