Luxury fashion houses dependent on Chinese customers reportedly saw a hike in stocks as China reopens, however, those clients may not necessarily be purchasing the goods elsewhere.

In the past, wealthy Chinese customers would frequently buy personal luxury goods when traveling overseas in order to gain from the exchange rates and tax advantages.

As per reports, LVMH shares have risen roughly 12% since early December when Beijing began to end its zero-Covid regulations.

Similarly, Cartier's parent firm Richemont's shares have gained around 13% since early December, while Dior has achieved over 11%.

According to Jessy Zhang of Daxue Consulting, the revenge spending that follows the closure of international travel would increase the purchase of luxury products in 2023.

Years of zero-Covid restrictions, however, have convinced Chinese consumers that they can enjoy their dose of opulence on their own soil, a habit that experts think is here to stay.

Zhang believes that in the long haul, domestic luxury spending would make up 70% of Chinese luxury customers' spending, while just 30% will come from overseas. He remarked that China's domestic luxury demand should significantly exceed that of offshore luxury consumption.

That would be the opposite of spending patterns prior to 2017 when nearly 70% of Chinese luxury consumption took place outside of the country.

As a result, by 2025, the world's greatest luxury market will be primarily in-house.

Apparently, the gloomy statistics for luxury shopping abroad are further exacerbated by the numerous travel restrictions that other nations have placed on Chinese travelers.

European countries, which have many high-end shopping malls, have proposed mandating Chinese visitors to have negative Covid tests.

As per reports, Covid tests are also required for visitors from China in South Korea and Japan.

Kenneth Chow, principal at Oliver Wyman, stated that more Chinese customers are choosing short-haul trips over long-haul ones. He added that Macao and Hong Kong would be among the first to gain from Chinese travelers earlier than other upscale shopping locations like Western Europe.

Source credit: https://www.cnbc.com/2023/02/01/luxury-stocks-rally-as-china-reopens-but-consumers-may-shop-in-house.html