Luxury brands flock to Bangkok as a safe haven for growth amid challenges in China.
Global luxury brands are recently flocking to Bangkok, Thailand. Amid a slowdown in consumption and economic recession in China, luxury brands are experiencing a decline in sales, while Thailand is gaining attention as an alternative market.
Bloomberg noted, 'Bangkok, Thailand, is becoming a new hub for luxury markets thanks to wealthy local consumers and tourists,' adding, 'Luxury brands such as Christian Dior, Louis Vuitton, and Porsche are seeing Thailand as a beacon of hope.'
According to the consulting firm Luxury & Site, 11 out of 26 luxury stores that opened in Southeast Asia over the past year are in Thailand. Siam Piwat, the operator of Bangkok's flagship shopping mall, announced that luxury sales have quadrupled over the last four years.
The Dior Gold House, which opened in Bangkok last month, showcases Thailand's changing status. The French luxury brand Dior opened a Gold House adorned with 1 million golden mosaic tiles in an area dense with high-end shopping malls and five-star hotels. This store, which replicates Dior's headquarters on Avenue Montaigne in Paris, is being viewed as a symbolic representation of luxury brands targeting the Thai luxury market, especially with its café run by a Michelin-star chef where customers can enjoy desserts after browsing Dior clothing.
Louis Vuitton also opened a cultural complex called 'The Place' in Bangkok. This site, which features Southeast Asia's first Louis Vuitton restaurant, brings together exhibition spaces, stores, and cafés. Additionally, Porsche is constructing designer condominiums in collaboration with a Thai real estate firm, and the Aman Group, which operates the most expensive hotels in the world, is expected to present hotels and residential complexes in Bangkok. Jonathan Siboni, CEO of Luxury & Site, said, 'Thailand is emerging as an important luxury hub.'
The reason luxury brands are focusing on Thailand lies in Southeast Asia's potential. Last year, luxury stores in Thailand and Southeast Asia saw a 124% increase compared to the previous year, significantly outpacing China (43%) and Japan (30%). Notably, Thailand has the geographical advantage of being within a 4-hour reach from any Southeast Asian country. Bloomberg explained, 'Thailand is in an ideal position to leverage the rapidly accumulating wealth of its neighboring countries.' Throughout 2024, Thailand attracted over 10 million Southeast Asian tourists, a record increase of 8.5% compared to the previous year.
The increase in tourists has also contributed to luxury brands' focus on Thailand. Thanks to recent amendments to visa regulations by the Thai government, tourists from India and the Middle East have increased by 31% and 24%, respectively, offsetting the decline in Chinese tourists. The Thai government anticipates that foreign tourists will rise from 35.5 million last year to 40 million this year.
However, there are risks in Thailand's luxury market. Household liability in Thailand reaches 89% of the gross domestic product (GDP), marking the highest level in Southeast Asia. Additionally, past political instability due to military coups could also impact foreign tourists, Bloomberg reported. Bloomberg projected, 'Despite the risks of high household liability and political instability, the growth of the luxury market will continue.'
Source: Chosu Biz