Mainland luxury market on pace for 30pc growth
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The mainland's luxury goods market is expected to grow by 30 per cent this year as young consumers snap up coveted watches and leather hand bags despite a slowing economy.
Consumer confidence in the world's fastest-growing market remains high, though luxury brands are reducing the pace of their expansion, according to a report by the global consultancy Bain & Company.
Sales of luxury goods on the mainland could hit 113 billion yuan (HK$137 billion) this year, up from 87 billion yuan last year, mainly driven by new customers, the firm said.
The mainland is expected to become the world's fifth-largest luxury market, with the rate of growth well ahead of the largest market, the United States, where luxury spending is on pace for an 8 per cent increase.
Japan, the second-largest market, is likely to record a scant 2 per cent growth this year.
Bain partner Bruno Lannes predicted sales would continue to rise at a 'healthy pace' next year, though growth will slow from previous years.
'The China market is still supply driven,' said Lannes. 'New store openings create new demand.'
According to the report, spending by new customers will amount to 14.9 billion yuan this year, representing 63 per cent of the total luxury growth.
Watches were among the bright spots in 2011 as aggressive marketing strategies by various brands appeared to pay off. Sales of watches are set to jump 45 per cent from a year ago, up from a 12 per cent last year.
The Bain report found global brands were taking a cautious stance on further expansion on the mainland. Store openings among a select group of top luxury brands dropped to 90 this year from 160 last year.
'There are still a number of expansions, but the pace is slowing down as the brands want to focus on how to maintain their exclusive images,' said Lannes, adding that, 'more and more growth will come from same-store sales'.
Expected Chinese spending on luxury goods worldwide this year, in yuan, up 36 per cent from last year, according to Bain