In the 13 years since Chanel launched its exhibition at Shanghai’s Museum of Contemporary Art, the French luxury brand has learned a lot about navigating China’s art scene. The “Culture Chanel” show may have satisfied audiences by featuring over 400 iconic pieces drawn from the archives, but the associated film drew criticism from some members of the public for its exoticist approach to Chinese culture.

Today, Chanel’s inroads into China’s art scene are more nuanced — and practical. In May, the brand announced it will increase investment to help restore and upgrade Shanghai’s Power Station of Art, a state-run contemporary art institution that has previously hosted events by Cartier and Shanghai Fashion Week’s Labelhood shows. The partnership, which commenced in 2021, also saw Chanel bring its touring exhibition on Gabrielle Chanel to the museum in July.

Renaud Bailly, Chanel’s president of the North Asia region, has described the partnership as marking “a new chapter in the house’s commitment in China” and contributing to the cultural landscape in Shanghai by “providing a platform to creators and bringing the most illuminating experiences to the public.” But how the brand will measure the initiative’s success in commercial terms remains a mystery.

When pressed to elaborate, a Chanel spokesperson stated simply that the “Chanel Culture Fund is non-commercial,” referring to the global programme of cultural patronage that partners with institutions across Europe, North America and Asia — including the Shanghai museum. Yet marketing initiatives like this are key to achieving its stated ambitions to grow sales in the key market.

Using art to help sell luxury goods is one of the oldest marketing tactics out there, with couturier Elsa Schiaparelli cited as a pioneering figure for her collaborations with surrealist Salvador Dalí during the 1930s and ’40s in Europe. The strategy has become far more transactional in recent years as high-end fashion and jewellery brands flock to international art fairs like Frieze and Art Basel, including the latter’s outpost in Hong Kong, in a bid to expand their client base to more wealthy art buyers.

Luxury brands have not missed their moment to build on this momentum in China, investing ever-greater sums of money to associate themselves with the local art scene. Gucci, Prada, Louis Vuitton, Cartier, Christian Dior, Valentino and others have employed initiatives that range from physical exhibitions to collaborations with local artists. While some brands have generated a lot of marketing buzz with their initiatives, others have underwhelmed audiences by not sufficiently localising art projects. A few have underestimated the risks of cultural patronage in a market as unique as China.

Weighing Up the Risks and Rewards

Mainland Chinese society’s perception of the contemporary art world doesn’t always mirror the West’s due to its development in the post-Cultural Revolution context. Brands must ensure that content and messaging is on point and free of reputational risk for all stakeholders — not just the brand, its art collaborators, loyal customers and the wider public but also the Chinese government, which takes a keen interest in monitoring art.

“Brands need to be extra aware of selecting the artist and their concept directions and the message behind these,” cautioned Garth Chow, director of Chongqing-based consultancy Jingsheng, advising brands to be “extra sensitive about what the market might like or not.”

Focusing squarely on the fashion side of art collaborations might have shielded brands from sensitivities and backlash in the pre-social media era, but that is no longer the case.

Dior, for example, has collaborated with relatively provocative artists like Shanghai-born Xu Zhen, whose conceptual work explores socio-political taboos and consumerism, for a reinterpretation of a handbag. However, it was a seemingly innocuous fashion image at the exhibition Art’N Dior by the photographer Chen Man that brought trouble to the house’s doors. In 2021, the brand had to withdraw the work after netizens reacted negatively to its depiction of Chinese beauty, and the photographer issued a grovelling apology.

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Besides not showing enough caution toward or respect for Chinese audiences, other pitfalls to avoid include being seen as a “predator of culture,” said Dr. Federica Carlotto, author of the recently published book “Luxury Brand and Art Collaborations.” Art initiatives “need to be authentic,” otherwise they will be called out in China.

“There are definitely companies saying let’s jump on the bandwagon. But if they are not consistent with relevant messaging to the wider community, they’ll be guilty of ‘art-washing,’” she said, in a comparison with greenwashing, which is used to describe sustainability initiatives that don’t measure up.

Broadly, however, the opportunity for luxury to leverage art in China is an attractive one. According to Carlotto, Chinese society now features “a consumption culture that doesn’t see any conflict between art and luxury” and a younger generation who likes to “raise their cultural capital alongside buying things.”

Timing is also key. In an era of softening demand in China with major luxury groups like LVMH and Kering reporting a slowdown and in the market, art-led marketing activations could help motivate increasingly wary aspirational consumers — but only if they provide a unique, emotional and meaningful way to engage with the brand, experts suggest.

The Race to Preserve, Steer and Channel Culture

“If you create your own foundation, you are in charge of culture. You are enabling discourses and what is relevant to a wider public and local communities,” said Carlotto, explaining the shift towards the creation of global art foundations by luxury brands like Prada, Gucci and Louis Vuitton.

In 2017, the latter introduced Espace Louis Vuitton — an art space highlighting the longstanding relationship between Louis Vuitton and artists — to China’s art capital, Beijing. The project is distinct from the Louis Vuitton Foundation in Paris, opened a few years earlier. By wrapping China into the group’s global art strategy (other Espace outposts exist in Tokyo, Venice and Seoul, for example) at a relatively early stage, the brand paid tribute to China’s art-going public while introducing brand customers and fans to respected international artists.

Prada’s global art strategy started in the 1990s with the formation of Fondazione Prada and was formalised in 2015 with a permanent space in Milan. Only two years later, it repurposed an historic Shanghai residence as a dedicated cultural institution. Helping to requalify historic buildings around the world, Prada took six years to restore Prada Rong Zhai to its current form, a villa with three floors and a surrounding garden. It has an active rota of exhibitions from local and international artists including Li Qing and Michaël Borremans.

“That’s a really big statement to sophisticated consumers in China,” said Jonathan Travers-Smith, founder and CEO of marketing agency Hot Pot China, who recently visited Prada Rong Zhai, noting that the return on investment for such large-scale, long-term projects is often difficult to quantify because brands don’t always identify the right performance indicators to measure it. But broadly speaking, he believes such foundations bring a “sense of mystique and differentiation” to luxury brands in the local market, especially in terms of “sentiment and association.”

Yuan Ning, an advocate for the preservation of Chinese heritage and co-founder of an art and culture salon called Salon Iter, contends that some art-based initiatives can help luxury brands in China to “insert themselves into the local market” and “enhance cultural authority.”

In recent years, there has been a shift towards greater respect for local culture by brands and consumers alike. It is a manifestation of the guochao movement that sees patriotic consumers show their pride by buying locally designed or made goods.

Loewe has harnessed this movement to great effect by leveraging consumers’ growing appreciation for traditional applied arts, say experts. Ning name-checked the LVMH-owned brand’s ceramics-themed exhibition at the Art021 Shanghai Contemporary Art Fair, which presented Deng Xiping’s porcelain artworks and sponsored the creation of a new educational program at the Jingdezhen Ceramic University to preserve the ancient craft. The accompanying video for that initiative was seen on Weibo nearly 8 million times.

This low-key approach chimes with what Ning describes as a shift away from “hype-driven” events to a more thoughtful introspection to rediscover stories from the artisans behind the craft. “For brands to continue to last in China, no matter who they are, they have to tap into the heritage and culture angle, no matter if it’s in real estate like old cultural heritage sites or intangible cultural heritage,” she said.

Ning’s advice is simple: follow the interests of the high-net-worth art buyers and collectors who are going “back to their heritage” and have growing interest in traditional art, ceramics and pottery. They can be found at art fairs, which have expanded their presence in China, offering luxury brands ample scope to connect with highbrow consumers. This year’s Art Basel Hong Kong, sponsored by LVMH’s Ruinart, drew 75,000 visitors in March. June saw the eighth edition of Gallery Weekend Beijing in the city’s historic 798 Art District.

Local luxury brands have also started to get in on the action. “There’s a shared sensitivity … between women in art and fashion, people who value art and [our] brand,” said Ian Hylton, president of Chinese womenswear brand Ms Min, who took part in Shanghai’s art fair Art021. Founded by Min Liu, Ms Min has numerous clients from the art world, many of whom were introductions from curators such as Pearl Lam or Vanessa Guo.

The Popularity of Applied Arts Projects

Luxury brands have been upping their investment in branded exhibitions in China so much in recent years that observers say the market is showing early signs of fatigue.

Loewe managed to inject excitement into this jaded format in March when Crafted World opened at the Shanghai’s Exhibition Centre. It won fans for its overt appreciation of heritage and featured, among other international artists’ work, a sculpture from 2023 Loewe Craft Prize finalist Huang Wanbing, a Shanghai-based multidisciplinary artist and fashion designer.

According to Chow, Loewe’s exhibition had the edge over previous art-based shows, such as Dior’s touring exhibitions where it invites artists to reinterpret signature pieces. In his words, Dior’s shows are “engaging” but Loewe’s exhibition was more “on point,” approachable and received more attention from younger audiences. When spectators left Loewe’s show, the emotional connection was strong enough that many were left wanting to buy mementos like keychains, wallets or T-shirts.

“Whereas the Lady Dior exhibition drew a distance between who’s buying Dior normally and who’s buying their collectible art pieces, Loewe brought it to the public,” said Chow.

Dior and Loewe both declined BoF’s request for comment.

“Loewe is the new benchmark for how brands should be leveraging the art scene to build brand equity,” said Tanguy Laurent, creative director of Shanghai’s creative studio TLCD, citing alignment between the brand’s initiatives and “the revival of local artisanry” driven by “growing cultural confidence and the government’s promotion of the Chinese craftsmanship spirit,” among other things.

In a very different manner, Gucci’s Art Wall in Shanghai — one of five across global cities — has gone a step further by engaging the general public. The 2022 street-art initiative asked fans to submit their own artworks, with tangible results in a mural. At the time, it reportedly generated over 500 million views for the hashtag #BloomingShanghai thanks to the brand’s partnership with a constellation of local celebrities who amplified the campaign on their Weibo accounts.

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The Italian brand used outdoor murals a few years earlier in the city, promoting an exhibition it supported at the city’s Yuz Museum called “The Artist is Present,” which featured a portrait of the artist Marina Abramovic.

Combining Patronage With Artist Collaborations

Louis Vuitton has a long history of collaborating with artists for its products, from its 1980s scarves printed with artwork from the likes of Sol LeWitt to the landmark Stephen Sprouse collection of graffiti-inspired logo bags and later collections featuring work by veterans like Takashi Murakami, Yayoi Kusama and Jeff Koons.

But since China skews younger than most luxury markets, so too does the audience brands must appeal to. This means artists who reflect that demographic should be considered, Chow suggests. Cue Louis Vuitton’s women’s pre-fall show in Shanghai where women’s artistic director Nicolas Ghesquière opted to work with 32-year-old Beijing artist Sun Yitian, who is known for her disembodied dolls. The Louis Vuitton products featuring her animal artwork ranged from clothing to accessories and debuted at a show held in the Long Museum. The series was then blown up to cover the facade of K11 Art Mall.

“[With this move] they’re saying we are speaking your language, and it’s cooler than before … It’s a new way to tell consumers [in China] ‘we care about the market and the young generations,’” Chow said.

Louis Vuitton declined BoF’s requests for comment.

Hermès, which has recently shown more resilience in the China market than some of its peers, has taken a slightly different route. Its latest collaboration with the artist Song Dong on window displays in Shanghai blurred the boundaries between the store and a gallery, generating what Travers-Smith describes as a positive “halo effect.”

“The role of merchandising in the store with a known artist gives a unique, standout look beyond marketing. It’s an association for the brand and everywhere you look through the store, it’s elevated by that artist.”

But in China’s fast-paced, dynamic cultural sector, it is often hard to know where to invest and which art-led model to prioritise.

According to Laurent, dedicated art destinations like those operated by Louis Vuitton and Prada can lose their shine over time. Even projects as successful as Prada Rong Zhai have their limitations. “Its impact is intense but yet not spread out. Also, repetition is a cue when you dedicate a set space for exhibitions,” he said, suggesting that a permanent location might not always be advantageous.

Jacques Roizen, managing director of consulting firm DLG China, echoes that sentiment. Temporary art exhibitions organised by luxury brands, such as Gucci and Chanel, have the advantage of being “more spectacular and exceptional,” he said, in comparison to the approach of “maintaining a permanent art museum, especially in the Chinese market, where consumers are always looking for the greatest and the latest.”

This week, the company is launching “ShopMy Opportunities,” a new feature that will facilitate a different sort of paid partnership between brands and influencers. With Opportunities, brands will be able to offer creators a set monthly payment in exchange for a guaranteed number of mentions across their social channels.

Unlike a traditional influencer campaign, which usually includes a detailed brief with specific talking points to hit, sponsored posts born out of Opportunities will have no mandates on what must be included in a post. The only thing the influencer is required to do is hit the number of posts they’re contracted for per month, and include a trackable ShopMy link to the brand’s website. Through that link, brands will be able to track how the post performed in their ShopMy dashboard. They can also approach influencers within ShopMy’s network about potential Opportunities through the company’s messaging system.

The idea is essentially to allow brands to pay in advance in order to ensure the creators they know will convert for them are mentioning their brand and linking to their products on a regular basis. Influencers, meanwhile, get the creative control they’re looking for.

“When [creators] have to go back and forth with a brand six times on reviewing content, it gets to the point where their voice has been sucked out of it,” said Tiffany Lopinsky, the co-founder and COO of ShopMy. “They lose in that situation because they don’t like it, their audience doesn’t like it, and I don’t think it converts for brands either.”

Lopinsky added that for brands, an organic mention can lead to a major sales spike, but you can’t predict when they’ll come. This feature is meant to give brands a way to bake some certainty into that process.

“It’s almost like the brand is putting these creators on salary, and it’s up to them to create the content,” added Lopinsky.

Opportunities’ arrival is reflective of the changing tides in the influencer marketing sector. As consumers have grown savvier, they’re less receptive to blatant ads. Influencers, too, want to be given the freedom to make ads that will resonate with their audiences. And as the industry has grown, so have the pathways for influencers to make money online.

ShopMy, which was founded in 2020, has been gaining traction in the space for its updated approach to affiliate marketing meant to ease communication between brands and influencers. In addition to Opportunities, ShopMy also this year introduced a feature called “Lookbooks,” which allows brands to invite influencers to select products for gifting from a predetermined offering.

Learn more:

The Fight for Influencer Marketing Dollars Heats Up

ShopMy, a four-year-old influencer monetisation platform, has attracted over 50,000 creators, making inroads in a space long ruled by incumbent player LTK. Tensions rose to new heights this week after LTK sued ShopMy for false advertising.

Hugo Boss shares plunged to their lowest level since 2021 after the company slashed its profit guidance for the year, citing weakness in key markets such as China and the UK.

The German high-end fashion brand now expects operating profit of around €350 million ($381 million) to €430 million in 2024, down from a previous range of €430 million to €475 million, according to a statement late on Monday. It also lowered its sales expectations.

The shares slid as much as 11 percent on Tuesday to the lowest intraday level since April 2021. The stock traded down 8.7 percent at €36.88 as of 11:14 AM Frankfurt time and is down 45 percent year to date.

It’s a blow to the brand’s revamp led by CEO Daniel Grieder, and is the first time the company — with a market valuation of €2.6 billion — has cut full-year guidance during his tenure, Citigroup Inc. analyst Thomas Chauvet said.

The former Tommy Hilfiger executive joined in June 2021 with a strategy to revamp the clothing range and attract younger shoppers. Hugo Boss was hard hit by the shift toward casual wear during the pandemic and people working from home.

“Following three years of nearly flawless execution and delivery on (ever-increasing) market expectations, Boss is facing a more subdued demand environment for premium casual wear,” Chauvet said in a note. The setback could disrupt its performance in the second half and casts doubt on its 2025 sales and margin targets, he said.

“The critical question now will be whether guidance has been cut enough to de-risk 2024 and provide a clearing event that the stock’s narrative can rebuild from,” said Jefferies analyst Frederick Wild.

The luxury sector has delivered mixed reports in the latest earnings season. Shares of Burberry Group Plc extended Monday’s 16 percent tumble after the UK trench-coat maker suspended its dividend, replaced its CEO and warned it may report a loss for the first six months.

Swatch Group AG shares rose 0.4 percent after sliding 9.8 percent on Monday, when it reported plummeting sales and a 70 percent slump in operating profit for the first half.

Meanwhile, Cartier-owner Richemont posted a slight rise in first-quarter sales on Tuesday as its solid jewelry brands offset declines from China and its luxury watchmakers. Its shares rose as much as 2.3 percent.

By Maggie Shiltagh and Chloé Meley

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Hugo Boss and David Beckham Partner Up for Design Collection

The collaboration includes collections designed and curated by David Beckham for both formal and casual menswear.

Sales of Swiss-made luxury watches are in sharp retreat as nervous consumers reconsider splashing out on expensive timepieces and demand slumps in one of the industry’s key markets.

Fresh numbers this week from Switzerland’s two largest publicly traded watchmaking conglomerates, Richemont and Swatch Group AG, confirmed a brutal, China-led pullback that’s also tarnished luxury fashion brands from Burberry Group Plc to Hugo Boss and Gucci.

The double-digit drop in sales seen in the latest results mark a stunning reversal of fortune for an industry that enjoyed an unprecedented sales boom during the pandemic-era. Back then, cash-flush clients, unable to spend on travel and dining out and inspired by flashy social media posts, plowed money into expensive mechanical timepieces.

Most of the top watch brands responded to the surge in demand by raising prices, some by double digits. That prompted some consumers to reconsider buying a new watch.

Sales of Richemont watch brands, which include Vacheron Constantin, Jaeger-LeCoultre and IWC, fell 13 percent in the three months through June, driven by a 27 percent drop in Greater China it said Tuesday. Swatch, which owns Omega, Blancpain and Breguet in addition to its entry-priced namesake, saw China sales plunge 30 percent in the first half of the year. Overall sales fell 14 percent and operating profit dropped an eye-watering 70 percent.

The drop in sales and cuts in production are rippling through the industry in Switzerland. Watch component suppliers, who scurried to hire staff and buy equipment during the boom, are facing deferred orders from big Swiss brands. Some components makers have already asked staff to reduce work hours or extend annual summer watchmaker holidays.

It’s a critical industry for the small country that employs more than 65,000 workers and is the third-largest export sector.

Swatch Group CEO Nick Hayek said in an interview this week that some of his company’s watch brands have delayed orders from suppliers amid a cut in production of between 20 percent and 30 percent, even as it keeps its own workers at their jobs.

“Some brands that have external suppliers have delayed some orders,” Hayek said. “But that’s not only us, I can tell you, this is in general,” throughout the Swiss watch industry.

Monthly Swiss watch export data for June, which are due on Thursday, will likely nod to the slowdown. After three years of record exports by value, wholesale exports declined by 2.5 percent in the first five months of 2024, according to the Federation of The Swiss Watch Industry.

The significant pullback for the sector isn’t wholly unexpected, but its scope and breadth is. CEOs and other industry executives flagged a slowdown in demand in the final months of 2023 that signalled the end of the frenzied rush to buy a Rolex or Patek Philippe that had lifted much of the industry.

Watch buyers in the US were the main drivers of the boom as the country overtook China as the top destination for exports in 2021. Even so, China’s position as the second biggest importer of timepieces is largely responsible for the current slump. Sales in the US have been surprisingly resilient and retailers in Japan are booming as tourists take advantage of the weak yen.

But that hasn’t been enough to counter the drag from China.

“We do not see an immediate end to China’s demand woes,” Bernstein analyst Luca Solca said in a report following the Swatch Group results.

Those woes are also affecting the broader luxury sector. On Tuesday, German high-end fashion brand Hugo Boss cut its profit guidance for the year, citing weakness in markets such as China. Its shares plunged to their lowest level since 2021.

Used Watch Market

The slump in sales of new watches follows a dramatic correction on the secondary market since prices peaked in 2022.

That weakness is also continuing. Prices for the most traded models fell 2.1 percent in the second quarter of 2024, according to a report this month by Morgan Stanley and WatchCharts, a ninth straight decline.

The WatchCharts data shows prices for used watches from all the major brand groups fell. Used watches produced by luxury conglomerate LVMH, which include Tag Heuer, Hublot and Zenith, fell the most, down 3.6 percent. An index of used Rolex models dropped 2.2 percent.

The value retention of Rolex watches on the secondary market has been a key differentiator for the top Swiss brand in recent years. But even that is starting to crack. According to WatchCharts data, just 63 percent of Rolex models are trading above retail prices on the secondary market today compared with 72 percent a year ago.

“It’s unlikely that secondary market prices will stabilise in the near future,” Morgan Stanley analysts led by Edouard Aubin said in the report, citing the exit of speculators and worsening value retention for many Swiss watches.

Morgan Stanley expects primary market watch sales to fall about 5 percent this year.

“With the increasingly symbiotic relationship between secondhand prices and prices of new watches,” the Morgan Stanley analysts said, “the pressure on the secondary market is reducing the pricing power of the leading Swiss watch brands.”

By Andy Hoffman