INDUSTRY BRIEFING: LUXURY GOODS
The Chinese companies in the Top 100 that saw a double-digit decline in luxury goods sales for 2020 included Chow Tai Fook Jewelry Group Limited
HKSAR joins the Global Powers of Luxury Goods Top 100 Chow Tai Fook Jewelry Group from China/Hong Kong SAR was amongst the top 10 luxury goods companies on Deloitte’s list.
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he share of China and Hong Kong in the top 100 luxury goods sales increased by 1.8 percentage points to 8.9% in the financial year 2020, according to Deloitte’s Global Powers of Luxury Goods 2021 report. With the entry of China National Gold Group Gold Jewellery Co. and the Guangdong CHJ Industry Co., a total of nine China (including Hong Kong Special Administrative Region [SAR])-based vertically integrated jewellers joined Deloitte’s list for 2021. However, the nine companies reported a 12.3% year-on-year composite decline in 2020 luxury goods sales revenue, with only Lao Feng Xiang achieving growth, Deloitte data showed. “Seven of the nine Chinese companies experienced doubledigit percentage falls, due not only to the COVID-19 pandemic, but also to a surge in the international gold price that dampened the retail demand for gold products, and
12 HONG KONG BUSINESS ANNUAL 2022
The clothing and footwear sector accounted for the largest percentage of sales in the Top 100
weak performance in Hong Kong SAR as a result of social unrest and a contraction in the local economy affecting tourism and local sales,” it said, but noted that the seven largest companies remained profitable. The Chinese companies in the Top 100 which saw a double-digit decline in luxury goods sales for 2020 were Chow Tai Fook Jewelry Group Limited (China/HK SAR), China National Gold Group Jewelry Co. Ltd. (China), Chow Sang Sang Holdings International Limited (China HK/SAR), Luk Fook Holdings (International) Limited (China/HK SAR), Chow Tai Seng Jewelry Co., Ltd. (China), Tse Sui Luen Jewelry (International) Limited (China/HK SAR), and Zhejiang Ming Jewelry Co., Ltd. (China). Guangdong CHJ Industry Co., Ltd (China), meanwhile, saw a single-digit decline of 7.7% in luxury goods sales. The composite net profit margin
for the China-based companies was at 4.2%, 1.7 percentage points lower than last year. According to Deloitte, the top 100 companies have an aggregate luxury goods sales of $1.96t (US$252b) in 2020, lower than the about $2.2t (US$281b) in the previous year following the, reflecting the impact of the pandemic which lead to the closure of stores, shifts in consumer demand, and supply chain disruption, amongst other factors. France accounted for the largest share in the Top 100’s percentage of luxury good sales at 28.1%, followed by the US at 18.8%, Switzerland at 12.6%, Italy at 11.3%, the UK at 9%, Japan at 4.2%, Germany at 1.2%, Spain at 1%, and other countries at 4.9%. The nine markets were included in the geographical analysis given the “high concentration” of luxury goods companies headquartered in Europe, the US, and the largest markets in Asia, Deloitte said. Whilst sales for many companies come from outside their country of origin, it said that all of the companies’ sales will be attributed to the company’s domicile country. Luxury goods in the report referred to goods for personal use such as designer clothing and footwear, bags and accessories including eyewear, jewellery and watches, and prestige cosmetics and fragrances. The top 100 were included according to their consolidated sales of luxury goods in 2020. The clothing and footwear sector accounted for the largest percentage of sales in the Top 100 at 33.6%, followed by jewellery and watches at 28.4%, cosmetics and fragrances at 17.4%, multiple luxury goods at 15.7%, and bags and accessories at 4.8%. In the top 10 Chow Tai Fook Jewelry Group Limited from China/Hong Kong SAR fell to Top 10, dropping two places from the 2019 list as its luxury goods net sales declined by 14.7%, reaching about $56b (US$7.2b). “The group had a stable performance in the first half of
