Luxury Looks Like a China Carry Trade Set to Unwind
Chanel and Hermes can still dictate prices to consumers betting on a profitable second-hand resale. For some other global brands, the music has already stopped.August 13, 2024 at 3:00 AM GMT+8
By Shuli Ren
Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She is a CFA charterholder.
![Inventory management will be key. Inventory management will be key.](https://assets.bwbx.io/images/users/iqjWHBFdfxIU/im_5vzN6WajM/v1/-1x-1.jpg)
Inventory management will be key.
Photographer: Qilai Shen/Bloomberg
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Multinationals have a puzzle that they need to tease out in China, the world’s biggest market for luxury products: What’s driving a slump in sales?
Is it because a slowing economy is leading people to tighten their belts, or a sign that the Chinese no longer believe many brands can hold their value?
This question matters because it affects luxury houses’ long-term prospects. If the problem is just a weak economy, they might accept recent earnings as a temporary rough patch and carry on business expansion as before.
But if people start to see luxury products as mere commodities, brands have a much bigger problem and must start to cut back on supply and restore scarcity