Mainland sales of luxury goods to reach US$44b within decade
Spending on luxury goods and services on the mainland will jump 134 per cent to US$44.4 billion in 2016, according to a MasterCard study.
Mainlanders between the ages of 18 and 60 will spend US$26.4 billion that year, an increase of 154 per cent. Those aged more than 60 are forecast to spend US$18 billion, a rise of 109 per cent, the study shows.
In the study released yesterday, the mainland luxury market is also expected to grow faster than in India, where total spending is forecast to increase 105 per cent to US$7.8 billion in 2016.
A recent Goldman Sachs report found that the mainland is the world's third-largest consumer of luxury goods, accounting for 12 per cent of global sales, behind Japan's 41 per cent and 17 per cent for the United States. The report predicted that the mainland would become the world's second-largest purchaser of luxury goods by 2015, with 29 per cent of the global market.
Against the backdrop of booming luxury spending on the mainland, international luxury retailers are wasting no time to expand across the mainland.
Italian luxury goods maker Salvatore Ferragamo plans to double the number of its outlets on the mainland to 50 by 2010.
Stella McCartney and Chloe have teamed up with GSIT, a mainland joint venture between Hong Kong-listed I.T and Glorious Sun, to open stores selling Stella McCartney and Chloe branded products on the mainland.
Lane Crawford Joyce Group, a luxury fashion retailer privately owned by Wheelock & Co chairman Peter Woo Kwong-ching, will invest HK$300 million to open its first self-operated department store on the mainland.
The move follows the failure of the company's three franchised stores across the border.
Pierre Lu Xiao, an assistant professor at Shanghai's Fudan University specialising in marketing research on luxury products, expected spending on such products on the mainland would grow even faster than MasterCard's estimates.
The academic expected more global luxury retailers to establish production lines on the mainland to take advantage of lower labour costs and the exemption of value-added tax for imported items.
However, Professor Lu said many luxury retailers were finding it difficult to expand further on the mainland after establishing a presence in prime districts.
'To expand further, they will risk their brand image and they need to find the perfect locations to expand,' he said.