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:
As Burberry is undergoing a major brand transformation, the British high fashion brand’s every move in China — the market that stands for the most important revenue source to the brand nowadays — is under close scrutiny from industry observers.
According to an investigative report this week by the Chinese fashion news site No Fashion, Burberry has shut down four retail stores in Shanghai since August 2018, with the latest closure occurring on March 31, when the brand ceased the operation of its flagship store at the city’s L’Avenue, which it opened in 2013.
No Fashion, citing insider sources, said the company had been laying off Chinese staff in preparation for the closure until only seven of them remained. The publication also said the permanent closure of the L’Avenue store represented a “landmark event” in Burberry’s perceived exit from Shanghai. Previously, the brand closed stores in the following locations in Shanghai: K11 Art Mall Shanghai (last August), Westgate Mall (late February) and Hongqiao Airport (late February).
Whether the recent store closures by Burberry is indicative of the brand’s hardships in China is open to interpretation, as the brand has clearly found a way to sell to the country’s digitally-savvy consumers through social media platforms like WeChat in recent months. Additionally, in an exclusive statement to Chinese news outlet Jiemian, Burberry said they would open two new stores in Shanghai’s IFC Shopping Mall and IAPM Mall in the next couple of months.
2. Prada Group lowered retail prices in China on VAT cut – Prada
Following in the footsteps of rivals like Louis Vuitton, Gucci, Montblanc, and Piaget, Prada Group announced on April 3rd that they would lower the retail prices of Prada and Miu Miu products in mainland China in response to the recent policy change on tariffs.
Starting on April 1st, China dropped the VAT (value-added tax) for import companies from 16 percent to 13 percent. The total reduction will reach around $33.5 billion (RMB 225 billion) in value this year, according to the General Administration of Customs.
3. Fosun International’s fashion unit may go public – LadyMax
Fosun International, the parent company of international luxury brands including Lanvin, Wolford, St. John and Folli Follie, may spin off its fashion business for an initial public offering (IPO) in the future, the Chinese fashion outlet LadyMax reported this week, citing a speech by Chen Qiyu, Co-President of Fosun International. Chen did not disclose details or a timetable.