China had a blockbuster New Year as the country reemerged from three years of lockdowns and COVID-19 woes.
According to the latest data from the National Taxation Administration, retail sales during the weeklong Chinese New Year, which ran from Jan. 21 to 27, increased more than 12 percent compared to the 2022 holiday season.
In Hainan, China’s duty-free island, daily average sales exceeded 350 million renminbi, or $51.8 million, which is more than triple that of pre-pandemic levels. Sales at 12 duty-free shopping centers totaled 2.57 billion renminbi, or $380 million, during one of China’s most important holiday seasons.
Despite a high level of COVID-19 infection rates, domestic travel jumped 23 percent compared to the corresponding period last year, and has returned to 88 percent of its pre-pandemic levels, official data shows.
According to Alibaba‘s Fliggy, a travel service platform, Chengdu, Shanghai and Guangzhou became the most popular local travel destinations, while Thailand, the Maldives and New Zealand have quickly been picking up steam.
Chinese New Year is a holiday period marked by family reunions, and many entertained themselves close to home. More than 100 million moviegoers spent in excess of 6.7 billion renminbi, or $992 million, at the box office in the first six days of the holiday.
Domestic titles such as “The Wandering Earth 2” and “Full River Red” topped box-office receipts.
Data from WeChat Pay revealed that offline transaction volume jumped 23 percent during the Chinese New Year, with hotel and restaurant transaction volumes growing 76 percent, and 40 percent year-over-year, respectively.
More than 4 billion digital red envelopes were sent on WeChat in the period.
Pent-up demand unleashed by pandemic policy relaxation resulted in positive retail numbers across major retail hubs. According to local media reports, retail sales at key shopping areas increased by 13.7 percent in Beijing.
In Shanghai, brick-and-mortar retail sales reached 32.3 billion renminbi, or $4.7 billion, recovering more than 83 percent of 2021 Chinese New Year levels. Retail sales at popular luxury malls such as Plaza 66, IFC and Taikoo Li Qiantan rose in single-digit percentages compared to the same time last year, according to Interact, a local commercial real estate agency.
In Chengdu, sales at key commercial retailers reached 1.174 billion renminbi, or $173.8 million, a 6 percent increase compared to the same time last year.
Major luxury brands saw a wave of moderate revenge spending similar to what happened in China after COVID-19 control measures were first relaxed in 2021.
At Plaza 66, the luxury shopping center in Shanghai, hourlong lines formed at super brands such as Louis Vuitton, Hermès and Chanel. Inside the stores, products were flying off the shelves, with many Xiaohongshu users describing the scene as “a bustling market fair.”
According to the popular social-commerce platform Xiaohongshu, a sales associate at Louis Vuitton’s Plaza 66 Maison store told a shopper that single-day sales at the store reached 10 million renminbi, or $1.48 million.
An upcoming price hike in February at Louis Vuitton and Chanel only gave shoppers more reason to make a speedy purchase or even “bulk buy.”
“I’m here for revenge shopping,” a shopper waiting in line told WWD. “I’m checking out all the Chanel stores in search of a Le Boy bag. There’s not much to do during the holidays,” another shopper said.
Popular items like Louis Vuitton’s monogrammed Carry All, Pochette Metis and Cannes, which Chinese shoppers nicknamed “Get Rich Bucket,” Chanel’s Classic Flap, 22Bag and Wallet On Chain, quickly sold out.
In Guangzhou, China’s Southern economic stronghold with 18 million residents that went through intense lockdowns last November, business at the city’s leading luxury mall Taikoo-Hui has been extremely strong since last December, said a sales associate at a Parisian luxury house.
Long lines were also formed outside Louis Vuitton, Chanel and Hermès during the period, while Gucci hired a lion-dance crew to entertain the customers on Jan. 28, the day business resumed trading in the lunar calendar according to tradition.
According to Pablo Mauron, partner and managing director of China at DLG, a Shanghai-based luxury digital marketing agency, the three-year pandemic had a lasting impact on consumer psychology, with shoppers shifting their attention “to the present moment in their pursuit of happiness and prosperity,” Mauron said.
“We anticipate that some of these behaviors will persist after the pandemic as well,” Mauron added.
“We all had a hard time last year, so this holiday season, people really want to treat themselves,” said Leaf Greener, the Shanghai-based fashion consultant, and influencer.
Greener, who spent her Chinese New Year at home in Shanghai, treated herself to some vintage fashion items, vintage furniture and artworks. “I want to be sustainable,” she said.
With apparent signs of recovery, LVMH Moët Hennessy Louis Vuitton remains cautiously confident of the China market in 2023.
“We have every reason to be confident, even optimistic, about the Chinese market,” Bernard Arnault, chairman and chief executive officer of LVMH, remarked on a conference call after releasing fourth-quarter and full-year results.
Despite a bullish Chinese New Year, Fitch Ratings said it expects China’s retail rebound to be “bumpier” than other countries due to weak employment outlooks, a housing market slowdown, a lack of a direct stimulus package and the prospect of a COVID-19 resurgence.
In a recent note, Fitch added that “strong growth in personal deposits in 2022, however, may provide upside to our expectations.” According to the People’s Bank of China, household deposits surged by more than 26 trillion renminbi, or $3.85 trillion, last year, which is almost the size of the U.K.’s GDP.
With spending likely to remain onshore for the first half of this year, luxury brands are set on increasing their retail footprints in the mainland China market.
In the last month, Celine, Marni, Blancpain and Chaumet opened their first stores in Zhengzhou, one of the wealthiest midland cities in Henan Province.
Bottega Veneta extended its retail footprint to Wuhan, another important midland hub, while De Beers and Cartier expanded to second-tier cities Hefei and Fuzhou, respectively.
Chanel is upgrading its Shenzhen MixC store into a two-story boutique with a VIP-only Chanel salon, a second for the brand in China. A second Nanjing store is set to launch at the newly opened IFC shopping mall.
According to industry insiders, Zhengzhou could welcome a new Chanel store later this year, a first for the brand in Central China.