The European luxury sector is welcoming the end of pandemic lockdowns in China, as the return of big-spending Chinese tourists could sustain further growth.
Prior to the pandemic, Chinese tourists visiting Europe were a major source of sales for luxury houses. The Chinese accounted for “a third of luxury purchases in the world and two-thirds of those purchases were made outside China”, said Joelle de Montgolfier, head of the luxury division at management consulting firm Bain & Co.
Their return has led RBC Bank to revise up its growth forecast for the sector this year to 11 percent, from 7 percent previously.
Photo: Reuters
“China reopening is one of the key ‘mega-themes’ for the luxury sector in 2023,” RBC Bank said in a recent note to clients.
After a drop in 2020, the luxury sector managed to surpass its pre-pandemic sales in 2021.
“The Chinese consumed, but only in China,” Bain’s De Montgolfier said.
Photo: Bloomberg
“In 2022, it was much more complicated with unexpected confinements in the country,” she added.
Nevertheless, that did not hold the sector back from making an estimated 22 percent jump to 353 billion euros (US$384 billion), according to a November forecast issued by Bain & Co.
That growth was supported by the wave of post-lockdown US tourists visiting Europe armed with a strong US dollar, as well as South Korean and Southeast Asian tourists.
Another pleasant surprise was Europeans “who had been ignored for decades ... and were more interested in luxury goods than expected,” said Erwan Rambourg, a luxury industry insider turned analyst and author of the book Future Luxe: What’s Ahead for the Business of Luxury.
With the lifting of travel restrictions in China “there will be a considerable return of Chinese tourists, but that will be more likely in the second quarter,” said Arnaud Cadart, a portfolio manager at asset manager Flornoy & Associates.
“The pandemic is still very active in China and it will affect lots of people,” Cadart said.
Chinese tourists may be needed if the flow of US tourists slows.
“European boutiques need this rebound in Chinese clientele to replace its American clientele which could buy locally,” Cadart said.
They also need to readapt to Chinese customers, who tend to travel in groups, and will join a large number of US tourists.
“There are already lines in front of the boutiques even without Chinese clients ... they need more staff,” De Montgolfier said. Otherwise, they risk a “degradation of the experience” of shopping in a luxury boutique.
Another concern: the volume of merchandise that Chinese customers will want to buy is unclear. The sector likes to keep volumes low and does not discount to ensure exclusivity.
PATENTS: MediaTek Inc said it would not comment on ongoing legal cases, but does not expect the legal action by Huawei to affect its business operations Smartphone integrated chips designer MediaTek Inc (聯發科) on Friday said that a lawsuit filed by Chinese smartphone brand Huawei Technologies Co (華為) over alleged patent infringements would have little impact on its operations. In an announcement posted on the Taiwan Stock Exchange, MediaTek said that it would not comment on an ongoing legal case. However, the company said that Huawei’s legal action would have little impact on its operations. MediaTek’s statement came after China-based PRIP Research said on Thursday that Huawei filed a lawsuit with a Chinese district court claiming that MediaTek infringed on its patents. The infringement mentioned in the lawsuit likely involved
Taipei is today suspending work, classes and its US$2.4 trillion stock market as Typhoon Gaemi approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed income trading, statements from its stock and currency exchanges said. Authorities had yesterday issued a warning that the storm could affect people on land and canceled some ship crossings and domestic flights. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) expects its local chipmaking fabs to maintain normal production, the company said in an e-mailed statement. The main chipmaker for Apple Inc and Nvidia Corp said it has activated routine typhoon alert
GROWTH: TSMC increased its projected revenue growth for this year to more than 25 percent, citing stronger-than-expected demand for AI devices and smartphones The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its forecast for Taiwan’s GDP growth this year from 3.29 percent to 3.85 percent, as exports and private investment recovered faster than it predicted three months ago. The Taipei-based think tank also expects that Taiwan would see a 8.19 percent increase in exports this year, better than the 7.55 percent it projected in April, as US technology giants spent more money on artificial intelligence (AI) infrastructure and development. “There will be more AI servers going forward, but it remains to be seen if the momentum would extend to personal computers, smartphones and
Catastrophic computer outages caused by a software update from one company have once again exposed the dangers of global technological dependence on a handful of players, experts said on Friday. A flawed update sent out by the little-known security firm CrowdStrike Holdings Inc brought airlines, TV stations and myriad other aspects of daily life to a standstill. The outages affected companies or individuals that use CrowdStrike on the Microsoft Inc’s Windows platform. When they applied the update, the incompatible software crashed computers into a frozen state known as the “blue screen of death.” “Today CrowdStrike has become a household name, but not in