Covid-19’s second wave made China’s economy the world’s largest – here’s what that means for luxury brands in 2021, according to experts

Nov 2 , 2020

With China overtaking the US as the world’s economic powerhouse, luxury brands need to figure out how to win in the Chinese market. Photo: Jing Daily

Burberry launched its social retail store in Shenzhen, but that’s just a start – here are 12 things luxury brands should do to win in the competitive Chinese market

With the West currently living through the nightmare of a second wave of Covid-19, luxury brands are focusing on 2021 and how to win in what has become the world’s largest economy: China.

China has now overtaken the US as the world’s economic powerhouse, according to figures released by the International Monetary Fund (IMF) this month, which predicts that the Chinese economy will grow 1.9 per cent this year while the US economy will shrink by 4.3 per cent, and the Eurozone by 8.3 per cent. This news makes China strategies more important than ever for luxury players as they head into 2021.

At the onset of the pandemic, accelerated change in brand strategies for China quickly became a must. But what do the luxury experts say brands should do to win in China as they enter 2021? We canvassed eight leading voices in China’s luxury market to compile this list of 12 key strategies and tips.

There is almost a blind spot at the top levels of brands that trade with China. They will not have a clue about what their brands look like on WeChat – brands must be willing to embrace China higher up the ladder. It has become too big to ignore

Tom Griffiths, commercial director, Verb China

Make a digital transformation

“In the first six months of the pandemic, luxury brands were forced to leapfrog in terms of digital innovation. A lot had to get on social platforms they were not on. A lot thought live-streaming wasn’t luxury, but now they have started doing it,” says Chloé Reuter, a founding partner at the Shanghai-based consultancy Gusto Luxe, whose clients include Harrods and Estée Lauder. “They need to keep stepping out of that comfort zone to compete. China’s brands are rising fast and have more local know-how.”

Establish brand relevance in China

Chinese shoppers heading overseas once looked to a brand’s reputation in other fashionable markets like Paris. Yet Tom Griffiths, the commercial director at Verb China, a performance marketing agency focusing on luxury with clients such as Alexa Chung and Jimmy Choo, opines that focusing on a brand’s relevance in China rather than overseas will be vital for success in 2021. “For those brands that have relied on being cool outside of China to get consumers’ attention from inside China, it is not going to be as easy as that any more,” he states.

Embrace China higher up

Griffiths also says brands that remain blasé about China will not succeed in what has become a more competitive market. Domestic brands have been gaining popularity since the pandemic began, and overseas travel shopping has been curtailed, which means getting China right is crucial.

“Interesting how little is known about China outside of the China bubble,” he notices. “There is almost a blind spot at the top levels of brands that trade with China. They will not have a clue about what their brands look like on WeChat, for example. Brands must be willing to embrace China higher up the ladder.