Europe risks becoming little more than a tourist attraction for wealthy Chinese if it does not reform, the head of the world’s second-largest luxury goods group Richemont told Bloomberg, as booming Asian demand helps offset European belt-tightening.
“A few years ago, I said if people do not watch it Europe will become an open-air museum for travelling Chinese. Well, we are halfway there,” Johann Rupert, the South African chairman and chief executive of Richemont told a results conference call on Wednesday. “You cannot work 35 hours a week, want to retire by 50 with full pension, have eight weeks of holiday and expect to be bailed out by people who work their butts off either in northern Europe or in China. Life does not work like that.”
“It’s quite amusing as a South African that we’re now debating how much credit should we extend to Europe.”
The Swiss company, which has just reported a 46 percent increase in sales in Asia-Pacific for its 2011 / 2012 financial year, said purchases by tourists in Europe – primarily from China – helped make up for sluggish demand in southern Europe, where government austerity measures are hurting consumers.
Competitors such as French groups LVMH, handbag maker Hermes HMRS.PA, and luxury and retail group PPR and Italian jeweller Bulgari BULG.MI have also posted upbeat quarterly results as Chinese buyers flock to stores in Asia and Europe.
Rupert, whose South African family control Richemont, said he feared trends that were hurting demand for luxury goods in countries like Italy could spread elsewhere.”Take your entrepreneurial Italian. He does not want to leave his garage in his luxury car because the tax guys are going to stop him. You cannot buy anything over 1,000 euro in cash, you have got to use a credit card,” he said
He pointed to a protracted debate over whether to build an extra runway at London’s Heathrow airport as another example of Europe’s malaise. “They are building 200 airports as we speak in China. Where do you think I have got to go to try and sell products?” he said.
The maker of Cartier jewellery and Piaget watches plans to open 70 new boutiques this year, particularly in growth markets and tourist hubs.
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