I think of the posts were referring to manufacturing. On the manufacturing side, it is primarily made in Europe and/or US (LVMH has a factory in Texas) and it doesn't make sense saving a few books to manufacture in China. The issues identified at Dior are very surprising and speaks to poor oversight within the Dior brand within LVMH.
I think on the Chinese demand, this is why LVMH shares are lower than pre-COVID levels. Because Chinese demand was was widely expected to come back once the lockdown finished never rebounded. I personally think we have a pretty long runway in China, especially as GDP per capital is still nowhere near western levels. Therein lies the opportunity. As I posted on twitter, Handbag sales in Japan actually continued to grow MSD post the Japan real estate bubble! I don't think we are at that level in China yet, especially as GDP per capita is like 1/4th of Japan levels whilst the population is much higher. At the peak, Japan was like 40% to 60% of luxury sales.
Anti-corruption drives are a real issue and materially impacted this sector around the 2014-18 time-frame but by materially impacted, I mean the industry still grew throughout this period. Obviously, if the government were to outright ban these goods or something like that, then we'd have a problem, but that seems quite contrary to what the government is doing, especially as they have a government endorsed luxury shopping duty free hub within China called Hainan.
