China Coffee Market, C-Beauty Sales, Luxury Slowdown, Small Town Economy, Market Stimulus Meeting | This Week in China's Retail
The retail market in Hong Kong is witnessing an influx of Chinese coffee chains like Luckin Coffee and Cotti, reflecting a growing trend towards affordable options. Meanwhile, Proya continues to dominate the beauty sector with significant revenue growth, driven by substantial marketing investments. Conversely, the luxury market faces challenges, as major brands like LVMH and Hermès report declining sales due to reduced consumer demand in China. Additionally, a shift in consumer trends sees young Chinese moving to smaller towns for better lifestyles amid economic pressures. Finally, the upcoming National People's Congress Standing Committee meeting holds potential for new government stimulus measures aimed at revitalizing the economy.
Retail Market
Chinese Coffee Chians are flocking into Hong Kong
Chinese budget coffee chain Luckin Coffee is set to open its first store in Hong Kong’s Tsim Sha Tsui district, with renovations currently underway. In addition to Luckin Coffee, another affordable coffee brand, Cotti, entered the Hong Kong market in November of last year, opening its first store on Queen’s Road Central. Since then, it has rapidly expanded to districts like Causeway Bay, Mong Kok, and Ngau Tau Kok.
Proya Continues to Lead the Beauty Sector
C-beauty flagship brand Proya released its third-quarter report for this year, showing a 21.15% year-on-year increase. For the first three quarters, Proya saw a 33% rise year-on-year, with revenue reaching 6.966 billion RMB and net profit hitting 999 million RMB. Proya places a strong emphasis on marketing, investing as much as 3.5 billion RMB in branding and promotional expenses for 2023.
Luxury Market
LVMH, Kering, and Hermes post weak sales amid Chinese luxury spending slowdown
Luxury companies have posted disappointing third-quarter earnings for 2024, particularly impacted by weak consumer demand in China. Even brands like Hermès have experienced a continuous decline in foot traffic in the Chinese market. LVMH reported a 16% year-on-year drop in the Asia-Pacific region for the third quarter, and a 12% decrease for the first nine months. Kering also saw a 30% year-on-year drop in the third quarter in the Asia-Pacific region.
Consumer Trends
Young Chinese Are Leaving Big Cities to Pursue Dreams in Smaller Towns
High inflation, increasingly competitive job markets, and the high cost of living are driving more young Chinese to small towns in search of their dream lifestyles. Factors like industrial upgrades, policy support, and a youth-led “internet celebrity economy” are contributing to the resurgence of smaller towns. In these places, young people are finding a new way of life—one that offers not only fresh travel experiences but also a “new lifestyle model” more connected to the rhythm of everyday life.
Government Policy
China Sets Date for Key Meeting about Market’s Stimulus Hope
China will hold the 12th meeting of the 14th National People's Congress Standing Committee. This meeting is very important, as the market sees it as a key window for announcing more stimulus measures to boost the economy. The meeting will take place from November 4 to 8 in Beijing.