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Burberry confident in China despite luxury crackdown

Tuesday, 17 Sep 2013 | 2:45 AM ET
Burberry CEO: We're not changing our strategy at all
Tuesday, 17 Sep 2013 | 1:43 AM ET
Angela Ahrendts, CEO of Burberry, tells CNBC that they are still driving growth in developing markets despite a slowdown in China.

The Chinese government's crackdown on luxury goods has hit the world's luxury goods industry but Burberry remains confident of the potential of emerging markets, the British fashion label's chief executive told CNBC at the London Fashion Week.

Last year, the Chinese Communist Party launched a crackdown on luxury purchases and ostentatious extravagance by banning banquets and television and radio advertisement for expensive goods.

(Read more: Gift-Giving Crackdown Hits ChinaLuxury Retailers)

"It's not just Burberry that was affected [by the crackdown], the entire industry was," Angela Ahrendts told CNBC on Monday. "But Burberry was the only one that was transparent about it but the entire sector was affected," she said.

Burberry surprised markets last September with news that it expected 2012 sales and profits to slow and come in below expectations. The Asia-Pacific region makes up a sizeable chunk of Burberry's sales, 37 percent of the group's £2 billion ($3.18 billion) revenues in year ended March 2013.

(Read more: Chinese Mistresses to Blame for Global Luxury Slowdown?)

Nonetheless, Ahrendts was confident Chinese demand for luxury goods would grow, despite the authorities' disapproval.

"It's the new normal and we've budgeted for it….I think that people forget that in the next year 100 million consumers will exit that country and travel to flagship markets all over the world," Ahrendts said.

"Really it's [about] offering the Chinese consumer the ultimate service wherever they are. That's why we've been investing in flagship stores across developing markets so that we can service them better."

(Read More: China's Rich May Be Loving Luxury Goods Too Much)

Speaking to CNBC after Burberry's Prorsum Spring Summer 2014 show, she insisted the premium brand would not change its strategy in emerging markets despite an economic decline in the region.

"We're not changing our strategy at all. Steady wins the race and…we're still very focused on investing for growth in the developing markets and in the brand. Strategy-wise, absolutely nothing has changed," Ahrendts added.

The show was not short of famous faces, with actress Sienna Miller and One Direction boy band member Harry Styles among the front row of celebrity spectators. Styles told CNBC the brand was "iconic."

"It's iconic, British, understated and nice and cool," Styles said. "They don't try to do anything too crazy they just do what they're good at."

- By CNBC's Holly Ellyatt. follow her on Twitter @HollyEllyatt

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