At the close of 2020, the leaders of China and the European Union announced the completion of the negotiation of the EU-China Comprehensive Agreement on Investment (CAI).
European Investment in China
One of the key outputs of the agreement for European companies with business in China is market access.
Market access determines the extent to which one contracting party will open the domestic market to investors of the other party. A “negative list” presents industries in which foreign investment remains restricted. Within the framework of CAI, China is granting European companies greater market access than before.
In the future, European entities will be able to invest in all sectors of the economy, including the automotive industry, the market for cloud services, financial services, and healthcare.
How will this affect the Luxury Market?
China – despite being the pandemic’s epicentre – was the first and only major economy to recover and enter 2021 with a relatively optimistic outlook. Beijing’s stable and time-sensitive policy responses, epidemic control strategy, and reprioritization of macroeconomic objectives ensured that it was the sole G20 economy that experienced positive growth in 2020. In fact, it is estimated that China’s Q4 growth returned to pre-pandemic levels.
High-end consumption and sales of luxury goods, cars, and homes also witnessed a rebound in China. High-end malls in China saw their sales grow 25 to 35 percent compared with 2019.
According to a joint report by Tmall Luxury and the consultancy firm Bain, the luxury goods market in mainland China was set to achieve a 48 percent growth in 2020 – even as the global luxury goods markets was projected to shrink by 23 percent, implying the enormous spending power of China’s wealthy class.
This of course creates significant opportunities for European luxury brands wishing to enter the China market. C. Melchers & Co. is one of the leading service providers for companies seeking a foothold in key Asian markets. With our stable yet flexible corporate structure, we help smooth your path to new markets.
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