The View | Why China’s luxury market is stronger than ever after Covid-19 pandemic
- China’s luxury sector shrank last year amid citywide lockdowns, but years of self-imposed isolation have given rise to a more sophisticated domestic market
- The big question for Hong Kong is how it can lure mainland shoppers who have more compelling options for luxury purchases at home
Global sales surged 17 per cent year on year, with fashion and leather goods – the company’s biggest division – up 18 per cent. Yet, while sales in the United States rose 8 per cent, revenues in Asia excluding Japan increased 14 per cent, compared with an 8 per cent contraction in the final quarter of 2022.
The outperformance of Asia stems almost entirely from the reopening of China, which accounts for roughly 80 per cent of LVMH’s business in Asia. Since early October, the share price of LVMH has soared 47 per cent.
The Covid-19 pandemic has accelerated and accentuated trends that are reshaping the global retail landscape. Although China’s luxury sector shrank 10 per cent last year because of citywide lockdowns, three years of self-imposed isolation have given rise to a more mature and sophisticated domestic market.
The mainland’s share of Chinese luxury purchases surged from a third in 2019 to more than 90 per cent in 2021. The repatriation of spending has led to far-reaching changes in shopping behaviour and preferences.