Home Consumer Could Chinese ‘revenge spending’ boost the UK economy?

Could Chinese ‘revenge spending’ boost the UK economy?

Chinese consumers saved £760 billion during the pandemic and brands like LVMH and Hermès are reaping the rewards – could your brand too?

by Antoaneta Becker
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The British economy is expected to get a significant boost thanks to ‘revenge spending’ by Chinese shoppers, writes Tom Pattinson

HSBC Global Research states that over £760 billion (6.6 trillion RMB) has been saved since the strict lockdown in China started three years ago. This amounts to around 5.4% of GDP, and, according to David Maddison, director of UK retail and leisure at HSBC, the potential for these savings to be unleashed as so-called ‘revenge spending’ is huge.

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“We have already seen the drastic impact of domestic revenge spending on luxury brands LVMH, Hermès, Ferragamo and Mulberry. This is only predicted to rise, given the higher-than-average demand for luxury goods from Chinese consumers. There is a significant opportunity for British businesses to capitalise on this Chinese demand,” he said.

With China’s Covid-era border controls removed, Chinese tourists are keen to travel abroad – a recent report from Gusto Luxe and Global Blue found that 92% of travellers were planning an overseas trip in 2023 – and not just for the travel experiences; the pricing of luxury goods in the UK and Europe is also a key attraction point. Research by Bain & Co found that prices for luxury bags were still 25-45% lower in Europe than in China – before accounting for 10-12% VAT.

After lockdowns in Europe ended in 2022, revenge spending by American tourists had a huge impact on reviving the European luxury market. “There is a hope and expectation that China will do as the Americans did, albeit to a greater degree, given the significant demand,” Maddison told the Times.

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

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