Luxury's rebound in China may take a little longer
19 January, 2023
At the World Economic Forum in Davos China made an impassioned speech that it had re-opened for business after nearly three years of border closures. But as the country aims to shrug off the pandemic years it was cut off from the world, fashion businesses have already felt the effects.
Burberry on Wednesday said its sales in China plunged 23 percent, and like most luxury retailers slashed their forecasts for 2022. LVMH in November said its revenue in China was not yet back to normal. Now it looks as if 2023 may have a similar fate and any growth is likely to be less of a boom when compared to previous years.
Chinese Vice Premier Liu He, addressing the Davos elites, said "Foreign investments are welcome in China, and the door to China will only open up further." Yet China is havingone of the largest post-pandemic outbreaks with 60,000-related deaths reported last month, which various media outlets have said is below actual figures.
With Lunar New Year celebrations less than one week away, the holiday period is a key sales driver for international luxury brands. But despite the freedom to travel many Chinese citizens will want to steer clear of catching coronavirus.
This week China reported its annual growth fell to almost the lowest level in 50 years in 2022, stark evidence that market volatilities remain in the world’s second largest economy.
Despite a positive long-term outlook, brands will have to remain highly vigilant and be ready for short term responses where needed.