Will Covid-19 chills and slumping economy keep China from becoming world’s largest luxury goods market?

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A confluence of macroeconomic factors appears to have stirred up an increasing amount of self reflection among China’s young middle-class shoppers and suppressed their appetite for spending

Analysts at Bain & Company, Oliver Wyman and home-grown consultancy Yaok Institute, however, believe that China is still on a path to becoming the world’s largest luxury goods market

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A Prada store in Beijing. Premium consumer and luxury goods brands have cut an 18 per cent year-on-year growth forecast on average for their mainland China businesses to 3 per cent, according to consultancy Oliver Wyman. Photo: Reuters

Yaling JiangandMia Castagnone

Published: 10:00am, 4 Sep 2022

Simon Fu, a 32-year-old Shanghai fashionista, used to hang out at the city’s most popular luxury shopping centre every week before Covid-19 struck.

This year, he has not been to Plaza 66 even once.

In early 2020, he returned from Tokyo with suitcases full of luxury fashion items, a habit cultivated and shared by most Chinese consumers of luxury products shopping abroad to take advantage of tax arbitrage.

But then lockdowns and work-from-home arrangements kicked in, and a realisation dawned on Fu – there were no occasions to show off his expensive outfits.

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This realisation occurred in parallel with concerns about a slumping economy and the rising unemployment around him.