French luxury goods company LVMH’s deputy chief executive officer has stated that Chinese consumers have been reducing their travel and spending, indicating that the decline in demand for luxury goods may persist for some time.
According to Bloomberg, on Wednesday, May 28, LVMH’s deputy CEO Stephane Bianchi told lawmakers at a hearing in the French Parliament, “In the past three months, outbound travel and shopping by Chinese tourists have decreased.”
LVMH has been warning about weak demand. In the first quarter of this year, organic revenue in regions including China dropped by 11%. The company also saw a similar decline for the full year of 2024.
Bianchi mentioned that LVMH has observed a growing interest among Chinese consumers in local brands. He noted that given the ongoing uncertainty over tariffs, it is unclear when demand in the United States will recover. He also stated that LVMH will no longer raise prices in its wine and spirits division, stating, “We cannot indefinitely increase prices.”
The stock price of LVMH has fallen by over 20% this year.
LVMH has been underperforming in the Asia-Pacific region recently. Last year, the brand’s sales in the Asia-Pacific region (excluding Japan) saw an 11% year-on-year decline, with net profit falling by 17%.
The persistent zero-COVID measures over the past three years have severely impacted the Chinese economy, while a prolonged real estate crisis has further eroded the wealth of many Chinese people. Currently, a sluggish job market, falling property prices, as well as uncertainty surrounding the national pension and other welfare systems have weakened consumer confidence in China. Most individuals feel pessimistic about their job security and future prospects. The series of economic stimulus measures implemented by the Chinese government in 2024 have all failed, leading people to continue saving money and preparing for the next crisis.
During the five-day “May Day” holiday, many individuals tended to opt for budget-friendly short trips, aiming to save on expenses. Chinese travelers going abroad are increasingly choosing neighboring countries like Japan and South Korea, while Southeast Asian countries such as Malaysia and Thailand are attracting Chinese tourists with visa-free entry and lower costs. Expensive long-haul destinations like the United States and Europe are not a top priority for Chinese travelers this year.