Bernard Arnault, Chairman and CEO of LVMH, has reportedly traveled to China for his first visit to the country since the end of strict Covid restrictions, after his company saw sales jump on a rapid recovery in Chinese luxury spending.
The French entrepreneur is the latest in a string of prominent business leaders to visit China after Tesla CEO Elon Musk and JP Morgan CEO Jamie Dimon made visits last month. Beijing has courted global CEOs to both stem the loss of confidence in business and divide Western companies and governments over their China policies.
According to reports, Arnault, recently overtaken by Musk as the world’s richest person, was spotted in several shopping malls in downtown Beijing on Tuesday State Media Reportsciting photos on Chinese social media.
Caijing said the French entrepreneur inspected several LVMH brand stores, including Christian Dior and Bulgari, at WF Central and SKP shopping malls, citing photos taken by local residents.
LVMH did not immediately respond to a CNN request for comment.
LVMH reported that first-quarter sales rose 17% year over year, beating analysts’ expectations, driven by a rebound in China’s luxury market after the downturn during the pandemic.
The company has “had a pretty good upswing in China, which bodes well for the rest of the year,” CFO Jean-Jacques Guiony told analysts during an earnings call in April.
Consumers were returning to the company’s stores and online sales were picking up, he said.
“We are definitely seeing this market normalizing… We are extremely hopeful and should benefit from a strong push from mainland China in 2023.”
Beijing ended its strict and often repressive zero-Covid policy in December, prompting the first surge in consumer activity after three years of continuous lockdowns. Luxury goods spending recovered faster than any other sector in the first quarter.
Although economic momentum has slowed in recent months, growth in luxury goods sales has accelerated.
According to government statistics released this month, retail sales of jewelry, gold and silver rose 19.5% year-on-year in the first five months of 2023, the largest increase among any commodity category.
China was one of the largest luxury goods markets in the world before Covid hit. Bain & Co. earlier this year estimated that Chinese consumer spending would account for about 17% of the global luxury market in 2022. That’s down from 35% in 2019.
But momentum is likely to pick up again this year as local consumer appetites remain strong and China recovers from the impact of Covid, the consultancy said in a report in February.
“Compared to other emerging markets, China is a luxury growth giant,” it said, adding that the country has a larger number of middle- and high-income consumers.
Arnault’s visit also comes at a time when Beijing is courting global CEOs to allay fears of its unfriendly policies toward foreign capital. Business confidence has plummeted after Chinese authorities carried out raids on several foreign consulting firms, leaving Western companies unsure about their future in the country.
Deteriorating sentiment has exacerbated the country’s economic woes, leading to a sharp drop in private sector investment and a rise in unemployment.
Late last month, Musk visited China for the first time in three years and met a number of senior officials who encouraged him to boost investment and operations in the country.
Chinese leaders are also trying to divide companies and governments over their China policies to resist efforts by Western nations to “de-risk” China’s economy.
On Tuesday, Chinese Premier Li Qiang said at a World Economic Forum event that “risk reduction” decisions should be made by companies, not governments.
“Some people in the West promote so-called dependency reduction concepts [on China] and risk reduction [from China]. I would say these concepts are false statements,” Li said.
“It is companies that are the most sensitive [to such risks] and are therefore in the best position to assess such risks. They should be left to come to their own conclusions and make their own choices,” he said.
“Governments and relevant organizations should not overstrain themselves.”