China’s economy is bouncing back from the impacts of Covid-19, and this is evident in the rising sales of consumer and luxury goods. Companies like Moncler, Reckitt Benckiser, Beiersdorf, and Puma have all reported positive sales growth in China.

Moncler, the Italian luxury brand famous for its puffer jackets, experienced a significant boost in shares, with a rise of over 5%. They had a strong start to the year in China. Beiersdorf CEO Vincent Warnery also noted signs of recovery in China and the global travel retail business. In February, retail sales saw a clear turnaround, indicating growth both online and in physical stores.

Warnery believes that Chinese demand will continue to drive the growth of Beiersdorf’s premium skincare ranges, such as La Prairie, Eucerin, and Nivea. Additionally, tourism from China is contributing to sales in neighboring regions like Macau, Hong Kong, Taiwan, and Japan.

Reckitt Benckiser saw sales pick up in China after a decline due to pandemic lockdowns. Their intimate wellness business, which includes products like Durex condoms and KY Jelly, is expected to perform well in China.

These positive sales trends in China align with the optimistic outlook expressed by executives during the fourth-quarter earnings season. Many luxury brands are pinning their hopes on a rebound driven by Chinese shoppers who have accumulated savings during lockdowns.

The strong sales performance in China is a relief for companies dealing with rising energy and wage costs in Europe. As the prices of essential items like food, energy, and rent increase, consumers are becoming more selective in their purchases. Therefore, resilient sales in China help alleviate the challenges faced by European companies.

Furthermore, the recovery of Chinese factories after the lifting of Covid-19 restrictions last year may serve as a counterbalance to the anticipated global economic downturn. This is particularly important as the US Federal Reserve continues its higher-for-longer interest rate policy.

Investors have responded positively to these developments, leading to a rise in global equities. The pan-European STOXX 600 index has seen a 0.3% increase since the beginning of the year, recovering some of the ground lost due to the Ukraine war and resulting energy crisis.

Moncler’s strong performance in China demonstrates the successful recovery of the country. The brand recorded double-digit sales growth both before and after the Lunar New Year holiday. Despite implementing a 10% price increase at the start of the winter season, Moncler has not experienced any negative effects on demand.

This growing confidence in the luxury sector is further reflected in Louis Vuitton, a fashion brand under LVMH, considering a price increase of up to 20% in China.

In conclusion, the increasing sales of consumer and luxury goods in China indicate a revival in the country’s economy. This is a positive development for companies facing challenges in other parts of the world. China’s recovery has the potential to contribute to stabilizing the global economy, and luxury brands are particularly optimistic about the rebound driven by Chinese shoppers.

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