Six luxury brands from China have made the “Global Powers of Luxury Goods 2017,” the list of the world’s top 50 luxury goods firms, which was just published by consultancy firm Deloitte. Topped by luxury conglomerates LVMH Moët Hennessy Louis Vuitton and Kering Group, the list ranks the 100 largest luxury goods companies based on sales in the fiscal year 2015.
All of the six listed firms in the Greater China region, which includes mainland China and Hong Kong, are jewelry businesses. The Hong Kong-based Chow Tai Fook Jewellery Group was placed the ninth on the list, beating Rolex, Hermes, and Tiffany & Co. Lao Feng Xiang was next in 13th place followed by Chow Sang Sang (25th), Luk Fook Holdings (28th), Eastern Gold Jade (36th) and Zhejiang Ming Jewelry (48th).
According to the Deloitte report, which is in its fourth iteration, China as a region, represented on the list by the six above-listed firms in China and Hong Kong, experienced a 2.4 percent decline in sales in FY 2015. Thus, the region performed the poorest among the eight geographic areas on the list, the others being France, Germany, Italy, Spain, Switzerland, the United Kingdom and the United States.
Breaking down the performance of each company, sales of Chow Tai Fook dropped 11.9 percent from the year before, causing its position go down two places (it was 7th last year). Chow Sang Sang, Luk Fook Holdings and Zhejiang Ming Jewelry were also loss-makers, with FY 2015 luxury goods sales dipping 1.2 percent, 8.9 percent and 23.4 percent, respectively.
On the other hand, the Shanghai-based jeweler Lao Feng Xiang, a century-old brand that owns a store on 5th Avenue in New York’s toniest shopping district, saw growth in sales by 7.9 percent. The best performer in the group was Chinese jeweler Eastern Gold Jade (a domestic firm engaged in the jade and gold business), which moved up 17 places from its previous ranking. Deloitte wrote that “growth was driven by a rebound in jade wholesale and growth in investment demand for gold bars.”
The overall weakness of the six brands was driven by a number of factors including the strong US dollar, economic slowdown in China, a constant sluggish retail landscape and continued decrease in the tourism industry in Hong Kong and Macau. In spite of that, Chinese consumers, along with the counterparts in other emerging economies such as Russia and the United Arab Emirates, the report said, have continued to be the most important buyers driving luxury goods consumption around the world.
The same report also cited the currency volatility as the main reason for the broadly positive sales growth in the luxury sector in FY 2015. In total, the world’s 100 largest luxury goods firms saw a 3 percent growth rate. However, the impact of currency on companies in each region depends on the currencies they use to settle their businesses. In general, those companies who use depreciating currencies, such as the Euro and the Swiss Franc, tended to benefit from the trend; while international sales of most of the US-based companies suffered from the rising greenback.
Italy, once again, led the list with the largest number of companies, while France dominates in terms of share of sales. In the meantime, companies that have multiple luxury lines almost doubled their growth, compared to the previous year. Bags and accessories continues to be the fastest growth sector.