Julie Gilhart, president of Tomorrow Projects and chief development officer of Tomorrow Ltd, states that Biden has been “engaging with top brands on many fronts. This includes the clothing and accessories collection titled Believe in Better from the Biden Victory Fund that enlisted some of the most celebrated designers like Thom Browne, Tory Burch and many others.”

Luxury brands should focus on China in 2021 – but how?

A survey by Glossy/Modern Retail in early October found that 46.8 per cent of those polled agreed that the US economy would improve with a Biden win, with only 12.9 per cent expressing the same confidence with Trump. Now, with the presidency decided – days or even weeks of legal challenges notwithstanding – we look at what impact Biden’s win may have on the luxury sector.

What Build Back Better means for US fashion

Biden’s Build Back Better campaign and America-focused policies argue for American-made goods, bought in the US – but in a less bullish way than Trump’s MAGA (Make America Great Again). Gilhart suggests that his proposals show he aims to: “encourage American companies to develop US-based jobs and build up industries at home.”

She continues: “[Fashion designer] Gabriela Hearst recently spoke about the fact that more than 400,000 small businesses across the country have collapsed in the wake of Trump’s management of the current crisis. Many of these businesses are a part of the fashion industry. Having domestic production would greatly decrease difficulties caused by the coronavirus.”

Indeed, remunerative plans under a Biden administration should give a strong boost to the US domestic economy. This will come through having wealthy Americans and corporations account for a greater share of tax. According to Tommy Wu, lead economist at Oxford Economics, this should make American households better off in general, “including the consumers of luxury goods”.

Under a Biden government, Wu predicts, “the US is likely to form a ‘common front’ with its traditional allies on China-related issues,” though he didn’t expect “significant decoupling” would happen.

“More decoupling could still give a boost to China’s home-grown brands as China will turn to more self-reliant companies and there could be a rise in nationalistic sentiment to some degree. This will lead to increasing competition for luxury brands from the West,” Wu adds.

Post-election, the Chinese consumer remains key

Luxury goods analysts are keen to argue China’s dominant role going forward in luxury. In 2019, China’s consumers generated 35 per cent of global luxury spending – American consumers generated 22 per cent. This was even before Covid-19 and China’s economic recovery. Western brands have accepted the importance of the luxury Chinese consumer but more recently, they have been battling nimble local brands on home territory too.

Luxury analyst, Flavio Cereda-Parini, managing director at Jefferies International, has gone so far as to say: “to perform (niche brands are the exception), they need to resonate well in China. We are seeing this already in 2020. If you were lagging behind pre-Covid, now it’s a disaster – the gap is so big that it is opening up.”

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Furthermore, if a brand is reliant on consumers but its government has a negative policy against their country, this may well hamper businesses clearly reliant on China. “The personal luxury goods sector is entirely about Asia. The US is holding up, Europe will bounce back, but these markets haven’t been growing for years. Any expansion is simply coming from Chinese travellers,” Cereda-Parini explains.

He also pointed to a potential boost for resellers but was adamant that all the market share gains from brands are coming from Asia – or more specifically China. “In luxury malls, the top 10 brands were getting 45 per cent of revenue, but now it’s 65 or 70 per cent and that’s reflected in the revenues. It would have happened anyway eventually but due to the virus we got there in six to eight months.”

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This article originally appeared on Jing Daily.