China announced at the World Economic Forum in Davos that its borders had renewed for business after nearly three years of closings. However, as the country attempts to recover from the global epidemic years when it was isolated from the rest of the world, fashion businesses have already felt the effects.
Burberry reported a 23 percent drop in sales in China on Wednesday, and, as with most luxury retailers, lowered its forecast for 2022. In November, LVMH stated that its revenue in China had not yet regained its previous levels. It now appears that 2023 will follow a similar path, with any expansion likely to be less pronounced than in past years.
Chinese Vice Premier Liu He, trying to address the Davos elites, said “Foreign investments are encouraged in China, and the door to China will only start opening even farther.”
Nonetheless, China is experiencing one of the world’s biggest post-pandemic epidemics, with 60,000 deaths reported last month, which various media outlets claim is lower than the actual statistics.
With the Lunar New Year celebrations coming up in less and over a week, the holiday season is a key sales driver for global luxury brands. Amidst their freedom to travel, many Chinese citizens intend to avoid contracting the coronavirus.
In the week, China reported that its annual rate of growth in 2022 will be close to the lowest in nearly 50 years, demonstrating that economic uncertainty remains in the second-largest economy worldwide.
Despite a favorable lengthy perspective, brands must remain extra diligent and prepared to respond quickly when necessary.
