Luxury Chinese market meets “cold stream” Burberry closes its Guangzhou factory

Recently, Burberry, a British luxury goods retailer, has been unfavorable. After the profit warning issued by the brand's group in September, it has just announced the closure of a factory in Guangzhou. The industry analyzed that Burberry's closure of the factory, in addition to the factory worker's working hour violation factors, may also be affected by the slowdown in the domestic economy, leading to a sharp decline in sales of the brand in China, to shut down the factory to reduce production costs.

Since the beginning of this year, many foreign luxury brands have experienced a “cold stream” in the Chinese market, and luxury goods companies such as Tiffany, LVMH, and Lifeng have fallen below 20% for the first time in three years in the second quarter. The reporter visited some luxury stores in Guangzhou and found that the sales situation is indeed not optimistic. Some industry people lamented: "Luxury brands are no longer in China."

Closed doubt clouds

Burberry has a 156-year history and is a British luxury brand with traditional style. In March 2007, Burberry proposed a "globalization" plan to relocate the production line to Shenzhen, Guangdong, and has since successively set up factories in other major cities in China. The Guangzhou factory closed this time is one of them.

According to the reporter's understanding, the reasons for the closure of the Guangzhou foundry are partly due to the failure of the workers' working hours and working environment standards to meet the standards and in violation of the British ethical trade organization regulations. However, there are also industry analysts, and its sharp decline in sales in China is also an important reason.

The reporter inquired about Burberry's official website and learned that the brand had three stores in Guangzhou, located in the Friendship Store, Taikoo Hui, and Haiyin Festival Walk. The reporter visited the Friendship Store and discovered that Burberry had three locations here, two of which were perfume counters and one was

Luxury goods are also discounted

Luxury consumption has developed rapidly in China in recent years and has become one of the engines for the growth of the global luxury brand market. According to the Boston Consulting Group, China is expected to surpass Japan and the United States by 2015 and become the world's largest luxury goods market. However, since the first quarter of this year, the performance of many luxury brands in the Chinese mainland market has shown a downward trend.

According to the latest data from the U.S. economic survey agency ISI Group, luxury goods companies such as Tiffany, LVMH, Lifeng, Prada, Burberry, and Ferragamo achieved sales growth of 17% in the second quarter, which is only half of the increase in the same period last year.

The world’s largest jewellery retailer, Chow Tai Fook’s earlier financial report, said that a quarter’s revenue increased by about 16%, a significant slowdown from the 61% increase in income in March. Hengdeli Holdings, the largest watch retailer in China, had previously stated that demand for high-end watches has slowed to single digits.

The reporter went to Outlets Plaza, which is located in the Festival City of Haiyin, Panyu, where luxury brands such as Gucci, Armani, Burberry, and HugoBoss are concentrated. The reporter walked into the mall and saw that there was very little traffic here on Sunday and the scene was deserted.