Are Chinese fashion designers trying to help Chinese President Xi shake off trade tariffs?

Fashion models posed for cameras as Chinese President Xi Jinping looked on at a fashion show on Saturday showcasing high-end brands like Gucci, Louis Vuitton and other upscale fashion. It was a spectacle designed…

Are Chinese fashion designers trying to help Chinese President Xi shake off trade tariffs?

Fashion models posed for cameras as Chinese President Xi Jinping looked on at a fashion show on Saturday showcasing high-end brands like Gucci, Louis Vuitton and other upscale fashion.

It was a spectacle designed to promote Xi’s pledge in Beijing last week to distribute more wealth in China “equitably,” the latest salvo in an ongoing trade war between the United States and China.

Some analysts speculate that Xi’s announcement is just part of a strategy to deflect more of China’s wealth away from the non-state sector.

Businesses that do business in China — nearly all of them non-state enterprises — are finding themselves squeezed between a rapidly expanding government, which is trying to crack down on economic inequality, and rising prices for industrial inputs like steel and aluminum, much of which are imported from outside China.

Fashion houses, like Louis Vuitton, which relies heavily on store-owners to create and maintain its business model, are in a particularly vulnerable position in the face of those factors.

Louis Vuitton’s shows in China have not been without controversy for years, with criticism accusing the brands of engaging in “cultural imperialism” by cozying up to leaders like Xi, often seeking their support for prestigious merchandise and accessories like the double-S wristwatch.

China’s luxury brands have been dominant in the top 10 of global revenue rankings for many years. But industry leaders such as Dior and Chanel have seen market share decline amid rising competition from new local brands, according to a recent Bain & Co. study. The number of luxury fashion stores in China is expected to expand at a clip of 25 percent a year through 2025, it said.

The Trump administration’s move to slap tariffs on all imports of Chinese goods, including luxury brands, is also likely to weigh on the sector, though in a different way, as Chinese shoppers are likely to save their extra income rather than spend it on items like red-carpet merchandise and travel.

Click for more from The Wall Street Journal.

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