Dior Dior Says China's Unreceived Anti-Corruption Movement Influences China as the Main Battlefield

Sidney Toledano, chief executive of Christian Dior Couture, the French luxury division of the luxury group Christian Dior, said in an interview recently that he is optimistic about the economic development prospects of the next few years in Europe. The new French President Emmaneul Macron’s commitment to changing labor market policies made him more convinced of this view.

Toledano said: "We have a new president - I think this is a good signal for the economic development prospects. I am very optimistic about the future economic development. The situation in the next few years will become better. Like China, France's The middle class is also gradually entering the upper class, which is a good driving force for the development of the luxury industry."

Previously, due to the government's crackdown on corruption, the demand for the Chinese luxury goods market was once in a downturn, but with the recovery in the second half of 2016, the sales performance of luxury giants including Hermès and Kering were all high. There has been a big recovery and one after another has raised its forecast for the future. Christian Dior is no exception.

In the second half of 2016, sales of Dior Haute Couture amounted to 1.043 billion Euros, a year-on-year increase of 9%, a year-on-year increase of 10% at a constant exchange rate, and a 33% increase in net profit (see “Falafel” report: Christian Dior Haute Couture Profits have surged 33% year-on-year in the past six months and sales growth has accelerated. Earlier this year, LVMH Group announced that it will acquire Dior Haute Couture, and LVMH’s major shareholder, the Bernard Arnault family, announced that it will acquire the remaining 25.9% stake in the Christian Dior Group through its subsidiary Semyrhamis for €12.1 billion. "Chi" reports that the majority shareholder of the LVMH Group formally initiated the acquisition of the remaining shares of the Christian Dior Group. With these factors, the share price of the Christian Dior Group has increased by 80% over the past 12 months.

The new president of France, Macron, hopes to make policy adjustments to make the labor market in France more convenient for hiring and dismissal procedures, and to adjust the salary levels and working hours from the company to the industry level, and to limit the severance payments enacted by the trade unions.

Toledano said that China is gradually becoming the primary development goal of Christian Dior Couture, and their market share in China is also increasing. He said that unlike other luxury brands, Dior has not been affected by this wave of anti-corruption policies.

Toledano, 65, has been in business for over 20 years since he took over the Dior business in 1998. He said, “When we entered the Chinese market 20 years ago, we thought that we should first test the water first and sell small goods first. At the beginning, we are fully committed. We want to gain a foothold here. Now it seems that we were right at the time. From now on, we will serve the next generation of Chinese consumers."

In the current Chinese luxury goods market, the leader is a local high-end liquor company, among which Sichuan Jiannanchun Group and Kweichow Moutai account for about 2% of the market share respectively. According to Euromonitor International, Louis Vuitton, Chanel, Richemont and Gucci have a market share of about 1%, while the Christian Dior Group’s market share in 2015 was about 0.6%, which is an increase from 0.4% in 2013. .

When talking about the LVMH Group’s acquisition of the remaining shares of the Christian Dior Group, Toledano said: “This will simplify our equity structure and generate some synergies. But I don’t like to use the term synergy, which can easily mislead us. There will be layoffs. Actually, I think we will increase the number of employees and work more closely with LVMH Group.”