Global luxury brands again chase China's young, rich and spendthrift
An increase in spending by cash-rich Chinese millennials is prompting brands to open new stores in second- and third-tier cities where luxury spending is growing faster
Global luxury brands from Prada to LVMH are investing in China for the first time since a crackdown on conspicuous spending five years ago, focusing on smaller, less developed cities even as the world’s second-largest economy slows.
An increase in spending by cash-rich Chinese millennials, largely unhindered by a crackdown on corruption and extravagant spending, is prompting brands to revamp some stores and open new ones in second- and third-tier cities where luxury spending is growing faster.
The youngsters, who account for around 30 per cent of the sector’s China sales, are a demographic less sensitive to wider economic factors, executives said.
“There is the emergence in China of a very strong upper class or upper-middle class,” Jean-Paul Agon, chairman and CEO of cosmetics group L’Oreal said on a call with analysts.
“And the difference is that now millennials from this middle and middle-upper class are absolutely not hesitant to buy luxury brands.”
Often single children armed with family money, the 20-34 year-old demographic started buying luxury brands at a young age and purchases more frequently, splurging on everything from jewellery and fashion, to cosmetics and handbags, industry experts say.