全球奢侈品：中国需求动态

Global Luxury Goods: Chinese demand dynamics Moderating luxurydemandgrowthhasledtohighercompetition and helpedopen thedoortochallengers.Western fashionandluxurybrandsneedtostandupandcompeteinChinatoday; failing to do so could see them on the defensive at home tomorrow. +41582723126luca.solca@bernsteinsg.com +44 20 7170 0540maria.meita@bernsteinsg.com toMsDgrowth.WeestimatethatChinesenationalscontinuetoaccountfor23%ofglobaldemand in 2025.Top luxury companies are evenmore exposed to Chinese consumers.Support from American, European, Middle Eastern consumers is all very well. Yet,movingback to 6%+ organic growth will demand the Chinese to revive. +44207676 6822yi-peng.khoo@bernsteinsg.com +85221232628eric.chen@bernsteinsg.com Consumershavewokenuppoorerthantheyhadthought,asthevalueoftheirrealestateassets has collapsed.Thishas broughtpeopleto savemore and has weighedheavyongrowthand employment:creatingfewer new jobs and downward pressure on salaries,as +44 20 7762 4044alix.turner@bernsteinsg.com This hasmaterially changed consumer attitudes and behaviors,primarily in theyoungercohort...Youngpeoplehadworkedhard,playedhard,andspentliketherewasnoyoung people are not as keen to put all of their energy into work, and are -like it or nottrying to find cheaper ways to live well. A hike in the mountains costs nothing ...whileolderand richerconsumersare lessaffectedbytheadversemacroeconomicchanges. If your real estate is paid for,or you have close to no mortgage,whether your flatis worth X or Y million on paper will not make a huge difference.Provided you have moneyand a job,you willwant your wealthto bemore than just a nice figure on a bank statement.You will want to enjoy the good things in life. That includes buying luxury products from timeto time.The stock market revival has prompted this cohort to spend more already in FY25. But the change we have seen is a change out of necessity,nota change in fundamental nature.You can survive on mereessentials,but people will needthesuperfluous in order to live well. Saying"people are no longer interested in expensiveproducts,they justwant experiences"should be preambledby"as peoplefeel poorerandsee more somber prospects ahead of them"This is the first serious crisis in China in 35years of growth.But do crises last forever? In the West we have seen many, and we knowthey don't. The Chinese will find the same is true for them in due course. Somuchsothat discretionaryconsumerdemandhascontinuedtoimproveover 2H25E.What we pickedup froma week of fieldwork in China is that consumers havealready started to turn. Landlords told us that 4Q25has been the best quarterin traffic andrevenuesinalongtime.Moresointhemassmarketandpremiumspace,andless sointhethe U-shapedrecovery wehave as the core scenario of our FY26Eoutlook. Continued on the nextpage.. Moremoderatedemandbringshighercompetitivepressures,as consumersare more discerning. their luxurybudgets on"musthave"brands.High desirability,flawless execution, broadbasedinnovationproveessentialtosustainconsumerinterest.Brandsfallingbehindsufferthe brunt of the deceleration - Hermes, Chanel, LV, Cartier, Van Cleef are on the right side ofthe divide /theKering brands are at the polar opposite/ Dior and Burberry are somewherein between,though getting better. foreground. Consumers trade up to more desirable brands if they have to paytop dollars, or trade down to more compellingly priced“bridge”and“premium"brands if they cannot- western accessible luxury brands have thrived as consumers have moved downmarket,with Polo Ralph Lauren and Coach dominating"the high end of the low end" Local Chinesebrands like Songmont (and many other brands behind it) are also thriving, dominating theentry section of the low end. At the same time,the core Western luxury brands have notthe sameto consumers. C)Consumers spendingless arenotaseasilyimpressedbybrands comingfromabroad. Chinese domestic brands operating at a fraction of the COGS multipliers of western brands (4-5x rather than 10x+) are finding a very fertile ground. There are plentyof them, and not only from China but from all across Asia. These brands have yet to directlychallenge Western luxury brands, they operate at completely different price points, but willinevitably do so:as we have seen in other categories, such as hard luxury (Laopu Gold) andfailing to stand up to competition in China today-means finding these same brands on theattack at hometomorrow.Giveup at your own peril. INVESTMENTIMPLICATIONS We seem to be on a gradual recovery trajectory,as far as global luxury demand is concerned. We willfind two sources ofvolatility at play:a)underlying demand gyrations,as consumers navigate a fragile macro-economic environment and a tenserdownswingsbeyondnaturalnewsflow. Inthis context weprioritizeplain vanilla qualityand become more discerning on self-help: 1) We would anticipate a quantum of intra-sector rotation awayfrom self-help and into high quality names like Hermes,Richemont,