CNBC: This Chinese Province Set A 9% GDP Target - But Then It Locked Down

A surge in Covid infections this month forced China’s tourist-heavy province of Hainan to order tens of thousands of tourists to stay put at their hotels, and local residents to stay at home.

“The public image and reputation of Hainan is damaged for the short term,” said Jacques Penhirin, a partner in the Greater China office of Oliver Wyman. “When I talk to the client they’re all looking at the bookings for [the upcoming fall holiday] which are still quite resilient. People have not cancelled yet, but it’s not looking good. Probably down on last year.” It’s “going to be bad for luxury brands and hospitality at least until Chinese New Year next year,” he said, referring to the Lunar New Year holiday in late January 2023.

An Oliver Wyman survey in May found that after roughly two months of lockdown in the metropolis of Shanghai, respondents from luxury and premium consumer brands cut their China growth expectations for the year by 15 percentage points.

“The question is definitely when will consumer regain confidence and peace of mind of travel and shopping which is further delayed by this Hainan incident,” Penhirin said, noting he expects this month’s lockdowns will be forgotten in one or two years.

“It’s more about the confidence than the income itself, especially for the luxury goods,” he said.

In the meantime, he said brands should put more effort to track their inventory in China, to make sure products aren’t being sold at levels that might induce a price war.

Read the full article on: CNBC.com