Recent Diplomatic Visits Underscore Important Role Of Luxury Industry
A Hong Kong speech on Monday by French Finance Minister Laurent Fabius marked the latest event in high-level visits by several French officials intended to strengthen trade relations between France and China. When French President François Hollande made his state visit to China in late April in order to forge deals that would contribute to equalizing France’s current $34 billion trade deficit with China, much media attention was given to the aviation and nuclear energy deals that weresigned with great fanfare.
However, also highly important to trade between the two countries is France’s luxury industry, which comprises one of the European country’s top exports to China.
Fabius’s speech highlighted the fact that France hopes its trade with mainland China will begin to reflect that of Hong Kong, with which it has a trade surplus that is accredited to exports of wine, luxury goods, and aircraft.
The key importance of the luxury industry was perhaps most clearly highlighted by the fact that Hollande brought along with him on his trip François-Henri Pinault, whose family owns luxury conglomerate PPR (which will soon be named Kering) and Christie’s auction house, to make a historic donation of a pair of bronze zodiac heads which had been looted from China during the Qing dynasty and hold enormous national significance to the Chinese government. This gesture was highly symbolic not only of the value Pinault places on China for his long-term business goals, but also the role of the luxury industry in France’s diplomatic overtures.
France’s luxury goods are highly sought after in China. According to the 2013 Hurun luxury consumer survey, French brands such as Louis Vuitton, Chanel, and Dior top the list of the country’s best brands for gifting.
Some experts in the media have discussed China’s consumption of French goods as somewhat of a savior for France. “A lot of people think that France is in a crisis, and it is, but France also has a lot of competitive advantages with some of the other developed countries. [There are a lot of luxury goods] that the Chinese are interested in consuming,” said Professor Douglas Yates of the American University of Paris in an interview with CNBC.
When it comes to the French luxury industry, trade statistics do not tell the entire story about the importance of Chinese consumers for continued growth numbers, considering the fact that an estimated third of all Chinese luxury purchases are made outside the mainland and Hong Kong. While these purchases won’t be reflected in trade balance figures, they are still good new for France, which remains the top travel destination for Chinese tourists.