This week, China was gearing up for the Spring Festival holiday, which begins just after the Lunar New Year. But while wealthier Chinese are traveling again, they’re staying much closer to home.
According to data from Global Blue and Bernstein, mainland Chinese shopping in Hong Kong in January was 426% of 2019 levels and spending in Japan was 232%, while Chinese spending in mainland Europe was just 80% of 2019 levels.
In contrast, spending by Americans in major European hubs has soared since the end of the pandemic, reaching 290% compared to 2019.
To be sure, most travel during China’s 40-day “Spring Festival” has always been domestic, with homecoming trips being particularly popular. But in one sign of change, demand for flights from Beijing to Sanya, China’s tropical beach resort and duty-free shopping hub, rose so much over the Spring Festival weekend that tickets cost more than 10,000 yuan ($1,400), roughly the same as the price of a flight to Paris on the same day.
“I was just in Paris in January, and there was no one in the duty-free area, whereas there would normally be queues,” said Aroma Xie, director of Shanghai-based showroom Seiya Nakamura 2.24.
Long visa times are also a barrier, but countries such as Singapore and Thailand have lifted visa requirements for Chinese tourists, further boosting Chinese duty-free spending in Asia, which is already up by nearly a third compared to 2019, according to Global Blue. The number of Chinese visitors to Japan is still less than half of what it was pre-pandemic, but there has been an uptick in Chinese tourists recently, and they are spending more. Thanks to the weak yen, Chinese spending is more than double what it was in 2019.
Meanwhile, Hong Kong is expected to welcome 1 million mainland Chinese tourists over the holidays, about 80-85% compared to 2019, according to the Hong Kong Tourism Board. Domestic hubs such as Chongqing, Kunming and Guilin are gaining in appeal with closer shopping and entertainment options.
What’s more, they also favor a type of shopping mall that is less common in Europe, particularly among multi-generational family travelers. “In a mall, everyone can be in the same place, but still do what they want. It’s not a one-person purpose, it’s a whole family purpose,” Xie explained.
Economic uncertainty, including high unemployment among young Chinese, is also a factor. Those hit hardest economically are younger shoppers who don’t need lounges and other mall amenities, are more independent in their travels and can navigate Europe’s street-side stores. Gary Bowerman, director of tourism research firm Check-In Asia and author of “The New Chinese Traveler,” said a generation that has only known prosperity has had to face layoffs and pay cuts, even in sectors like technology.
Part of the mystery is that political and racial tensions since the COVID-19 outbreak have led to an uptick in anti-Asian attacks. “When you read reports from Western countries, there is definitely a sense of anxiety about traveling abroad,” says Huishan Zhang, a London-based Chinese designer. And with social media videos circulating of attackers yelling at Asians to “go back to China,” some Chinese people have decided not to come to China in the first place.
France is an exception in Europe, where Chinese spending has returned to 2019 levels, according to Mathieu Grac, senior vice president at Global Blue. That’s a strong recovery compared with Italy, where spending is just 64% of 2019 levels, and Spain, where it’s 81%. But Bernstein expects the rest of Europe to catch up around the middle of the year.
China has also taken steps to increase inter-regional travel. Last November, it imposed visa exemptions for citizens of five European countries visiting China – France, Germany, Italy, Spain and the Netherlands. The move hasn’t entirely paid off, but it has led to some goodwill gestures. According to Bernstein, Germany has significantly reduced processing times for Chinese visas, and France has announced a new type of visa that allows Chinese nationals who have completed certain studies to stay for up to five years.
This week’s fashion
Fashion, business, economy
(Shutterstock)
Tod’s Group is being taken private in a deal with L Catterton. The Della Valle family will retain majority ownership in the company with 54% of the total share capital, while L Catterton will hold 36%. L Catterton will pay 512 million euros ($552 million) for Tod’s shares, or 43 euros per share. Following the news, the stock price rose to 42.7 euros per share.
EssilorLuxottica’s margins were slightly below expectations. Adjusted operating margin for 2023 reached 16.5 percent at current exchange rates. The company said it expects adjusted operating profit to be in the range of 19-20 percent of sales between 2022 and 2026.
Shopify edged out Temu and Shein as sales beat expectations slightly. Revenue rose 24% to $2.1 billion in the period, beating analysts’ average estimate of $2.08 billion. The results didn’t impress Wall Street, with Shopify falling about 4% in U.S. pre-market trading.
Engaged Capital has secured the backing of the VF heirs in a bid to refresh The North Face’s ownership. Engaged Capital, which owns 1.3% of VF, has the backing of descendants of founder John Barbey. The Barbey family wants to replace two directors on VF’s 12-person board, one of whom has been nominated.
Nike is laying off 2% of its workforce. The company said it would redirect resources to its most important areas and growth opportunities. “Our company is not currently performing at its best, and I ultimately hold myself and my leadership team responsible,” CEO John Donahoe wrote.
U.S. senators urge SEC to block Shein’s IPO unless it discloses business risks in China. Marco Rubio wrote that Shein’s recent decision to seek approval from Beijing for its planned U.S. IPO “raises serious doubts” about the accuracy of the company’s filings. Rubio’s opposition is the latest political obstacle in Shein’s bid to go public.
Aditya Birla Fashion & Retail reported a net loss for the third quarter. The Indian fashion conglomerate’s loss for the quarter ended December 31 rose to 1,080 crore rupees ($13 million). The company said “higher interest expense on account of higher borrowings” hit its bottom line.
Target’s new private label will sell beauty products and clothing for under $1. The private label, known as Dealworthy, will sell clothing, beauty products and other items starting at under $1, with most items priced under $10. The products will be available in stores and on Target.com later this month.
U.S. retail sales fell sharply after the holiday shopping season for the first time in nearly a year. Retail purchases, not adjusted for inflation, were revised downwards from the previous month to fall 0.8% from December. The decline suggested consumers were taking a breather after a strong holiday shopping season.
A climate group has filed a greenwashing complaint against Lululemon in Canada. The group has asked the competition watchdog to investigate whether the company’s “Be Planet” messaging is misleading shoppers. There is no guarantee the Canadian Competition Bureau will take up the case.
Tiger Woods has announced a new lifestyle brand, Sunday Red. The golf legend’s new apparel and footwear line was launched by golf equipment manufacturer TaylorMade. The brand is operated as a separate business unit based in San Clemente, California, under the direction of President Brad Blankinship, former General Manager of Quiksilver.
Anna Wintour will host a fundraiser for Biden during Paris Fashion Week. Wintour will be hosting the event along with Biden-Harris 2024 presidential campaign finance chair Rufus Giffords at an undisclosed location in Paris on March 4. Tickets range from $500 to $10,000.
Beauty Business
(Shutterstock/Shutterstock)
The job cuts are likely as the body shop is putting itself through administration. Aurelius said sales were weak over the Christmas period and early January. The chain did not have enough working capital to continue operating in its current form.
Online beauty sales in China surged in January, and the overall market is expected to recover if the impact of a long-term decline in duty-free beauty sales is excluded, according to Bernstein data. Online beauty sales rose 58% year-over-year last month.
LeBron James is launching a grooming line for men. Developed in collaboration with beauty product manufacturer and distributor Parlux Ltd, Shop Men’s Grooming Line will be sold in approximately 1,600 Walmart stores. The line will be available in April.
Popular skincare brand Dieux is making its Sephora debut. The label will be available in 714 stores in early March. To support its Sephora launch, the brand has hired retail director Lesley Yee Leung and is expanding production of its highly sold-out products.
Valentino is launching a luxury fragrance range. L’Oreal unveiled the range to press and buyers in Paris, due for release in late spring, inspired by creative director Pierpaolo Piccioli’s haute couture show, which aimed to refresh and reinvent the brand’s high-end bespoke line.
Smashbox is marking its comeback with Pamela Anderson, who has been announced as the face of its new “OG” campaign promoting the brand’s flagship product, PhotoFinish Primer. With Anderson, the label hopes to tap into nostalgia for its 1990s and 2000s heyday.
people
(Farfetch & Shutterstock; illustration by Fred Galley for BoF)
Farfetch CEO Jose Neves is stepping down amid a leadership shakeup. Other Farfetch executives, including the company’s chief financial officer, chief product officer, chief platform officer, chief marketing officer and chief operations officer, are also leaving. In the meantime, Coupang CEO Beom Kim and the rest of Farfetch’s executive team will lead the company.
Alastair McKimm is leaving iD magazine. The British fashion bible has been shuttered under new owner Karlie Kloss, as the company continues to restructure without the star stylist and fashion editor at the helm. A replacement has yet to be announced.
Media and Technology
(Shutterstock)
The Met Gala will be co-hosted by Zendaya, Jennifer Lopez, Chris Hemsworth and Bad Bunny. The dress code for the gala is “The Garden of Time.” This year, TikTok will be a sponsor for the first time, as will Loewe, a fashion brand under LVMH.
Tem spent millions on six Super Bowl ads in an attempt to win back U.S. shoppers. Revenue fell 12.5% month-on-month in December and 4.8% in January, a sharp drop from the app’s more than 50% growth rate expected by mid-2023. Shares of Tem’s parent company, PDD Holdings, have fallen nearly 10% this year.
New York City is suing social media platforms over concerns about the mental health of teenagers. The city filed the lawsuit in California state court in Los Angeles against Meta, TikTok Inc. and its parent company ByteDance Ltd., and Google LLC and its YouTube platform. The city alleges that Meta Platforms and others exploit children and young people.
Hearst’s profits fell 2% due to declines in TV and print. Its consumer-media business, which accounts for half of the company’s revenue, has seen ad revenues fall due to weak digital ad sales in a non-election year. CEO Stephen Schwartz said he expects 2024 to be a strong revenue year.
Edited by Yola Mzizi
