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.
“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.
