PARIS — Christian Dior chief executive officer Sidney Toledano said the brand’s prospects in Mainland China remain bright, despite fresh evidence that a government crackdown on corruption and ostentation is sharply denting demand for luxury goods in the world’s second-largest economy.
This story first appeared in the December 20, 2013 issue of WWD. Subscribe Today.
Speaking at the general assembly of Christian Dior on Thursday, the president and ceo of Christian Dior Couture said the French fashion house has not been affected by the antigraft campaign that began nearly a year ago under the new administration of President Xi Jinping.
“Our position in China is strong both in terms of image and market share gain, so I remain very confident regarding China, as far as Christian Dior Couture is concerned,” Toledano told WWD on the sidelines of the meeting. “We have not been affected by the [crackdown on] gifting.”
The executive’s comments came after figures released earlier in the day showed Swiss watch exports to China plummeted 26.8 percent in November as a result of the ongoing Chinese government campaign to curb exorbitant gift-giving.
Commenting on the data released by the Federation of the Swiss Watch Industry, which showed an overall 0.5 percent drop in exports of Swiss timepieces last month, Citi analyst Thomas Chauvet said the outlook for China remained uncertain.
“It is a negative data point for the Swiss watch industry and luxury sector sentiment as we were expecting further easing of destocking in China and possible benefits from [the] earlier timing of Chinese New Year,” he said in a research note.
“China’s new President Xi Jinping’s tough stance on corruption practices and extravagant spending is likely to limit any recovery of the illegitimate component of luxury demand this year [gifting]. This is likely to have a greater impact on the high-end rather than the midrange segment,” he added.
Toledano noted that Dior sold mainly products for personal use, such as women’s dresses. “On the men’s side, we are younger and more fashionable and edgy, so we are not part of the political thing,” he said. “As far as Dior is concerned, we have positioned ourselves well.”
He noted that the “Esprit Dior” exhibition, held at the Museum of Contemporary Art in Shanghai from Sept. 13 to Nov. 10 attracted more than 120,000 visitors. “Wealthy and young Chinese people have a level of knowledge and an appetite for learning about brands, their tradition, history, know-how and quality,” he noted.
Responding to a shareholder’s question during the general assembly, Toledano declined to reveal China’s contribution to total sales at Christian Dior Couture. He said that while demand across Mainland China varied, there was still an appetite for ostentatious consumption in some sections of the country.
“There is ostentation, and ostentation. I was reading a report recently that said that the graphic design and logo of certain brands were still extremely popular, provided they have a history and interesting graphic design,” he noted.
The nation’s leadership earlier this month released new rules outlining how officials should avoid extravagant spending on activities ranging from overseas travel to the purchase of new vehicles.
Some say the ongoing campaign could portend a slower shopping season over the upcoming January Chinese New Year, a period known for elaborate gifting, particularly between businesses and governments as a form of collateral to ink business deals in the coming year.
Christian Dior, the luxury goods group, is the main holding company of LVMH Moët Hennessy Louis Vuitton, the owner of brands including Christian Dior, Givenchy, Guerlain, Sephora, Moët & Chandon and Tag Heuer.
The general assembly was called to present the company’s results for the period of May 1 to June 30, following a change in the timing of its financial year. According to the revised dates, the current financial year runs from July 1, 2013, to June 30, 2014.