China has, in fact, turned the misfortune of the global pandemic into an economic opportunity.
China’s emergence as the world’s leading post-Covid luxury market, will enable the path to the luxury market’s complete global recovery.
The word “unprecedented”, though now perhaps irritatingly overused, is, nonetheless, a very accurate description of what has happened on our planet over the past year or so. However, in the midst of all the talk about the disastrous effects of the pandemic and the lockdowns, one extraordinary phenomenon that is currently still too commonly overlooked is China’s spectacular economic recovery over the past couple of months.
In the context of the global economy, China’s reported 2.3% GDP growth during 2020 is not only highly impressive and unexpected, but also makes it the only major economy in the world to actually grow over the past year. Despite China seeing its first economic contraction in nearly 30 years during the first quarter of 2020, the bounce-back has been, in the true sense of the word, “unprecedented”. While the world is still suffering under the second wave of covid-19 infections and the looming threat of a third wave is threatening recovery, China’s economy is, for the most part, open. China has, in fact, turned the misfortune of the global pandemic into an economic opportunity, with medical equipment and face mask exports soaring.
Despite the recent growth spurt, however, consumer spending as a whole is still lagging behind in terms of the current recovery. Nonetheless, there is one consumer index that leads the way in terms of this truly unprecedented economic recovery: the country’s luxury market – a market that has proven itself to be surprisingly resilient in the midst of the continuing current economic challenges. One of the main reasons for this is of course the fact that less money spent on tourism meant more domestic luxury spending.
The resilience of China’s luxury goods market is amplified, for example, by a comparison of sales figures from Swiss luxury giant Richemont from the final quarter of last year. While sales in Europe experienced a drop of 20% to dip below the one billion euro mark, while the company’s sales in Asia grew by an emphatic 27% over the same period to over 1.7 billion euros.
This points not only to the uneven nature of the current global economic recovery, but also to the strength of China’s high net worth and luxury client base. As Bain & Company recently rightly observed, the rise of China’s luxury goods market is truly unstoppable – even in the midst of an unprecedented global economic slowdown. The country is now expected to become the world’s largest single luxury market by as early as 2025. And, as with so many things, China will be setting most of the trends in the luxury goods market for the foreseeable future.
And with China’s GDP expected to grow by a mammoth 9% this year, the hope, or perhaps rather the expectation is that China’s emergence as the world’s leading post-Covid luxury market, will enable the path to the luxury market’s complete global recovery.
Paul Russell is co-founder of Luxury Academy London, a multi-national training company with offices in London, Mumbai and Visakhapatnam. Luxury Academy London specialise exclusively in the luxury industry and deliver training in leadership, communication and business etiquette training for companies and private clients across the globe.
Prior to founding Luxury Academy London, Paul worked in senior leadership roles within luxury hospitality. A dynamic trainer and seminar leader, Paul has designed and taught courses, workshops and seminars worldwide on a wide variety of soft skills.