China News Brief
    March 21, 2024

    Swiss watch exports to China tank; Youth unemployment in China ticks up; Chinese hospitals shutter baby delivery services.
    Photo: Shutterstock

    Swiss watch exports to China tank#

    Swiss watch exports declined  in February following the record-breaking year of 2023. According to data released by the Federation of the Swiss Watch Industry, sales decreased by 5.2%, while export value fell by 3.8% YoY, just above $2.2 billion (2 billion Swiss francs). This significant downturn, the industry organization states, comes after two years of stable growth and is attributed to unfavorable base effects and a sharp decline in the Greater China region. Exports to the second and third largest markets, Mainland China and Hong Kong, respectively decreased by 25.4% and 19%. While other major markets including the United States, France, Japan, and the United Arab Emirates maintained growth in the mid to high single digits, it was not enough to offset the decline in China.

    Youth unemployment in China ticks up#

    Following the official resumption of disclosing urban survey unemployment  rates by age group in December 2023, data for January and February 2024 has been released. In February, the unemployment rate for the labor force aged 16-24, excluding students, reached 15.3%, higher than January's 14.6% and December 2023's 14.9%. Previously, on March 18, the National Bureau of Statistics announced that the urban survey unemployment rates for January and February 2024 were 5.2% and 5.3%, respectively, with an average of 5.3% for both months. This indicates that the youth unemployment rates in January and February, excluding students, were 9.4 and 10 percentage points higher than the overall unemployment rate for the same period.

    Chinese hospitals shutter baby delivery services#

    More Chinese hospitals are shutting  down their newborn delivery services due to a lack of demand stemming from a declining population and birth rate. At least four hospitals across three provinces announced the closure of their obstetrics departments in the last month alone, a Semafor review found. The declining population – which fell for a second consecutive year in 2023 – is forcing hospitals to sacrifice once-vital services to prioritize its aging citizens, as the government struggles to convince women to have more babies.

    Tommy Hilfiger names new brand envoy#

    Tommy Hilfiger yesterday announced  singer Fan Chengcheng as its new brand ambassador. The brand has produced a commercial, narrating a youthful story of Fan and another ambassador Li Qin starting a Tommy college-themed music party, reuniting with a few friends.

    Visa exemption sparks Singapore tourist surge#

    According to data released  by the Singapore Tourism Board, the number of Chinese tourists entering Singapore in February reached 327,000, more than eight times the 35,300 during the same period in 2023. Behind the data, undoubtedly, visa exemption is a major driving factor. The mutual visa exemption between China and Singapore, starting on February 9 (Chinese New Year's Eve), prompted Chinese tourists to travel to Singapore during the Spring Festival period. At the same time, a series of heavyweight international performances such as Taylor Swift's concert further boosted the consumption economy in Singapore.

    Sephora to exit South Korea#

    Sephora Korea announced  on March 19 that it will gradually withdraw from the South Korean market starting from May 6. Sephora, a cosmetics brand under the luxury goods giant LVMH Group, opened its flagship store in the Gangnam District of Seoul in 2019, entering the South Korean cosmetics market. Faced with competition from local brands such as Olive Young, Sephora's sales have remained weak, with net losses of $12.76 million (14.8 billion Korean won) and $17.41 million (20.2 billion Korean won) in 2021 and 2022, respectively.

    US court scrutinizes Hermès’ sales tactics#

    A recent lawsuit filed in the Northern District of California against Hermès , the Paris-based luxury retailer, sheds light on the enduring allure and exclusivity of Birkin bags, long considered a status symbol for the affluent. The lawsuit alleges that Hermès unlawfully tied the purchase of Birkin bags to buying other products from the company. One plaintiff claims she was told she needed to demonstrate consistent support for the brand to acquire another Birkin, while another plaintiff recounts being repeatedly instructed to purchase additional items before being eligible to buy the coveted bag. This legal action underscores a broader practice among luxury retailers, like Hermès, who require longstanding customer relationships for access to specialty items. Despite the lawsuit, Hermès has yet to respond officially. The difficulty in obtaining Birkin bags reflects a broader trend in luxury retail, where exclusivity and scarcity drive demand, often necessitating extensive purchasing relationships for coveted items.

    Temu reducing reliance on US#

    According to the latest report from The Information, against the backdrop of increasing  political pressure in the US, Temu, the Chinese e-commerce platform under Pinduoduo, is actively adjusting its strategy to reduce reliance on the US market. The report quoted two sources familiar with the company's top-level decision-making as saying that currently, the US market accounts for 60% of Temu's total merchandise sales, but the platform has set a target to reduce this proportion to 30% by 2025. To achieve this goal, Temu is accelerating its business expansion in regions such as Europe, the Middle East, Japan, and South Korea. The platform has notified its partner merchants to prioritize stocking popular items in these regions to meet the growing market demand.

    Luxury consumption in the US declines#

    Citi analysts stated that, according to a survey of over 10 million American cardholders, luxury goods consumption  in the US declined by 15% YoY in February, following a 19% drop in January. LVMH, Brunello Cucinelli, and Ferragamo are the luxury groups most affected by the slowdown in the US economy. Since the end of 2022, factors such as slowing economic growth, inflation, and the recovery of the tourism industry have dampened luxury goods consumption in the US.

    Rivetti family reduces stake in Moncler#

    On March 19, the former owner of Stone Island, the Rivetti family of Italy, announced  that it had sold a 1.18% stake in the Italian luxury group Moncler to institutional investors at a price of 67 euros ($75.04) per share, causing Moncler's stock price to fall by 3.5% on the same day. According to the Rivetti couple, they still hold a 0.5% stake in Moncler through a company named Grinta. The connection between Rivettis and Moncler dates back to three years ago when Moncler acquired their company, Stone Island. As of March 19, Moncler's stock price fell by 2.5% to 67.5 euros ($75.60).