In “Chinese Whispers,” we share the biggest news stories about the luxury industry in China that have yet to make it into the English language.
In this week’s edition, we discuss:
Louis Vuitton, Piaget, Montblanc will lower prices in China after new tariff cut April 1st
Starting on April 1st, China will reduce VAT (value added tax) for import companies from 16 percent to 13 percent, and the cross-border tax will be lowered as well. The total reduction will reach around $33.5 billion (RMB 225 billion) this year, according to the General Administration of Customs.
Immediately after the news, Chinese fashion media outlet Ladymax confirmed that Parisian luxury brand Louis Vuitton quietly lowered their product prices by 3 percent on their Chinese website because of the tax adjustment, and the same report says German luxury brand Montblanc plans to adjust prices of selected products as well, including writing instruments, leather goods, and high-end timepieces. The Swiss luxury jewelry and watch brand Piaget disclosed that it will reduce prices of their retail products on the mainland, starting on the 1st, and the cross-border shopping platform Tmall Global announced that every order that consumers place after April 1st will enjoy the benefit of the tax reduction. The price of high-end British perfume Creed, for example, will be reduced from about $400 (RMB 2,690 yuan) to $393 (RMB 2,639).
These adjustments further narrow the price gap between the mainland and overseas spending. It’s been less than a year since the last tariff reduction this past July, proving that the Chinese government is eager to redirect Chinese oversea consumption back to the mainland.
Shanghai Tang appoints founder’s daughter as the new creative director
Shanghai Tang, the poster child of Chinese luxury fashion houses, is returning to its roots with the news that Victoria Tang-Owen will become the company’s new creative director, a decision that was announced via the brand’s Instagram account on March 26. Tang-Owen is the daughter of the original founder of Shanghai Tang, David Kong. She has always been active in fashion circles and established her own creative company, Thirty30 Creative, with her husband Christopher Owen.
The brand posted Tang’s new design for SS19 Men’s collection on Instagram, which included strong millennial elements, while the brand’s new logo shows her interpretation of “China chic.” The change comes shortly after the Chinese investment fund Lunar Capital acquired Shanghai Tang this past December.
Lululemon’s Q4 China e-commerce sales grow more than 140 percent
On March 28th, the Canadian brand Lululemon released its fourth-quarter earnings report for the 2018 fiscal year, and for the three months ended February 3, 2019, the brand’s global revenue increased by 26 percent year-on-year to $1.17 billion, exceeding analysts’ expectations of $1.15 billion.
In addition, the company’s chief operating officer, Stuart Haselden, mentioned at the earnings conference that Chinese e-commerce sales were particularly strong, with a growth rate of more than 140 percent in the fourth quarter. During that quarter, Lululemon saw the strongest holiday season sales they’ve had in six years. The brand successfully launched Asia-exclusive products with actress Xin Zhilei during this year’s Chinese New Year holiday.