What: The luxury conglomerate is focusing its investments on other booming Chinese cities as Hong Kong loses its relevance.

Why it is important: Hong Kong was previously Asia’s premium shopping hub, but interest has started to decrease as mainland Chinese consumers switch to shopping at home.

Mainland tourists were attracted to Hong Kong by lower prices and wide array of product offerings but anti-government protests in 2019 and the pandemic left Hong Kong devoid of tourists, causing major retailers to shut their doors.

As a result, post-Covid recovery in Hong Kong has been much slower in Hong Kong than elsewhere in China for LVMH. The conglomerate has already moved the regional headquarters of some of its brands and the group’s local office to Shanghai as well as relocated some senior executives to the mainland.

The portion of total luxury spending that’s done within the mainland is expected to almost double pre-Covid levels, with some of the biggest names in luxury already expanding their presence on the mainland as they reap the benefits of China’s reopening.

The duty-free island of Hainan and gambling hub of Macau are two emerging cities set to see success as luxury destinations. Hainan’s duty-free sales more than tripled in 2021 from 2019 and Macau’s visitor arrivals recovered to 62% of 2019 levels over the Easter holiday, only further accelerating Hong Kong’s decline as a luxury shopping mecca.

LVMH is shifting out of Hong Kong as luxury shoppers stay home