581 Managing Global Economy
“Cartier Parent Richemont’s Earnings Set to Lose Sparkle”- Wall street journal
Description of Event
Nowadays, with a population of 1.4 billions, China’s economy has became the second largest market in the world. However, comparing with the same period in 2015, a luxury brand of Cartier’s sales is falling down about 12% for the five moths ending in August because Chinese government cracks party officials by on gifting, such as, luxury watches, purses, and other luxury goods. As a result, Swiss watch industries exports dramatically decline. According to Wall street journal (Manuela, 2016) points out that exports to Hong Kong, long the top market for Swiss watches, plunged nearly 33% in July, compared with a 14% decline globally from a year earlier. The U.S. saw a 15% drop, with total Swiss watch exports of 179 million Swiss francs. Sales have been so slow that makers of Cartier, Tag Heuer and other luxury timepieces are buying back thousands of items from dealers.
Connection to International Business
The problems in the Swiss watch business impact on luxury goods; moreover, which is far from the growth of a couple of years ago. Also, with the terrorist attacks in Europe, currency swings and consumer’s confidence. Those factors affect the global economy. The Euro currency is depreciating due to fall out money; so that luxury brand markets, especially watch market in Europe have struggled in recent months, Even the most fashionable brand in the luxury industry, Hermes, sales is only growing 6% this year; on the contrary, the last year in 2015 was 20% growth. Therefore, some luxury stores in Europe sales is slowing down because of the number of inbound tourists to Europe dropped in recent years, especially after the terrorist attacks in shopping hubs, such as Paris. Above those reasons, Swiss watch business is facing some short-term macroeconomic problems. Moreover, with consumers preferences change irregularly and luxury watches competitors that is particular smart watches,...