“In the past, luxury brands, and especially foreign brands, have done well in China, but since Covid I see a shift to more domestic brands that offer much better value for money,” he says.
“In my sector, we used to see a huge desire for brands like Dyson vacuums and hairdryers. Now domestic brands are offering competitive quality and innovation at a fraction of the price. The same goes for cosmetics.”
The shift has been a shock to the system for many brands that bet on China.
Burberry, Gucci and Estée Lauder are just some of the luxury names whose profits have suffered because of faltering Chinese demand.
Some fear the world’s factory is now in overdrive as shrinking profits force producers to ramp up output just to get enough cash to service their debts.
Zongyuan Zoe Liu, a senior fellow at the Council on Foreign Relations, believes China is at risk of being sucked into a “doom loop” of falling prices, factory closures and job losses that will leave it facing a Japanese-style lost decade.
She believes China’s problems have long been rooted in the “four Ds” – debt, demand, demographics and decoupling from the rest of the world.
“Chinese brands took advantage of Covid to become much better at brand positioning and marketing, and can be as competitive or more competitive than foreign brands now in a lot of categories,” says Cavender.
However, this switch also masks a new frugality. Retail sales growth has struggled, and is now close to its lowest level since the country emerged from lockdowns.
International tensions are another worry. Donald Trump has already vowed to escalate its trade war with China if he returns to the White House next year, while Kamala Harris said this week that as president she would ensure “America, not China, wins the competition for the 21st century”.
Lun, who is currently in the US on a business trip, says many Chinese bosses remain worried about what the future holds.