China moves into luxury goods and machinery, challenging Europe's industrial dominance
Gucci's China-made sneakers signal Chinese manufacturers are competing in high-end industries, not just cheap goods.
What to know
- Chinese manufacturers are competing in luxury goods and industrial machinery, not just low-cost consumer products, marking a qualitative shift in global competition.
- Germany has been hit hardest: its export mix now overlaps significantly with China's, while German exports to China fell 9.7% and imports rose 8.8%, with car exports down a third.
- Chinese suppliers developed technical expertise partly through partnerships with European manufacturers like Volkswagen, then leveraged it to become direct competitors.
- Economists characterize this as the "second China Shock"—a shift from the early-2000s flood of cheap goods to competition in premium sectors at unprecedented scale.
“Gucci told Reuters it will keep making its other products in Italy. But unlike the connotation a "Made in China" sticker carried from days of yore, the move to China is the latest signal of Chinese manufacturing moving into Europe's most storied industries, like high-end consumer goods and cars.”
Fortune, Reporter · Fortune ↗
Gucci (Kering) Luxury fashion houseKer Gibbs Former president, American Chamber of Commerce ShanghaiHoward Yu Professor of management, International Institute for Management DevelopmentBrad Setser and Sander Tordoir EconomistsTorsten Slok Chief economist, Apollo Global Management
How it unfolded 2 developments, newest first · click a bar or a number to jump articlesposts
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Economists describe China positioning to compete across German industrial sectors
Economists Brad Setser and Sander Tordoir characterize the dynamic as China having already displaced significant German industry market share and preparing for deeper competition. The shift reflects Chinese suppliers' technical maturity—built partly through decades of partnerships like Volkswagen's manufacturing presence in China since the 1980s—enabling them to move from supplier roles to direct competitors.
“China has already eaten much of [the] German industry's lunch and is preparing to start on dinner.”
— Brad Setser and Sander Tordoir, economists -
Good. Complacency and lack of competition isn’t good for europeans - it’s good for the large stockholders and elite families that control these businesses. We keep hearing the media spout how bad this is, but this might just be the thing that brings us back to an era of prosperity.
1 more of the top 2 · 2 posts in this stretch
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It’s been the US for quite a bit too. The internet is a giant disinformation campaign at times
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background
German trade metrics show China displacing traditional export patterns — European Central Bank analysis shows China's export mix now resembles Germany's—focused on factory machinery and cars—more than any other EU country. Simultaneously, German exports to China fell 9.7% last year while imports from China rose 8.8%, with German car exports to China alone dropping a third, as Germany's trade deficit with China grew by a third.
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background
Economists frame shift as the 'second China Shock' — Economists including Apollo Global Management's chief economist Torsten Slok characterize Chinese manufacturing's move into high-end goods and industrial machinery as a second wave, following the early-2000s flood of cheap electronics and apparel. China is now following the development path of South Korea, Taiwan, and Japan, moving from low-cost production to competing in premium and technical sectors.
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Gucci begins manufacturing $1,000 sneakers in China
Gucci breaks from its 105-year tradition of Italian craftsmanship by producing luxury sneakers in China, selecting a manufacturer for its "technological know-how" and quality standards rather than cheap labor. The company will continue making other products in Italy.
“It's no longer a place where only cheap stuff gets manufactured and poor quality this and that.”
— Ker Gibbs, former president of the American Chamber of Commerce in Shanghai -
1 outlet first by Fortune, 8h ago · read ↗
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