Burberry's performance in China declines, closing Guangzhou's factory

  

Guangzhou employees have walked to protest

For Burberry's foundry in Guangzhou announced the closure, the Commercial Daily reporter learned yesterday that the main reason is due to the workers' working hours and work environment standards have failed to meet standards. According to informed sources, the employees of the factory had previously held a four-day strike to protest against low wages, long working hours and the insults of management.

It is reported that the Burberry brand joined the British Ethical Trade Organization in June 2010, and compliance with the organization's proposed staff working hours should not exceed 48 hours per week. "According to the survey, the factory employees work more than 11 hours a day, a week to work for 6 days, which is equivalent to 66 hours / week? Far more than the standard." The informed source said.

“We apologize for this, and we do have many problems that need improvement.” The person responsible for Burberry Brand's Responsibility Department admitted in an email replying to the reporter yesterday that the factory did violate the brand's consistent production environment and management system. Code of ethics.

"However, the closure of this factory in China will not have an impact on Burberry's sales operations in China." Related people at Burberry Brand's marketing department also pointed out yesterday that "it is just one of Burberry's many factories in China, and The last batch of products produced by the factory for Burberry was also delivered in July.” In addition, the reporter’s question “Is this shutdown in China still related to the sharp decline in Burberry’s sales in China?” The company did not give a reply in the reply email to the reporter.

This year, sales growth declined

In fact, due to the continuous growth of sales in recent years, China is seen as the growth engine of Burberry's brand performance. However, since the first quarter of this year, Burberry's performance in the mainland of China has shown a downward trend. According to the financial report of the first quarter of 2012 of Burberry Group, the company's sales growth in the Asia Pacific region in the first quarter fell to 16% from 67% in the same period last year.

In a statement recently issued by the group, it also stated that its stores with more than one year's name in the third quarter of this year saw an increase of zero during the ten weeks ended September 8, far below the number as of June 30. The end of the second quarter saw a 6% increase in same-store sales.

"This year, Burberry's slowdown in sales growth in China has a lot to do with the slowdown in the domestic economy." Zhou Ting, dean of luxury goods research and wealth quality institute, told reporters yesterday that consumer confidence has declined. One reason is that China's luxury consumer market has been growing for nearly 10 years. In first-tier cities, some consumers who frequently purchase luxury goods also have a gradually mature and rational growth process.

According to the survey, in 2012, about 30% of China's richest people said they would cut their spending on luxury goods, and the Chinese middle class, with an average annual salary of 160,000-180,000 yuan, was even more noticeable in this aspect.

“In addition, with the economic slowdown in China, in August this year, China’s fiscal revenue growth rate was as low as 4.2%, and the central government’s fiscal revenue showed a rare negative growth. This forced the Chinese government to limit public spending to a certain extent. The introduction of public funds for the first time in China may not stipulate the provisions of the luxury goods regulations, which have caused partial suppression of the demand for luxury goods such as gold, jewelry and luxury watches,” said a person in the relevant industry.

Despite this, Burberry still maintains an optimistic attitude toward the Chinese market. Stanford Cartwright, chief financial officer of Burberry, made it clear recently that “although China’s economic indicators have deteriorated, Chinese consumers still have strong consumer desires and there are still huge business opportunities in the Chinese market.” It is reported that Burberry is currently China opened 63 stores and plans to expand to 100 in the future.