Luxury giants are no longer able to sell in China, Cartier’s parent company’s sales in China have fallen for three consecutive years, and Van Cleef & Arpels’ business has been robbed by the old gold shop?

Hard luxury goods are not selling well in China. Richemont, the parent company of Cartier and Van Cleef & Arpels, has seen sales in China fall for three consecutive quarters.

Swiss luxury giant Richemont Group released the third quarter data for fiscal year 2025. From October 1 to December 31, 2024, Richemont Group’s sales increased by 10% year-on-year to 6.15 billion euros (about 46.409 billion yuan), far exceeding the market’s expected increase of 1%.

This is mainly due to the strong performance of the European and American markets. As of December 31, Richemont Group’s sales in Europe, the United States, Japan, the Middle East and Africa all increased by double digits, among which the group’s sales in the United States increased by 22% year-on-year to 1.647 billion euros (about 12.426 billion yuan), which is the region with the highest sales growth. Sales in Japan and Europe also increased by 19% year-on-year, and the Middle East and Africa increased by 20%.

However, the Asia-Pacific market, which has the largest sales volume, has become a burden for the Richemont Group.

In the quarter ending December 31, the Asia-Pacific market, where China is located, was the only region where Richemont Group experienced negative sales growth, with sales in the region falling 7% year-on-year to 1.913 billion euros (about 14.433 billion yuan). Richemont Group pointed out in the report that this was mainly due to weak demand in the Chinese market, including a 18% drop in sales in the Greater China region, where mainland China, Hong Kong and Macau are located. However, other regions in the Asia-Pacific market performed well, and sales in the Korean market also grew by double digits.

This is not the first time that Richemont’s sales in China have fallen year-on-year. In the first and second quarters of fiscal year 2025, Richemont’s sales in the Asia-Pacific region fell by 18% year-on-year, and sales in Greater China fell even more, reaching 27%.

The decline in high-end consumption power in the Chinese market is the consensus of many fashion industry professionals when analyzing Richemont Group’s weak sales in China.

Zhou Ting, a luxury goods industry expert and director of the Yaoke Research Institute, told Times Finance that Chinese consumers’ consumption habits and spending power are changing. “High-end consumers lack confidence in the future, while mass consumers’ spending power has dropped sharply. The luxury consumption driven by mass consumption upgrades has almost disappeared. On the other hand, consumers are becoming smarter and more rational, which has led to a decrease in the mystery and novelty of luxury brands. The concept of luxury brands maintaining and increasing value is also being challenged in the face of weakening demand.”

She also pointed out that in the past, luxury groups had over-marketed to young people in the Chinese market, but the spending power of this group of people is not as high as before.

From the perspective of specific business, Richemont Group, known for its “hard luxury”, is facing multiple challenges in the Chinese market.

Richemont, which owns many high-end watch brands such as Vacheron Constantin, Jaeger-LeCoultre, A. Lange & Söhne, and Panerai, has to face the “cooling down” of the Chinese watch consumption market. Financial report data shows that Richemont’s watch business sales have also fallen for three consecutive quarters in fiscal year 2025, with declines of 13%, 19% and 8% respectively; in the first three fiscal quarters, the overall sales of the department fell by 13% year-on-year.

A senior person in the watch retail industry told Times Finance that since 2020, the seemingly prosperous watch market has had a consumption bubble and has been in oversupply. At that time, some brands under the Richemont Group also reaped the sales dividends, and the group also adopted a relatively active channel expansion strategy in the Chinese market. Now that demand has declined, the group’s performance is bound to be under certain pressure.

According to data from the Swiss Watch Industry Federation, from January to November 2024, the export value of Swiss watches to mainland China and Hong Kong fell by 26.3% and 19.7% respectively.

In the second-hand watch market, wealthy customers who used to spend lavishly are becoming less and less receptive to high-priced watches. “Watch consumption is downgrading. Not only is the average customer spending decreasing, but many customers are starting to replace low-priced watches with high-priced ones and use the cash for other investments,” a second-hand watch dealer told Times Finance in December last year.

Many analysts said that in addition to the pressure on the watch business, the high-end jewelry business, which accounts for 70% of Richemont Group’s sales, is also facing challenges from multiple competitors. In the first three quarters of fiscal year 2025, Richemont Group’s high-end jewelry sales increased by 8% year-on-year to 11.593 billion euros (about 87.466 billion yuan).

There are more and more players in China’s high-end jewelry market. Zhou Ting said, “Many traditional luxury brands are making great efforts in the jewelry and watch market.” In addition to Tiffany, Bulgari, Chaumet and other brands under the LVMH Group, FountainVest Capital also acquired the pearl-based high-end jewelry brand Tasaki in December last year in conjunction with Japanese fund Unison Capital.

Tang Xiaotang, founder of Wushishang Chinese website, pointed out that the trend of cost-effective consumption has also given some Chinese local jewelry brands the opportunity to share the cake with “Van Cleef & Arpels”.

For example, benefiting from the rising gold prices, Laopu Gold, which focuses on high-end positioning, has entered the high-end jewelry circle as a “dark horse” in the past year and successfully landed on the capital market. An industry insider once revealed to Times Finance that in some high-end shopping malls, Laopu Gold’s performance even exceeded that of Van Cleef & Arpels, and “the consumer groups of the two brands are highly overlapping.”

Interestingly, according to fashion business media LADYMAX, Van Cleef & Arpels sent a legal team to Shenzhen last November to formally declare the ownership of the intellectual property rights of the “Four Leaf Lucky” series and personally rectify the “Shuibei Pingtai”. This was also interpreted as Van Cleef & Arpels’s increasing concerns about counterfeit goods damaging its brand image and market share.

However, in Tang Xiaotang’s view, in the past two years, Richemont Group’s performance has also been better than luxury groups such as LVMH SE and Kering SA, which mainly sell leather goods, because its watch and jewelry customers have stronger assets, purchasing power and ability to withstand inflation and economic fluctuations.

Times Finance contacted the Richemont Group’s Chinese team through a third-party PR, but the team said they were not accepting interviews related to the financial report. However, the group’s management said in a previous conference call that it would take some time for the Chinese luxury market to recover, but they were still optimistic about the medium-term development prospects.