Post- COVID-19, luxury businesses have found themselves in a challenging reality, where they have limited access to capital, talent, and new markets.
The pandemic has become a golden opportunity for some countries, industries, and businesses.
Despite rising production costs and pressures from home, manufacturing in China could keep local, patriotic consumers happy.
The global pandemic has created political and societal challenges while reshaping entire industries. In the luxury world, businesses are now in a challenging reality with limited access to capital, talent, and new markets. But in some developed economies like China, where the emphasis is on “self-reliance,” the pandemic bounceback has been faster than in other areas. In fact, COVID-19 has been a golden opportunity for some countries, industries, and businesses.
It is worth noting that China’s first-quarter GDP this year grew at an 18.3-percent record pace compared to the same quarter in 2020, which was China’s largest GDP jump since it started keeping quarterly records in 1992, according to the BBC. For the second quarter of 2021, China’s GDP grew by 7.9 percent more than the same quarter last year.
Undeniably, the luxury world has become even more reliant on China. Therefore, some brands have aggressively expanded their footprint in the Middle Kingdom, while others have deserted the country, moving their manufacturing elsewhere. Several foreign companies that left China have failed to address its new consumer demands and fully understand the market.
Think of it this way: The pandemic has brought rapid shifts, even in China, pushing forward new consumer behaviors such as increased demand for comfortable loungewear and trendy active apparel. But the unprecedented speed of these changes surprised some global brands. Understandably, businesses that did not meet consumer demand lacked inventory for high-demand items; hence, they could not take advantage of the strong uptick in purchases.
Now, let’s look at five key long-term changes in the industry and see how luxury brands can better tackle COVID-19 disruptions.
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