Chinese luxury spending unlikely to bounce back to pre-coronavirus levels any time soon, Bain says
- Luxury purchases to recover to pre-pandemic levels between the end of this year and the first half of 2023, partner at American consultancy says
- A lacklustre luxury market could dent Beijing’s hopes of domestic consumption bolstering the national economy
Mainland Chinese consumers’ spending on luxury items is unlikely to recover to pre-Covid-19 levels any time soon, owing to limited international travel and a bearish view on the economy, global consultancy Bain and Company said.
“We expect Chinese consumers’ personal luxury purchases to recover to pre-Covid levels between the end of 2022 and the first half of 2023,” said Xing Weiwei, a partner at Bain. “This will be supported by continuous repatriation of spending and boosted by the gradual reopening of international travel, first in Asia and then globally.”
Before 2020, China’s middle class, buoyed by rising affluence, made up a third of global purchases of luxury goods, ranging from watches to leather bags and cosmetics.
In 2019, Chinese consumers bought luxury goods worth about US$120 billion, which included purchases conducted both domestically and when they travelled abroad. Buying overseas has trickled to near zero over the past two years, since the outbreak of the coronavirus pandemic, which has limited international travel.
Before the outbreak, 155 million mainland residents travelled abroad in 2019, becoming the biggest driving force of the global tourism and luxury goods markets.
“Covid-19 has prevented millions of Chinese people from buying luxury goods,” said Zheng Honggang, CEO of Shanghai-based Kate Travel. “We have received numerous queries from clients about the reopening of international travel, as they are eager to buy long-coveted bags and shoes during overseas tours.”