According to a report released on Tuesday by Bain & Company, Beijing’s zero-Covid policy and a slowing economy caused spending to decline by 10% in China’s luxury market in 2022, ending a five-year streak of robust growth.
The luxury market expanded by 42% a year between 2019 and 2021, but in 2022, after China intensified its efforts to eradicate Covid-19 with city-wide lockdowns, the market’s fortunes shifted as a result of legislative changes that hurt the real estate industry and increased unemployment.
According to Bain, the amount was contrasted to sales growth of 26% between 2016 and 2019 and growth of 1% between 2012 and 2016.
All luxury categories were impacted to varied degrees over the year, according to Bain, mirroring recent findings from companies like the French luxury goods firm LVMH and Italy’s Salvatore Ferragamo for 2022.
The watch market experienced the biggest declines, with sales falling between 20 and 25 percent from 2021, while other categories with high internet penetration, such high-end beauty, experienced single-digit declines.
Sales of apparel and accessories fell by 15 to 20 percent, while those of jewellery and leather products fell by 10 to 15 percent.
However, Bain predicted that Beijing’s decision to scrap the zero-Covid policy in early December would likely lead to a return of growth this year as mall traffic and consumer confidence pick up.
Weiwei Xing, a partner at Bain & Company located in Hong Kong, stated that “we expect to see 2021 sales levels somewhere between the first and second half of 2023.”
Despite the abundance of hope, there are concerns. Before foreign travel begins, brands must close the pricing gap between China and Europe, the expert added.