Associated Press photos Shoppers walk Thursday on Canton Road, the one-stop-shop for high-end brands in Hong Kong. As China's economy has slowed, consumers have become skittish about paying high prices for luxury goods.
People walk past a Tiffany & Co. flagship in Hong Kong, where only a dozen people stopped in one afternoon last week, with most leaving empty-handed.
Wednesday, December 05, 2018 1:00 am
Luxury industry feels China pinch
Economic downturn has made it harder to sell high-end goods
JOE McDONALD | Associated Press
BEIJING – The designer boutiques of Manhattan and Paris are feeling the chill of a Chinese economic slowdown that has hammered automakers and other industries.
It's a rude awakening for such designer brands as Louis Vuitton and Burberry that increasingly rely on Chinese customers who spend $90 billion a year on jewelry, clothes and other high-end goods. The industry already is facing pressure to keep up as China's big spenders, mainstays for American and European retailers, shift to buying more at the spreading networks of luxury outlets in their own country.
Last week, Tiffany & Co. showed how much well-heeled Chinese tourists matter to retailers abroad. Shares in the jeweler known for $5,000 watches and $400 silver baby spoons fell 12 percent after its CEO said they were spending less.
In Hong Kong, the top shopping destination for mainland travelers, only a dozen visitors were in Tiffany's flagship store one afternoon last week.
“The name-brand goods are too pricey,” said Zhou Jiqing, from the neighboring city of Shenzhen. “I'm waiting for the Christmas sale.”
Forecasters including Euromonitor International and Bain & Co. say Chinese customers will be the luxury industry's main growth engine over the next decade. But this year, shoppers are skittish amid cooling economic growth, trade tension with Washington and weak real estate and stock markets. The spending shift could have big implications for retailers who've been catering to them with various amenities but now will have to work even harder to get their dollars.
“Consumers are just not as excited about spending that kind of money right now,” said Ben Cavender of China Market Research Group.