Are you taking on China?
Chinese consumers are the engine of worldwide luxury spend growth. With the onset of the pandemic and abolishment of tax-free shopping, accelerated change in brand strategies for China have quickly become a must.
British luxury brands have been left in shock when our chancellor recently made the controversial and unwelcome decision to end the VAT Retail Export Scheme on 31 December 2020. The return of affluent international visitors is critical to post-Covid recovery planning and abolishing tax-free shopping will put a barrier between the UK and well-off yet price-sensitive tourists, particularly from China – the largest audience in the world. Where it was once struggling economically, China is now booming and is home to a wealthy class of consumers who are keen to get their hands on Western products and consumer goods.
British luxury brands are a powerful part of the allure of the country for international visitors, and have powered tremendous economic growth over the last decade – the time is quickly approaching where you’ll be able to judge the growth potential and ambition of a global business by asking one question:
Are you taking on China or not?
The size of the prize is undisputed and the appetite of Chinese consumers to be connected to the rest of the world is only getting bigger. The global luxury market set to top €1.3 trillion ($1.5 trillion) by 2025 and China is expected to account for 40% by 2025, representing 75% of the market growth between 2018-25. Reaching Chinese consumers is HARD and presents challenges. The consumers are different, the technology is different and the rules are different. Advertising in China is a key part of business growth strategy but fraught with complications due to high entry points, access to Chinese tech and data, understanding of local regulations and most poignantly ad fraud. Current market conditions have meant that luxury brands have to recalibrate their strategies to compete in a future market, The Runway Media product uses Chinese Technology and Chinese data to reach Chinese Audiences. The agency has boots on the ground in China and traders all over the world, so brands can be serviced in their own time zone. Most importantly, brands are insured against ad fraud and can be guaranteed to never pay for a post bid fraudulent impression.
According to one report, half of all luxury purchases in China will be made domestically by 2025 – so this is not a time for brands to be resilient and rest on their laurels since trade from Chinese tourists will suffer in the short term. The goal should be to develop an omni-channel e-commerce plan, celebrate New Year and not let Rishi’s decision obliterate potential growth.
This was posted in Bdaily's Members' News section by Kirstine Newton .
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