RY has looked East in its hunger for growth lately, but as the Chinese miracle takes a big fat bite of the reality sandwich, is it time to pack up the Fortnum’s picnic basket and head home?
It is certainly true that Burberry was not the only one taking a beating in the market yesterday. While its precipitous fall was the most notable, its troubles were also taken as something of a bellwether for the sector, with falls at LVMH, Tiffany and Richemont among others – although none on the same scale.
Whether or not this suggests a widespread fear that emerging Asia is losing its taste for the finer things in life, or a concern that even the seemingly impervious world of ultra-high-net-worth individuals is starting to feel the pinch is much harder to untangle.
It’s not so much that Chinese demand is going away. Richemont for example reported as follows on 5 September: “Demand in the Asia-Pacific region remained solid after two years of exceptionally high growth.” But of course solid is hardly the same thing as exceptional.
Perhaps the real problem in China is not so much that the feast is over – compared to Western growth rates, it may still come out ahead – but that after luxury firms tasted the caviar of explosive growth it’s hard to readjust to solid bread and butter.