Major brands exiting China market
PTI
BEIJING
After enjoying a decade of aggressive expansion in China, international luxury brands have begun to curtail their operations as the world's second-largest economy is beset by a slowdown, a massive government crackdown on graft and a Chinese preference to buy expensive goods abroad.
French retailer Louis Vuitton closed its store in the sprawling port city of Guangzhou. That was followed by two more shutdowns by the firm in Harbin and Urumqi in Xinjiang.
The company, however, said the closures were part of a marketing strategy adjustment by headquarters.
During the past two years, Britain's Burberry has closed four stores in China, Coach shut two, Hermes one, Armani five, and Prada went from 49 to 33.
Following 10 years of aggressive expansion, the luxury brands have been shrinking their physical presence in China to adapt to a cooling market plagued by a slowing economy, an ongoing anti-corruption campaign and Chinese buyers' increasing overseas purchases, Hong Kong-based South China Morning Post reported today.
Fortune Character Institute (FCI), a Shanghai-based market research unit, forecasts mainland luxury sales to grow 3 per cent to USD 25.8 billion this year, much slower than the 11 per cent in the recovering global market.
The institute in a study found that although Chinese shoppers consumed 46 per cent of luxury goods around the world, their purchases in their home market accounted for only 10 per cent of global sales, falling from 11 per cent in 2012 and 13 per cent in 2013.
The sluggish growth is reflected in the expansion plans of luxury brands. They are opening fewer new stores and closing more, the report said.
"Store openings are no longer a major way for international luxury brands to expand in the China market. Over the next two years we expect these brands to close even more stores than before," said Zhou Ting, director of FCI.
