Is luxury «made for China»?

Cristina D’Agostino

By Cristina D’Agostino12 août 2020

There is nothing particularly surprising about the second quarter figures recently published by the major luxury groups. They are bad. Kering reported a 57.7% drop in current operating profit and LVMH's operating profit fell by 68%. And yet, in the same period both groups showed spectacular growth in China, with LVMH's fashion and leather goods division growing by 65% and Kering reporting 40% growth. China continues to prove to be a driving force in the luxury sector; this was already a trend before the pandemic accelerated things even further. To take Hermès as another example: Asia-Pacific (excluding Japan) accounted for 48% of the group's sales in the first half of 2020. It is no coincidence that Louis Vuitton picked Shanghai as the location to present its men's spring 2021 collection at the end of July. Highly anticipated, and above all highly mediatised on Chinese livestreaming platforms, the show generated 100 million views worldwide, according to the brand spokesperson, including 68 million views on the Chinese platform Weibo alone, with 18 million more on Douyin and 8 million on Tencent. The "rest of the world" recorded 3.3 million views on Instagram and 335,000 on Facebook. These numbers speak for themselves, and they are also why Michael Burke, boss of Louis Vuitton, refers to “historic sales in the markets of Taiwan, China and Korea during the week of the fashion show” in an article published on WWD.

The fact is, whoever masters the art of interaction and strikes the perfect balance between Chinese influencers and sales on social networks is going to be the king of luxury. But what is the right balance for a luxury brand, considering how significantly the Chinese consumer is influenced by politically or culturally oriented statements? The sense of irony that the old continent cultivates, the way of thinking, the style, the art of deconstructing to better anticipate - are these factors that are going to help or harm luxury sales?

Luxury brands also face growing taboos in China, partly in connection with the global health crisis: this crystallized the sense of identity among Chinese consumers, who did not appreciate the criticism directed at the country’s handling of the virus after it arose in Wuhan. Market-watchers say that brand strategies should be guided by empathy with the Chinese people. Ray Ju, associate director of Labbrand New York, declared in the Jing Daily, "the time has come for brands to be compassionate, not provocative or overly humorous. Avoid designs or symbols that might be misinterpreted, even if they seem trendy.” In other words, the creativity of luxury brands has become a diplomatic issue and the growing pressure is making it increasingly hard to handle. After facing the challenge of “Made in China”, luxury will now have to reckon with a new rising challenge in that market: “Made for China”.

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