SYDNEY • China's luxury shoppers may be shunning pricey cars, but they are still finding an appetite for handbags and champagne as the trade war plays out unevenly across the country's high-end retailing landscape.
Report cards from LVMH, home of Louis Vuitton leather goods and Dom Perignon champagne, as well as casino operators in Macau offer signs that the trade fight with the US and the accompanying economic slowdown are not entirely derailing the China-led boom in top-end retail. That is helping to offset gloomier scenarios in BMW and Mercedes showrooms and luxury real estate offices.
French giant LVMH said on Tuesday that its luxury retailer DFS performed especially well at the key Chinese tourist destinations of Hong Kong and the gambling enclave of Macau, while the company's wines and spirits business "grew rapidly" in China, too.
Across the world, "all geographical areas progressed well", LVMH said as it reported a 10 per cent jump in third-quarter sales.
The economic stand-off between the US and China escalated last month when President Donald Trump slapped a 10 per cent duty on US$200 billion (S$276 billion) of Chinese imports including handbags, and said the levy will jump to 25 per cent next year. China said it would retaliate with levies on US$60 billion worth of US goods.
As retailers pass on the duties to consumers, the tit-for-tat spat has raised concerns that shoppers would rein in spending.
Chinese consumers make up the lion's share of growth for the luxury business as an increasing number of families cross the income threshold to become affluent.
Relief also showed up in Macau during the Golden Week holiday. Chinese tourist arrivals in the world's largest gaming centre for the period that ended Sunday jumped 14 per cent from a year earlier. High rollers bet 10 per cent more in the first six days of this month than in the same period last year, according to Morgan Stanley.
Still, the casinos' robust performance is not wiping out analyst concerns that the industry will grow at a slower pace in the next few months amid a weakening macro economy in China.
Other sectors of the luxury market were not so fortunate during Golden Week. While the holiday is typically a buoyant period for new home sales, transactions this year were the lowest since at least 2014, according to China Securities.
Chinese households are also baulking at committing to other big-ticket items. Jaguar Land Rover, the British marquee brand owned by Tata Motors, reported sales in China slumped 46 per cent last month.
Fashion is holding up better. Chow Tai Fook Jewellery Group, the world's biggest jewellery retailer by revenue, notched double-digit sales growth in mainland China and Hong Kong for the three months ended June.
Chinese demand is "intact", said senior analyst Deborah Aitken at Bloomberg Intelligence in London. "LVMH is the first to confirm Asian markets are buoyant."