Tiffany & Company Analysis Report

1267 Words 5 Pages
Impacts of Chinese Economy on Tiffany & Co. Analysis Report
In the last five years, China and Chinese consumers play an important role in the growth of luxury industry. The dramatic growth of domestic economy fueled Chinese’s appetite for the finer goods in life. For Tiffany & Co., we have reached record number of sales in China in the past five year. Given such a great achievement, Tiffany & Co. is considering the retail expansion plan to enhance its appearance in China by opening four more new stores. However, three articles imply the concern about the economic slowdown and unstable economy environment in China. The central bank aims at cutting bank reserve requirement, using quantitative easing, and cutting interest rates to simulate the economy. Nevertheless, these stimuli may have side effects and backfires on the Chinese economy.
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should hold on the retail expansion plan, as the economic slowdown and effects of the central bank’s stimulus plan are not clear. Cutting bank reserve requirement results in an increase in price level in the long run. There is the uncertainty that whether product prices will increase faster than wages, prices of raw materials or not. If not, the company’s profitability will be jeopardized. Moreover, the improper withdrawal of the quantitative easing causes inflation and rises in interest rates, which causes consumption decrease and eventually slows the economy growth. If the consumption decreases and new stores are opened, the decreasing revenue and increased fix costs will erode the company’s profitability. Cutting interest rates will reduce the company’s cost of borrowing. The company should make investment on studying Chinese consumers’ appetites, improving the market campaign and the online store. When the economy slows down, the competition among jewelry stores will increase. Instead of expanding our footprints, the company should focus on retaining existing customers by better design and

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