British firms confident about Chinese market

British consumer goods companies are deploying more resources in China, a market buoyed by a growing army of consumers with enhanced spending power, appreciation of good value and openness to novel ideas, said their executives.

Diageo, a British spirits distiller that offers products such as Scotch whisky, gin and beer, will start to build its $75 million malt whiskey distillery in Eryuan county, Southwest China's Yunnan province, this year.

The company said the latest investment in Yunnan serves as an important part of its long-term commitment to invest and grow in China.

"There is a growing appreciation for whiskey among Chinese consumers. We have seen this in action through the emergence of whiskey bars and boutiques across China, growing popularity of whiskey auctions and the successes of our own whiskey summit and similar events," said Sam Fischer, president for Asia-Pacific and global business at Diageo.

"We will continue to focus on premium whiskey as part of our core business, and we will also add a world-class China-origin whiskey to this portfolio. We have observed that Chinese consumers are evolving to appreciate whiskey for its heritage and craft, rather than drinking it for status," Fischer said.

Last year, the London-based company invested in a new regional logistics hub in Shenzhen, Guangdong province. It is also building a new research and development center in Shanghai, which is set to open this year.

"China's expanding consumer market is one of the world's most important and remains highly dynamic, presenting enormous opportunities for the broader industry," said Josie Zhang, president for China of British luxury brand Burberry.

After opening the first-of-its-kind social retail store in Shenzhen in 2020, she said the brand will continue to make significant investments locally, pioneering industry-leading innovations that serve to promote shared growth.

By blending physical and social worlds with a suite of digital technologies powered by Chinese internet giant Tencent Holdings, Chinese customers are able to unlock exclusive content on the brand and personalized experiences, and then share them with their communities via a mini program backed by WeChat－Tencent's iconic messaging app.

With the younger consumers shaping up to be the backbone for luxury brands, Zhang said their desire for socializing, interaction and sharing is propelling Burberry to delve into the realm of social retail.

"We will continue to invest here with the expansion of our store network across China's vibrant cultural hubs. We are also deeply committed to contributing to China by ensuring all of our stores are carbon neutral in line with the nation's climate ambitions, and by empowering communities to thrive through various cultural programs," Zhang said.

The global revival in the personal luxury goods market has been powered by the dynamism of local consumption, particularly in China and the United States, which now form a dual engine stoking the gains of the sector, according to consultancy firm Bain & Co's Luxury Goods Worldwide Market Study, which was released in December.

The Chinese market has experienced remarkable momentum, with its size nearly doubling since 2019, entirely due to the repatriation of Chinese purchases from abroad, according to the report.

Duty-free shopping has likewise gained from its opportunities. The island province of Hainan reported 49.5 billion yuan ($7.75 billion) of offshore duty-free shopping in 2021, up 80 percent on a yearly basis.