Chanel, the world's second-largest luxury brand, says its efforts to curb the grey market have been successful and are helping boost revenue in China despite weaker overall demand for luxury goods.
The company narrowed its price gaps between the US, Europe and Asia last year to prevent smugglers buying goods in one region to re-sell to another in the grey market.
"We reduced quite a lot the parallel market, mainly in Asia, and we have double-digit growth in our boutiques in mainland China," Bruno Pavlovsky, Chanel's president of fashion, said in an interview in Havana yesterday.
Chanel will unveil its latest Cruise collection in Havana on Tuesday, in Cuba's first major fashion show since the 1959 revolution.
It's another sign of warming relations between the Communist-ruled island and the West.
The US and Cuba formally agreed to restore diplomatic relations last July.
Despite the success in curbing grey market sales, the privately owned company expects slower sales growth this year, Pavlovsky says. He declined to disclose figures.
He noted that Chanel has an entire team, including external lawyers, to monitor the secondary market.
The luxury goods industry has been plagued in the past few months as a drop in global tourist traffic caused by recent terrorist attacks, slower economic growth in China, and record low oil prices have dented the purchasing power of important luxury buyers from Russia and the Middle East.
In April, industry leader LVMH said its fashion and leather goods sales were flat while Hermes said revenue growth slowed in the first quarter.
Pavlovsky said fewer Russians were travelling because of the weak rouble, and Brazil's recession has curbed demand there.
But Chanel was seeing solid growth in the United States, some parts of Europe such as Britain, Russia, China, Japan and Korea, he said. Chinese and Russians not travelling abroad as much were buying more at home.
"There is a slowdown but not such a big slowdown," he says.