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On February 26, the Hong Kong Government announced the sudden cancellation of the anticipated fashion show of the prestigious luxury brand Christian Dior, belonging to the LVMH conglomerate. The news emerged less than a month before the scheduled date for the event, which was scheduled for March 23 at the emblematic old Kai Tak airport.
The event, whose projected budget was approximately HK00 million (equivalent to US$12.8 million), had been the subject of intense anticipation, especially following the success of the inaugural Louis Vuitton show in the same location last November.
The decision to postpone the event is attributed primarily to "commercial factors," according to sources close to the situation, with no additional explanations provided. These factors are presumed to be linked to the unpredictable economic landscape that currently characterizes the Greater China region. However, it is important to note that the IMF has forecast GDP growth in China of 4.6% by 2024.
This sudden change has generated a series of questions among analysts and fashion fans. The lack of transparency around the reasons for the cancellation and the uncertainty about the future of the show raise questions about the strategy and positioning of the renowned fashion brand in the region. Given the importance of the Greater China market to Dior, the question arises as to whether the brand is making a grave mistake by canceling the show in Hong Kong.
Hong Kong is home to 11 Dior boutiques and three apartments in Lane Crawford, renowned as Asia's leading luxury emporiums. Despite the challenges that the high-end market has faced in the region, including protests and restrictions related to the Covid-19 pandemic, the recent opening of borders with mainland China has fueled commercial activity for these iconic institutions.
Today, they stand out for the notable influx of Chinese tourists in search of exclusive shopping experiences. Additionally, according to HSBC, the 20% increase in luxury goods sales in the Asia-Pacific region (excluding mainland China) is estimated to be largely driven by Hong Kong, Macau, South Korea and Japan.
The abrupt and unexplained cancellation of the event could be interpreted as a snub by the PCC Government, which could be extremely damaging to the reputation of the luxury brand.
A recent study by Launchmetrics revealed Dior's success in the Chinese online market. The brand's collaborations with content creators were valued at $397 million, surpassing those of Chanel ($313 million), Nike (34 million), Armani (17 million) and Hermès (11 million).
A key factor in Dior's dominance in the Chinese market is its effective use of Douyin, the local equivalent of TikTok, which contributed 56% of the brand's media impact value.
Furthermore, the Chinese market represents more than 20% of the LVMH group's annual sales, emphasizing its strategic importance. Therefore, Bernard Arnault, owner of the luxury conglomerate, has dedicated diligent efforts to foster a strong relationship with the country.
Arnault acknowledges that the potential benefits of expanding in China outweigh the risks. Hundreds of millions of potential luxury consumers are expected to emerge in this market in the coming years, and Arnault has positioned his team of designers to capture this opportunity.
Even Louis Vuitton designer Pharrell Williams, who presented a stellar show on Hong Kong's Walk of Stars, said, "I don't know if the world could survive without Hong Kong and mainland China."
Designed to revitalize Hong Kong's status as a fashion capital and boost LVMH's sales, the event made clear the company's commitment to captivating Chinese shoppers and asserting its presence in the region.
In fact, Ludovic Watine-Arnault, nephew of Bernard Arnault, has expressed that "for many of our brands, China is a key market and one for which they must do their best."
Given the significant importance of the Chinese market for the LVMH group, it is crucial to observe how the country will react to Dior's current stance, which contrasts markedly with that of other brands belonging to the luxury conglomerate.
