Welcome to the first issue of the 2024 Retex China monthly newsletter, bringing you the latest updates from China directly from our Shanghai team.
In this issue:
- Economics Highlights: We’ll keep you updated on Chinese economic prospects for 2024, with a particular focus on ambitious GDP growth and new foreign investment projects.
- Latest Market Trends: We’ll also explore the latest market trends, with a focus on the luxury sector’s resurgence in China in 2023 and future prospects, including topics such as overseas consumption and the evolution of the daigou market.
- Fashion, Luxury & Design: Finally, we’ll discover initiatives from Fashion, Luxury, and Design brands for the Chinese New Year, including installations, exclusive creations, and cultural celebrations. Additionally, we’ll take a look at the latest flagship and pop-up store openings, along with special events planned.
Keep reading to discover the latest economic and cultural trends from China!
Economics Highlights
Chinese Economic Outlook 2024: Ambitious Metropolises Targeting 5% GDP Growth
Chinese metropolises are outlining ambitious economic prospects for 2024, aiming for GDP growth of around 5%. Beijing aims to stimulate technological innovation and domestic demand, while Shanghai is committed to strengthening its role as a global financial center. Key provinces such as Guangdong, Jiangsu, and Zhejiang are also targeting robust economic growth, reaffirming their status as the nation’s driving forces.
New Foreign Investment Projects in China: 11 Initiatives totaling over $15 Billion
The Chinese National Development and Reform Commission has announced the launch of the seventh batch of major foreign investment projects, aiming to further enhance the attractiveness of foreign investment in the country. The 11 selected projects, spanning from biomedicine to automotive manufacturing and new energy technologies, represent a new peak in investment scale. With a total planned investment of over $15 billion, these projects incorporate cutting-edge technologies to promote industrial upgrading and stimulate local employment. So far, the previous six batches of projects have attracted a total of $73 billion in investments, significantly contributing to the country’s economic development.
Chinese Foreign Trade on the Rise in 2023: Reaching ¥41.76 Trillion
Outbound trade in goods surpassed expectations, recording a 0.2% growth and reaching ¥41.76 trillion ($5.88 trillion) in 2023. Exports increased, mainly driven by the rise in shipments of new energy vehicles, while imports experienced a slight decline. Collaboration with Belt and Road partners and the implementation of the RCEP contributed to boosting the volume of trade, despite global challenges. Despite uncertainties in 2024, Chinese foreign trade is expected to maintain a positive trend, with expansion in both volume and quality.
Cross-Border E-commerce: Engine of Chinese Economic Growth
Cross-border e-commerce has become crucial for China, experiencing exceptional growth in the last five years thanks to industry giants like Alibaba and JD.com. Fueled by digital technologies such as big data and AI, this phenomenon is transforming traditional industries and improving the country’s manufacturing production. However, rapid growth necessitates stricter regulation to ensure platform oversight and consumer protection. Ultimately, international e-commerce continues to inject vital energy into the Chinese economy, guiding the country towards greater stability and sustainability in foreign trade.
Tourism in China: Boom in International Bookings and Expectations of Record Revenues in 2024
The Chinese tourism industry is gearing up for an exceptionally lively season during the Spring holidays, with a strong surge in international flight searches and an expectation of a rapid recovery in overseas travel. Southeast Asia remains a coveted destination, driving growth, while international tourism is expected to surpass $107 billion in revenues in 2024. With a variety of experiences ranging from snowy adventures to tropical getaways, coupled with the resurgence of international travel, China has promised an exciting tourist season.
Luxury Consumption on the Rise: Expected 12% Increase in 2024
According to the recent China Luxury Report by the Essentials Research Institute, personal luxury consumption in China saw a rebound in 2023, with a 9% growth that pushed the market past the trillion yuan mark. Prospects for 2024 indicate further growth, with a projected rate of 12%. The increasingly significant contribution of Chinese consumers to the global luxury industry is set to be a dominant trend in the next three to five years.
Beauty Retail: 5% Sales Growth
Cosmetics sales in 2023 reached $414.2 billion, up 5.1% from the previous year, with December sales hitting $32.3 billion, a 9.7% increase year-on-year. However, it is noteworthy that this growth rate represents the lowest in the past decade. This signals a transition to a more refined operational era in the cosmetics market, following a period of high growth.
Latest Market Trends
Luxury Market: 12% Recovery in 2023, Focus on VIP Customers, and Activity Optimization for 2024
- The Chinese luxury goods market experienced a year of ups and downs in 2023, according to Bain & Company’s recent report. After a pandemic-induced downturn, the market rebounded by 12%, although it remains slightly below 2021 levels. The report highlights challenges related to consumer confidence and economic recovery, with more Chinese consumers purchasing luxury goods abroad. However, the Chinese market continues to be a significant global driver, contributing up to 24% to global luxury goods consumption.
- In 2023, the luxury sector showed a broad-based recovery, driven mainly by the growth in beauty product purchases, which saw an 8% increase compared to the previous year. Fashion, accessories, and jewelry also saw growth, albeit more modest. Reduced foot traffic in malls in 2022 led to increased revenue concentration on VIP customers, but in 2023, both VIP and non-VIP customers contributed to increased foot traffic. However, non-VIP customers showed a decrease in conversion rates and per capita spending. For 2024, many luxury brands are expected to slow down physical store expansion, focusing efforts on optimizing existing operations.
New Trends in Chinese Luxury: Strengthening of Domestic Consumption and Evolutions in the Daigou Market
- Shift towards Overseas Luxury
Before the pandemic, one-third of luxury consumption in mainland China came from overseas, but from 2021 to 2022, over 90% came from the domestic market. With the recovery of outbound tourism, Bain predicts that mainland China’s share of luxury consumption will drop to 70% in 2023. Chinese tourists are expected to return to pre-pandemic spending levels in Europe (40%) and Asia (65%) by 2023. Price differences between domestic and overseas markets remain a key factor, attracting consumers to purchase luxury goods abroad. - Evolution of the Daigou Market
Historically, South Korea’s duty-free market was a vital source for luxury daigou. In 2022, despite a 90% decrease in foreign visitors, tax-free luxury sales remained at 70% of 2019 levels, driven by daigou. In 2023, the South Korean government and luxury brands took measures against daigou, expecting a 30% contraction in tax-free sales to foreign visitors. However, a more specialized daigou model is emerging, especially in the fashion and leather goods sectors, utilizing a platform-based approach to offer consumers a rich and authentic shopping selection at lower prices through wholesale channels. The future development of the daigou market depends on luxury brands’ control over their wholesale channels abroad.
CES 2024: China in the Spotlight with Over 1,100 Companies
This year’s CES trade show was an exceptional event, with over 4,000 participating companies and an attendance of over 130,000 visitors, as reported by the organizer, the Consumer Technology Association. Particularly noteworthy was the significant increase in Chinese companies, which this year numbered over 1,115, more than double compared to the previous year. Prominent brands such as Hisense, Lenovo, and TCL showcased their latest innovations, alongside global giants like Qualcomm and IBM. The presence of over 1,200 startups confirmed the event’s exceptional vitality, with a wide display of cutting-edge technologies, ranging from robotics to virtual reality. The trade show was enriched by over 200 forums, offering insights into the challenges and opportunities shaping the consumer electronics sector.
Fashion, Luxury & Design
Chinese New Year
The festivities are the perfect occasion for Fashion, Luxury & Design brands, both local and international, to immerse themselves in the ancient Chinese tradition and celebrate the symbolic animal of the year.
LOUIS VUITTON. Louis Vuitton celebrates the Chinese New Year with captivating installations dedicated to the Year of the Dragon at its stores in Shanghai, Chengdu, and Beijing, along with temporary spaces. These unique artworks, integrated into the brand’s prestigious stores, include a Year of the Dragon installation at the Taikoo Li store on the Bund in Shanghai and the Taikoo Li store in Chengdu. Additionally, Louis Vuitton has set up temporary spaces dedicated to the Chinese New Year at Taikoo Li Sanlitun in Beijing and Huaihai Zhong Road in Shanghai. An extraordinary celebration that blends tradition and modernity, bringing a touch of festivity and culture into the daily lives of Chinese customers.
LOEWE. For the Chinese New Year, Loewe has enriched its collection with three exclusive creations: jade pendants crafted by master carvers Cheng Lei, Qiu Qijing, and Yin Xiaojin. Each piece, meticulously handcrafted, is paired with a delicate 18-carat gold chain. A celebration of tradition and art, ready to enchant luxury lovers worldwide.
QEELIN. Qeelin has recently documented the “Golden Dragon Parade” in Yangshuo, Guilin, for a short film celebrating the Year of the Dragon. This traditional folk event takes place on the Yu Long River, a tributary of the Li River, and represents the community’s hopes for favorable weather and peace in the country. In the video, global brand ambassador Liu Shishi wears Qeelin’s distinctive Wulu collection jewelry and holds a pumpkin lantern, a symbol of peace and prosperity, as she rides on the waters. With Qeelin’s 20th anniversary, this film not only strengthens the brand’s presence in the Chinese market but also its connection with consumers in the country.
TOD’S. TOD’S has collaborated with craftsmanship experts in paper and plastic, Wang Yuheng and Song An, to create a unique artistic project themed “Nine Dragons and Auspicious Blessings” for the Chinese New Year. The project, which includes themed windows, red envelopes, and an animation of the Nine Dragons, draws inspiration from traditional Chinese symbolism. In 2023, the Tod’s Group saw a significant increase of 28.2% in sales revenue in the Greater China region, despite some quarterly fluctuations in the Chinese market. The consistent double-digit growth compared to 2021 was partly driven by exceptional results achieved in other regions, particularly in Japan.
BURBERRY. Burberry has opened a pop-up boutique at the Genting Hotel in Chongli dedicated to the Lunar New Year 2024 collection. The store, enhanced with a kite-themed display, also includes a Norman’s Café pop-up with a selection of classic British delicacies. The pop-up boutique will be open until March 26th.
Latest Fashion & Luxury Openings: Flagship and Pop-up Stores
TIFFANY. The new flagship store of Tiffany on Tmall has officially opened, marking a significant milestone in the online luxury sector in China. For the opening, the “Tmall Little Black Box” channel exclusively showcased the Woven necklace from the Tiffany Keys series, available in a global limited edition. With over 13,000 followers since its soft launch in December, the store has already garnered considerable interest. To date, Tmall is the first Chinese e-commerce platform to host five prestigious luxury groups, consolidating its position as a leader in the online luxury market in the country.
CHANEL. After successful exhibitions in Paris, Melbourne, Tokyo, and London, an extraordinary retrospective on the life of Gabrielle Chanel, founder of Chanel, titled “Gabrielle Chanel: Fashion Manifesto,” will make a stop in Shanghai from July 12 to November 24, 2024. This event marks the first time Gabrielle Chanel’s work is celebrated with a retrospective in China and will be organized in collaboration with the Palazzo Galera and the Museum of Contemporary Art in Shanghai, with the support of Chanel.
ARC’TERYX. On January 20, ARCTERYX opened the “Arc’teryx Museum,” the world’s largest eco-friendly flagship store, in Shanghai. Inspired by the Coast Mountains of Vancouver, the store offers immersive experiences that faithfully reproduce different natural environments, showcasing the functionality of outdoor clothing and equipment. Divided into four themed floors, the “Arc’teryx Museum” invites visitors to immerse themselves in the emotions of outdoor adventures and discover the brand’s path of innovation over the years.
VALENTINO. Valentino Beauty and BUTTERFUL&CREAMOROUS, a pastry company, have announced an exclusive collaboration for the launch of a new joint collection. To celebrate the partnership, the BUTTERFUL&CREAMOROUS flagship store in Shanghai has been transformed into a “Warm Sunshine Orange” themed store, offering a unique experience to its customers.
K-BOXING. The renowned men’s high fashion line KB HONG by K-Boxing Men’s Wear successfully debuted at Milan Men’s Fashion Week, presenting its latest Fall/Winter 2024 collection. Originating from Shanghai and with a solid tradition in the industry, the company has also announced plans to open a store in Milan, highlighting its commitment to elegance in men’s business casual clothing.
RICHEMONT GROUP. The Richemont Group recently announced its financial results for the third quarter of 2023, highlighting a significant increase in sales in the mainland China region, Hong Kong, and Macau, with a growth of 25% compared to the previous year. Mainland China sales recorded double-digit growth, while Hong Kong and Macau saw significant year-on-year growth of 60%-80% and 80%-100%, respectively. Sales contributed by Chinese consumers recorded a 42% year-on-year increase, contributing to a compound annual growth rate of 10% over the four-year period from 2020 to 2024. However, Burkhart Grund, a group executive, emphasized that the rebuilding of the Chinese market is still ongoing and may take some years. Nevertheless, he expressed confidence regarding the Chinese New Year, although some challenges remain, especially in the European and Middle Eastern markets.
