Chinese purchases of luxury goods have reached top levels. Where? In China, of course. As a consequence, luxury brands have gone beyond the peak results achieved before the pandemic. Yet, they must pay attention to the growth of local brands, pushed by what analysts are calling China Pride. The pride sentiment that local consumers have further accentuated after the cotton scandal in Xinjiang.
Luxury is at the top in China
The Jing Daily Krane Shares China Global Luxury index reached the highest level ever. Elaborated by Jing Daily, this index replicates the performance of the global luxury market, with particular focus on business done in Beijing. April proved to be a month of constant growth, closing with 333.33 points, up from the 249.9 points of the pre-pandemic peak. This means that Chinese consumers have spent more than ever on fashion goods. For the 2nd months in a row Kering was first in the ranking. LVMH and Capri Holdings fought for 2nd. Moncler came in 10th, as the only Italian company present in a ranking that proved that the athleisure tendency in China is slowing down.
Careful with China Pride
It’s called Guochao, and it’s the trend that is attracting Chinese consumers towards national brands, rather than Western ones. The patriotic wave was further pushed by the developments of the cotton-related battle that is developing in Xinjiang. Additionally, China Pride is a sentiment expressed by many young Chinese consumers that are attracted to increased digital capacities and local brands’ marketing campaigns, as highlighted by a report from Credit Suisse.
“The strength of one’s brand remains high in China because they are historic brands and offer higher quality products”, says Jesalyn Wong, analyst with Credit Suisse, to the South China Morning Post. According to Wong it’s difficult that national brands will be able to compete with international luxury entities, even with great steps towards higher quality over the next 3 to 5 years. But, “that being said, we can’t exclude the possibility that a local brand may be able to close the entire gap”.
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