I have heard from a good friend who is also in the luxury goods sector in China that even companies like Ermenegildo Zegna are having trouble paying their bills?
Is this just a case of pushing the smaller companies to keep reserves up or are they being squeezed hard by head office?
Personally I find it hard to believe that the luxury goods sector should be anything but booming in China. Given the enormous resources of the wealthy in China, anyone with money to put down 5k on a handbag probably hasn’t been greatly affected by the credit crunch.
I realise that the casual visitor to China will see a plethora of LV nags in the hands of the myriad golden sparrows on the streets of Shanghai, but most of the bags are fake.
Perhaps the companies are cannibalising profits from China to feed into other areas. Certainly, in this climate I don’t much feel like buying myself a new watch. Although just as like, that is fatherhood speaking too.
Watch this space, I will be interested to hear of any reports on how the market is actually doing.
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