What happened: According to China’s National Bureau of Statistics, Chinese consumers increased their spending in August while retail sales of consumer goods reached 3,357 billion yuan — a 0.5-percent growth from a year ago. Total retail sales of consumer goods over the first eight months of the year reached 23,802.9 billion yuan, which is a drop of 8.6 percent year-on-year, according to China’s National Bureau of Statistics.
Meanwhile, the sale of “upgraded consumption goods” also registered fast growth. “In August, sales of communication equipment, cosmetics, gold, silver and jewelry, and automobiles grew by 25.1 percent, 19.0 percent, 15.3 percent, and 11.8 percent, respectively,” the bureau states.
Online retail sales also expanded, reaching 7,032.6 billion yuan over the first eight months of the year, jumping by 9.5 percent from last year. These latest figures for industrial production show a strong recovery in the country, as manufacturing also grew by 5.6 percent year-on-year. Also of note, the country’s urban surveyed unemployment rate stands at 5.6 percent.
Jing Take: China’s leading economic indicators point toward economic growth, but that doesn’t mean luxury brands are “safe” or that they can maintain organic growth in the future. China’s economy is maturing, and consumers and local businesses are changing quickly.
Even before the COVID-19 crisis, experienced luxury buyers began prioritizing value over prestige and extravagance. This new view on consumerism aligns China more with Western values instead of an emerging economy. Consequently, luxury brands need to be prepared for a shift in the landscape.
“Revenge spending” and a post-lockdown shopping euphoria won’t sustain long-term growth, so luxury brands need to build contingency plans for a future where China is no longer the luxury industry “savior.” As such, luxury brands should know that continuing to put all their eggs in China’s basket will come with added risks.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.