China has eased its pandemic restrictions and the country’s wealthiest citizens are ready to spend big.
With freer movement now allowed, the country’s hottest shopping districts are filling up again with people buying designer goods. In fact, China’s luxury sales are increasing faster than the rest country’s economy. China saw sales of jewelry and precious metals like gold and silver increase 37.4 percent in March from a year earlier, “more than three times as fast as the rebound in overall retail sales,” the Times reported citing data from China’s National Bureau of Statistics.
LVMH, the luxury goods company that owns Louis Vuitton, Tiffany & Co., and Dior, posted an increase of 18 percent growth in revenue in their fashion and leather goods sector, according to the New York Times. And this jump has been largely attributed to customers in China.
“We expect China to be the luxury industry’s key growth engine this year, especially given a slight deceleration in other core markets like the U.S. and Korea,” Morgan Stanley analyst Edouard Aubin told the Times. “Much of the initial spend driving the rebound is, for now, less to do with the middle class of China and more to do with rich people spending more.”
Residents of China still find it difficult to travel outside of the country, meaning customers can’t easily make their purchases in other places. So domestic retail destinations like Shanghai gather large crowds, as well as emerging locales like Chengdu and Hangzhou.
Not all luxury brands are seeing the bump. Kering, which owns Balenciaga and Gucci saw much slower growth than LVMH. Aubin told the Times that the economic rebound is being seen by companies “at the top of the pricing pyramid,” such as Hermès, Chanel, and Louis Vuitton. Or, as another expert told the paper: “Being bigger helps.”