Will Louis Weedon Become The Next Apple In China?

According to the world clothing and shoe net, after the alarming performance warning issued by Apple (142.19, -15.73, -9.96%), investors soon began to worry that if Chinese consumers reduced the purchase of iPhone, then the investors would be worried.

(Louis Vuitton) the handbag is likely to be next.

Apple's expected lower revenue expectations shook the global market, hitting suppliers and competitors, but there was still plenty.

Companies depend on those customers who like to be big at Apple's latest products.

After Apple lowered its revenue forecast, Gucci's (Gucci) parent company opened its cloud, Louis Vuitton's parent company LVMH, Boboli and Cartire's parent company, and its share price fell across the board.

Kai Yun shares fell 5.5%, the largest single day decline since last October; Lu Wei Ming Xuan fell 3.8%, Boboli fell 5.9%, the peak fell 2.8%.

"It will become more challenging to do well in China because the market is tightening," said David Roth, chief executive of The Store, global retail business at WPP, an advertising giant.

This is a challenging signal. People need to calm down and get to know China better and prepare for it. "

Apple blamed the slowdown partly on the slowdown in demand in China, which set the alarm for the entire luxury sector.

According to data from EuroMonitor International, Chinese consumers account for 30% of the world's $1 trillion in luxury spending.

Over the years, luxuries and Tiffany (79.59, -2.24, -2.74%) luxury companies have targeted the wealthy Chinese tourists who buy expensive handbags, jewellery and other luxuries while on vacation in Paris or Dubai.

But investors are worried that the depreciation of the renminbi, the slowdown in China's economy and the government's crackdown on overseas purchases may weaken demand.

The peak has already felt the impact.

The Swiss watch and jewellery manufacturer warned last November that sales growth in China has slowed.

Other companies maintained a more optimistic tone. Lu Wei Hun Xuan and Kai Yun both expressed strong sales performance in China in October and welcomed the pfer to domestic sales.

For luxury retailers, the Chinese New Year holiday, which begins in February 5th, will be a key test.

A week long Spring Festival holiday traditionally comes from China.

An important period of lavish consumption.

About 2/3 of sales take place outside China, and tourists open their wallets when traveling abroad, taking advantage of better choices and cheaper prices than in China.

Turning to domestic consumption

But as the global trade conflict has brought heavy pressure on China's stock market and exchange rate, coupled with the slowdown in the domestic economy, more and more mainlanders choose to shop in China instead of going overseas.

"Obviously, the consumption pattern has changed: Chinese people are buying more and more at home," said Pascal Martin, a partner at OC&C strategy consulting in Hongkong. "Pascal has obviously changed its consumption pattern."

Up to 25% of the former import clothing tax is now only 7.1%.

The recent crackdown on the return of undeclared merchandise by Chinese authorities has also encouraged domestic consumption.

A report released by HSBC last month showed that the gap between China's overseas and domestic spending on luxury goods is narrowing, and the balance of 50/50 is in sight.

Companies are scrambling to set up more stores in China or cooperate with local online stores such as Tmall (Alibaba, 130.6, -6.10, -4.46%).

Italy luxury brand Zegna (Ermenegildo Zegna), which has branches in 35 cities in China, opened a flagship store in Tmall last December. Italy fashion company Valentino (Valentino) also took similar actions in November last year.

"In terms of duplication of business and loyalty, it will be much healthier for Chinese consumers to consume your products in their own country," said Thibaud Andre, director of research at Daxue Consulting, a consulting firm focusing on Chinese market.

The change in consumption patterns has brought trouble to retailers like Tiffany.

For a long time, Tiffany has been counting on Chinese shoppers to go to Fifth Avenue or Rodeo Drive.

In November last year, Tiffany reported less than expected sales and highlighted the "obvious pattern" of Chinese consumers cutting consumption overseas.

However, sales in China are still strong.

One of the key strategies of these companies is to focus on the technology millennial generation and the younger generation of Z.

In a November report, Bain & amp; Bain said it expects that these age shoppers will account for 55% of the world's total purchases of personal luxury goods by 2025, according to a November report.

Retailers and investors are concerned about whether this spending trend will continue.

"Luxury brands still benefit from the strong ability to attract new consumers in China," Erwan Rambburg, a HSBC analyst, said in a report last December. "But managers are preparing for the slowdown. Most of the investors we see in Hongkong have even more fearful predictions," Elvan Lamburg, a HSBC analyst, said.

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