What Global Luxury Brands Need To Know About The China Market In 2021
A devastating global pandemic has ravished the world, millions of people are at risk of losing their livelihoods, entire industry sectors have been subdued, and China’s rising global influence has annihilated “the unipolar moment” in world politics.
Given the current situation, global brands have understood that the regional economic outlook for the Old World is not too promising. At the same time, China’s economy has been far better equipped to bounce back. As such, multinational corporations found an opportunity in the COVID-19 pandemic to close down underperforming facilities and downsize their operations and stores’ footprint in the Western hemisphere while investing heavily in China.
European luxury brands have inaugurated new stores, expanded their digital solutions, and boosted their e-commerce performance in China — all while reducing their physical footprint in the West. “Mainland China has become the place where all the purchase power is trapped,” said Mauro Maggioni, Asia Pacific CEO at Golden Goose.
OTB CEO Ubaldo Minelli echoed a similar view in his discussions with Vogue Business. “We will increasingly shift physical retail investment to China and the Asia Pacific.” So, considering these circumstances, let’s look at some challenges for global luxury brands in China.
Significant changes in consumer behavior
January marked the demise of four turbulent years. However, ending Trump’s dreams of a second term didn’t bring the prospect of a reconciliation between China and the US. And consumers on both sides are becoming increasingly fearful, angry, and distrustful of the other side. Chinese consumers, in particular, are shifting away from American brands.
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