Chinese spenders saved an estimated $827 billion (5.6 trillion yuan) during pandemic lockdowns over the past three years, according to Bloomberg. Now, high-end retailers worldwide are looking for that stashed cash to turn into a spending spree, as the market waits for consumers to partake in revenge shopping.
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But there are no guarantees that shoppers will relinquish their savings. While global brands are hoping to see a similar retail boom in China as the one seen in the US, where sales surged past pre-pandemic levels after restrictions lessened, changes to China’s economic landscape may make many across the country hesitant to spend as they did before Covid.
One of those key pandemic shifts was the rising population of jobless Chinese youth—those who live in urban areas are a key demographic for luxury retailers—with the unemployment rate sitting at 16.7 percent in last December, according to Bloomberg. As a result, affluent Chinese parents may be more conservative if they believe their children don’t have a career path, choosing instead to save and pass on their wealth.
But young people haven’t lost hope when it comes to employment. Morgan Stanley reports 82 percent of individuals between 18 and 24 feel “very” or “somewhat” confident they will land a job in the next six months. This comes as the government looks to end its regulatory quell on big tech, allowing foreign entities to enter the market and feed the labor demand for eager college graduates.
China previously had one of the strictest Covid-19 policies globally, and while the government has recently relaxed policies, the overall market suffered other changes as a result changed. Chinese tourists had vanished from the shopping streets of Paris or Milan, and brands such as Dior and Prada, which once went to great lengths to court luxury shoppers, have shifted their attention in South Korea and Japan, where sales have been booming.
It’s still too early to tell whether retail numbers will return to the way they were pre-pandemic, but one thing is for sure: The luxury sector is waiting to see how Chinese consumers will spend their cash.