China’s big spending millennials and Gen Z help Chanel, LVMH and other luxury retailers defy its slowest economic growth in 30 years

At a grand exhibition centre modelled on Saint Petersburg’s Admiralty Hall in Shanghai in November, at a launch attended by Hong Kong actress Carina Lau Kar-ling, French luxury house Christian Dior showcased a new collection of its iconic Lady Dior handbags. The bags, reimagined by 11 designers from around the world, go on sale this month for between US$5,000 and US$16,000.

The launch comes amid an economic slowdown in China, which has been wooed by the who’s who of international luxury brands. Sales of personal luxury goods in China returned to double-digit growth in 2017 and 2018 after declining in 2015 amid another economic slowdown and a government campaign against corruption. And the sales figure for last year is expected to touch US$28.47 billion, an increase of 13.6 per cent over 2018, according to an estimate by research firm Euromonitor International.

The forecast for 2020 is a slower 10.5 per cent year-on-year growth, but sales are expected to grow and reach US$43.6 billion in 2024.

It seems that this time around rising concerns about a slow down in China’s economy, its ongoing trade war with the United States, as well as worries about a full-blown recession globally have not affected an appetite for premium luxury purchases among Chinese consumers – particularly its younger spenders.

“It is quite scary how the younger generation [in China] is so willing to spend,” Lau, 54, recently told South China Morning Post. Millennials, those born between 1981 and 1996, and the Generation Z, who followed the millennials, together account for about 500 million of China’s 1.4 billion population, and are expected to drive its economy once domestic investment and exports slow down.