Hogan Lovells analysis - Luxury retailers in Hong Kong and neighboring markets face Coronavirus crisis

Posted Mar 12, 2020

Luxury goods stores in Mainland China and Hong Kong are seeing a significant reduction in consumer footfall. In respect of Hong Kong, the combination of the protests and COVID-19 has clearly had a significant impact. As for the Mainland China market, luxury retailers should have seen an uptick in sales in Mainland China stores, due to shoppers discouraged from traveling to Hong Kong, but it appears that quarantines and fear of infection are discouraging many consumers from visiting stores in Mainland Chinese cities as well.

In these circumstances, luxury retailers face a number of potential legal issues arising from their Greater China operations, including:

(a) issues arising from the closure (indefinite or otherwise) of stores, including contractual and other matters relating to premises and service providers;

(b) employee and data protection matters under local employment laws;

(c) supply chain risk (including risks associated with air and sea shipping); and

(d) non-Asian consumer concern regarding goods/materials originating from Greater China.

If COVID-19 has or might have an impact upon their people or operations, organizations should take swift steps to assemble an internal crisis response team and, where a necessary external advisor to ensure that they are in the best position to adapt to what is a fast-developing situation.

Hogan Lovells is deploying its Crisis Leadership Team and practitioners with expertise and deep industry sector knowledge to help guide luxury retailers. For more information about the steps luxury retailers should take when addressing COVID-19 developments or how Hogan Lovells can help, read our analysis.