From volatile sales and revenue to broader strategic and operational challenges, the dependency on China is proving to be a double-edged sword., the luxury fashion industry is incurring something of a stalemate here in Asia. In recent years, the luxury fashion sector has increasingly centered its strategies around the Chinese market, capitalising on its vast consumer base and the burgeoning wealth of the population.
China’s middle class — once a robust driver of luxury consumption in China — is now facing financial strain alongside a shift in government policy towards showcasing restraint and modesty from the ruling Chinese Communist Party . As reported by BusinessStandard.com, the term “luxury shame” first gained traction in the United States following the Lehman Brothers crisis of 2008 to 2009.
What happens when the China “gravy train” turns sour? Kering shares took a hit last week when the luxury conglomerate reported that operating income in the second half of the year would be down by 30 percent after a 42 percent drop in the first half of 2024. According to Forbes, July saw Burberry shares plunge by more than 16 percent, while Hugo Boss shares dropped by nearly 7.
China’s growing economy sees a rising middle class who view the consumption of branded goods as a reflection of one’s status. Purchasing a luxury brand is something of a physical declaration of the advancement of one’s social status. In the Asian context, the concept of “mian zi” or “face” plays a paramount role in the fabric of society and owning the latest speaks volumes about a person’s “face”.