The Plaza 66 shopping mall on Nanjing road in Shanghai resumed business on June 1. The flow of people has increased and there are long queues in front of some luxury stores. Photo: Chen Xia/GT
Global luxury conglomerates LVMH and Kering cheered the return of Chinese consumers after China readjusted its COVID management and reopened to the world, expressing confidence in a strong market recovery in the country, the most promising market for luxury products.
Kering on Wednesday said it has seen an encouraging start in the Chinese market from the beginning of this year, with better than expected retail sales, after China moved to optimize its COVID-19 response in December.
"The malls are full, streets are full and people have completely returned to normal life," said François-Henri Pinault, the group's chief executive, at a webcast after releasing its full year results on Wednesday.
"I was very surprised by the level of support expressed by the authorities to (support) domestic consumption, private sectors and international companies. The business environment…is much more welcome now," he said.
The group's revenue exceeded €20 billion ($21.41 billion) in 2022, an increase of 9 percent on a comparable yearly basis.
LVMH also expressed confidence that China's luxury sales will bounce back this year as the country continues to reactivated business activity. LVMH logged revenue of €79.2 billion for 2022, up 23 percent.
And in the coming months, "we have every reason to be confident, indeed optimistic, on the Chinese market," LVMH CEO Bernard Arnault said on a conference call, according to a CNN report.
"In Macao…the change is quite spectacular. Stores are now full. It's really come back at a very strong pace," he said.
LVMH's top fashion brand Louis Vuitton is expected to increase prices in China by as much as 20 percent, as luxury labels bank on a strong rebound for growing Chinese consumers' demand, Reuters reported.
The China luxury market had been on a bull run over the past five years, with the market doubling between 2019 and 2021. Despite setbacks in 2022, China is still the most promising market for luxury, according to consulting firm Bain & Company in a report sent to the Global Times on Thursday.
"Growth will resume in 2023 after China recovers from the most-recent Covid-19 impacts. We expect positive conditions to return before the end of the first quarter," the report said.
Positive factors include China's solid consumption fundamentals and larger number of middle- and high-income consumers, the consulting firm said, projecting those segments of population to double by 2030.
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