Why China Is Behind The Global Luxury Slowdown
Explore the impact of China on the global luxury market and why the industry is facing a slowdown. Discover the reasons behind the decline in luxury goods sales and the consequences of the changing consumer behavior in China post-Covid.
Install Tubelator On Chrome
Video Summary & Chapters
No chapters for this video generated yet.
Video Transcript
China used to be the
promised land for the $380
billion luxury goods
business.
Now it is the land of
losses.
Today, we're looking at why
the luxury business became
so dependent on China and
why it's suffering now.
I'm Robert Frank for inside
Wealth and you know,
luxury goods sales total
about $380 billion a year.
But last year they declined
2%.
And the reason was China.
Luxury lost 50 million
consumers over the past few
years. And that is all
because they bet so big on
China. But after Covid,
the young Chinese stopped
buying. You had an economic
crisis there and more
importantly, a psychological
crisis among young,
wealthy consumers.
Youth unemployment soared to
over 20%.
And rather than buying stuff
and status,
young people wanted
experiences and memories.
So the whole market shifted.
But there's another secret
reason for why luxury is
suffering in China,
and that is the rise of
local brands. From watches
to jewelry to
fashion, even supercars.
China is now making its own
luxury products.
And because there's a new
kind of nationalism in China
that values Chinese brands,
luxury companies are now
winning over the European
brands.
So I want to tell you about
a watch company in China
called Atelier Yuen.
This is by two French people
that live in China,
have worked in China for
years.
They just launched a new
watch that is titanium,
that's got a double sapphire
crystal that is a gorgeous
purple color that costs
$3,500.
It's taking the country by
storm.
A watch like that from
Switzerland would cost ten
times as much. And by the
way,
China brands are doing the
same thing with supercars,
with other luxury goods,
and this is a big threat to
the European companies.
The stocks of the big luxury
giants like LVMH,
Richemont, caring.
They all fell over 20% last
year because they built so
many stores in China.
They were betting their
future in China.
And by the way,
ten years ago,
China accounted for half of
all luxury sales in the
world. They expected that
would grow instead.
Now China accounts for only
12% of luxury goods sales.
There are two kinds of
companies that are doing
