Luxury market grows 23 percent in 2010 from 68 billion yuan (US$10.2 billion) in 2009, with the younger generation driving sales, according to an industry report.
If expressed in euros the annual growth rate will be 30 percent while worldwide sales of luxury goods are expected to rise 10 percent, according to a study by consultants Bain & Co.
China is positioned to become the world’s third largest luxury market by the middle of this decade, Bain said.
“We’ve seen an emergence of new behavior and trends now that the (global financial) crisis is retreating,” Claudia D’Arpizio, a Bain partner in Milan and lead author of the global luxury market study. “The luxury shopper of this decade is more likely to be Chinese, more likely to be male, and more likely to be young.”
In fact, Chinese were spending more on luxury goods, reaching 156 billion yuan (US$23.5 billion) in 2009 which included buying outside the Chinese mainland in Hong Kong and Macau, Bain report said.
“The younger generation knows about luxury brands and is driving the growth in China,” said Bruno Lannes, a partner at Bain & Co China. “Although they do not have the spending power yet, it is a good indicator for future growth in the market.”
Most of the growth in 2010 will come from new customers whose demand will spark new store openings. For the first eight months of 2010, 15 major luxury brands opened 80 new stores in China, according to the report.
Wealthy consumers in tier 2 and tier 3 cities are also jumping on the bandwagon when it comes to luxury goods purchases, Lannes said.
The report pointed out that wealthy consumers with monthly family incomes of more than 100,000 yuan (around 15,000 UDS) in tier 2 and 3 cities spent an average of 186,000 yuan (around 28,000 UDS) on luxury goods in 2009, surpassing the 166,000 yuan (over 25,000 USD) level by their counterparts in tier 1 cities such as Beijing and Shanghai.