LVMH billionaire CEO Bernard Arnault in China to woo all-important Chinese consumers

The high-profile visit coincides with a gathering of global executives and world leaders in Tianjin
Visit reflects ‘luxury companies’ high expectations for China’, Digital Luxury Group’s partner and managing director for China says

China's border reopening

Bloomberg

Published: 5:10pm, 28 Jun 2023

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Bernard Arnault, the CEO of LVMH, kicked off his tour of China with a visit to a high-end shopping centre, with the billionaire’s efforts to woo Chinese consumers coinciding with the government’s push to build ties with foreign companies.

The French entrepreneur was spotted at a mall in Beijing on Tuesday, Global Times tweeted, citing photos taken circulating on a Chinese social-media platform.

Louis Vuitton CEO Pietro Beccari is joining the trip, as is Delphine Arnault, Bernard’s daughter who heads Christian Dior Couture, people familiar with the trip have said, declining to be named discussing his whereabouts. The itinerary includes meetings with local teams in several cities, the people said.

The high-profile visit coincides with a gathering of global executives and world leaders in Tianjin, where Chinese Premier Li Qiang has sought to reset ties with major trading partners and warned of the risk of confrontation amid the campaign to “de-risk” supply chains away from the world’s second-biggest economy. President Xi Jinping separately pledged to do right by foreign investors as the country continues to open up.

Pandemic’s effects leave China luxury market stronger than ever

Beijing has already rolled out the red carpet for other global business leaders – including JPMorgan Chase CEO Jamie Dimon and Tesla founder Elon Musk – to try and assuage concerns that it has become more hostile towards foreign capital. The charm offensive comes as pressure builds for officials, who face an increasingly gloomy economic outlook and have highlighted a consumption revival as core to the recovery.

“This type of visit is critical for these luxury executives because the market, consumer behaviour and the local presence of luxury brands have all changed drastically in the last three years,” said Pablo Mauron, partner and managing director for China at Digital Luxury Group. “Whether or not this represents a vote of confidence, it does reflect luxury companies’ high expectations for China.”

Arnault was spotted in Beijing on Tuesday. Photo: Twitter

For LVMH, mainland China has become a critical driver of growth. The country’s shoppers splurged on luxury handbags and jewellery in the first quarter after strict Covid-19 curbs were lifted, pushing the share price to a record and briefly lifting it into the world’s 10 most valuable companies.

But the past three years, in which China sealed itself off from the world to combat Covid-19, have also seen major consumer shifts that have sparked a re-evaluation for many firms. LVMH has already moved some of its brands’ regional headquarters and senior executives to cities like Shanghai, betting that the pandemic pivot by Chinese shoppers to buying at home is likely to continue.

The growing influence of the country’s Generation Z, who are set to surpass peers in the United States and Europe as the world’s biggest luxury buyers by 2025, is adding impetus to lock in a foothold, though foreign brands will need to meet the needs of increasingly discerning customers.

China rolls out ‘charm offensive’ for foreign investors, but doubts linger

“The past three years’ growth should not be taken for granted,” Mauron said. “We see that most luxury companies are taking a cautiously optimistic view about this market. However, there will be challenges ahead, which will necessitate a top-down approach from the brand headquarters, complemented by authentic insights into the local scene.”

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