Luxury Market Stretches with China's Reopening... "LVMH Prefers Expanding Investment in Mainland over Hong Kong"

As interest in Hong Kong, once known as the 'Asia Premium Shopping Hub,' declines, the world's leading luxury group Louis Vuitton Moet Hennessy (LVMH) reportedly wants to expand its investments in mainland China, Bloomberg reported on the 23rd.

The appearance of the luxury street in Tsim Sha Tsui, Hong Kong [Image source=Yonhap News]

Bloomberg cited sources familiar with the matter, stating that LVMH wants to focus more on investments in growing Chinese metropolitan cities such as Shanghai, Chengdu, Guangzhou, and Shenzhen.

The sources revealed that LVMH has already relocated some of its regional headquarters, including the group's regional headquarters previously based in Hong Kong, to Shanghai, and has also assigned some senior executives to the mainland.

LVMH declined to confirm these reports.

Hong Kong has long attracted mainland Chinese luxury shoppers with lower prices and a wider variety of products compared to the mainland. However, due to large-scale anti-government protests in 2019 causing social unrest and the subsequent three-year COVID-19 pandemic, mainland Chinese shoppers disappeared from Hong Kong for four years, leading major luxury stores to begin closing their outlets.

The sources stated that LVMH, which owns brands such as Louis Vuitton, Christian Dior, and Tiffany & Co., has experienced a much slower recovery in Hong Kong after COVID-19 compared to other Greater China regions. They added that LVMH expects an increase in domestic consumption among Chinese shoppers, and accordingly, luxury consumption within mainland China is projected to nearly double compared to pre-COVID-19 levels.

LVMH has already benefited from China's reopening of its borders after three years earlier this year. Since the beginning of this year, LVMH's stock price has risen by 30%, and on the 13th (local time), it entered the world's top 10 companies by market capitalization ($486 billion).

This is thanks to a significant increase in sales driven by the recovery of daily life and consumption in China. Bloomberg reported that if the market capitalization surpasses $500 billion, LVMH will become the first European company to achieve this record. Amid long-term bullish prospects for the Chinese market, some major luxury brands have already expanded their mainland China operations. Hainan and Macau have become popular travel destinations for Chinese people amid the Chinese authorities' moves to expand duty-free zones. All these trends could further weaken Hong Kong's importance.

During this month's Easter holiday, Macau visitors recovered to 62% of 2019 levels, while Hong Kong only reached 44%, Bloomberg reported.

This content was produced with the assistance of AI translation services.