Icicle’s possible listing in Paris tells us everything we need to know about China’s ambitions in the luxury sector. Local brands are advancing in one of the key luxury markets, namely the domestic one. They are riding the wave of “guochao” sentiment, which encourages consumers to favor made-in-China brands. But there are also other competitive factors at play, such as more affordable prices. Should European luxury brands start to worry? Let’s take a look at China’s luxury strategy.
China’s luxury strategy
Chinese luxury brand Icicle is considering an initial public offering of its parent company ICCF on the Hong Kong or Paris stock exchanges. According to the Financial Times, the brand could be worth €1 billion. Although a listing by 2026 seems unlikely, the brand’s intention is clear: to develop exports by capitalizing on the growing interest in non-Western brands. In China, this is nothing new: local luxury brands have gained market share. And competition with Western luxury brands, which didn’t exist a few years ago, is beginning to intensify. It’s no coincidence that several international brands that opened stores in second- and third-tier Chinese cities during the boom years, are now thinning them out to focus on major cities.
Consumer momentum
Driven by the government, Chinese consumers are embracing the guochao trend. This trend is changing their spending habits, and not just in fashion and luxury goods. In addition to sentimentality, there are also some important economic factors to consider, first and foremost: price. The Chinese economy isn’t shining, and the real estate bubble has yet to run its course, so young Chinese consumers are more willing to pay a reasonable price for a product made in China than for a Western product that costs 10 times more. Furthermore, Chinese brands are more willing to sacrifice margins. Bernstein estimates that retail markups are four to five times higher than the cost of goods sold, half of what European brands charge.
And in terms of style?
Local brands also know how to capture consumers’ attention when it comes to style. They incorporate historical motifs, tradition, and local culture into their products more effectively than foreign brands. One example of China’s growing competitiveness in fashion is Laopu Gold, a jewelry company that now has a market capitalization of nearly $18 billion, up from less than $1 billion when it went public in 2024. This value is not far from what LVMH paid for Tiffany six years ago. We also see this competitiveness in the world of sneakers with the rise of Anta, Puma’s new majority shareholder. China’s image as the world’s factory and exporter of fake products is changing.
Photo from Icicle
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