Chinese Consumers

TAKEAWAY: Chinese Consumers

FISH: 
Alex, you’ve been in the luxury world for a long time, with Bulgari, and then with Sephora, and most recently, before Tiffany, with Diesel. And you’ve seen the explosion of growth of China and its importance as a world consumer of luxury, both in China proper but also the tourism, and then, as you talk about, greater China—Taiwan, and Hong Kong, and Singapore. So talk a little bit about what’s happening in China, what’s happening with tariffs, what’s happening to consumption by the Chinese consumer.

BOGLIOLO: 
Yeah, just to give you a few data points, if you take the luxury market, it’s estimated on a worldwide basis at €1.1 trillion. And if you take all that huge market and you split it between what is called personal luxury—meaning whatever goes on your body; can be apparel, cosmetics, jewelry, watches—that represents €260 billion of the total. The rest is luxury cars, yachts, wine and spirits—things that you don’t wear on your body. 

Now, of these, of course, Tiffany is acting in the personal luxury segment, so this €260 billion. And of that market, as of today, if you look at the distribution by region, it’s basically split one-third in the Americas, Europe, and Asia. But that is a misleading number, because if you look at the nationality of people buying, regardless of where they complete that purchase, actually 33 percent of sales in luxury—personal luxury—are estimated to be to Chinese nationals. And that percentage is expected to reach, according to industry estimates, in a matter of few years, 45 to 46 percent. 

And there is a reason for that—not just because China is a very populous country but it’s because luxury is growing exponentially in any economy that is moving fast, with a growing middle class. That is the big engine of growth. This is why Japan, for example, in the ’80s and the ’90s, was the driving growth of the market, because Japan in those days was super-strong as an economy. So China is definitely the most—for sure, the fastest-growing market in the world, but also the biggest one when you look in terms of consumers.