Within 5-7 years, China is expected to become the biggest luxury market in the world with projected spending to reach $14.6 billion. The Chinese spent $9.5 billion on luxury brands in 2009 for 27.5% of the world’s luxury goods market despite the recent global financial crisis. Currently, China is the world’s second largest luxury goods market.
Chinese consumers have an insatiable appetite for high-end brands as their income increase. The Boston Consulting Group conducted a survey that confirmed a long-held belief – that Chinese “aspire to” luxury brands. Being able to afford luxury goods is an indication that they have arrived. The Chinese have traditionally enjoyed brand names and the status associated with brands.
The Chinese luxury market is huge for the global luxury goods companies, not only because of its population size, but the Chinese luxury consumers are generally younger, in their mid-20s and 30s, with rising income potential. “Chinese consumers who buy Chanel, Gucci and Louis Vuitton, average 25 to 35 years old with fast rising income,” said Boston Consulting Group principal Vincent Lui, “High net-worth households will grow from 417,000 to 609,000 by next year as luxury brand competition moves to China’s developing inland cities.”
While the Chinese luxury market is formidable, it is still young and evolving. Luxury companies are scrambling to establish a presence in the metropolitan cities and many have expanded to provincial cities, yet the formula for success is far from certain. It is best not to underestimate the Chinese luxury consumer. Although China’s luxury consumers are more willing to display their wealth, the more sophisticated among them are no longer satisfy by a visible logo. Younger luxury goods consumer, in particular, are increasingly discriminate. According to retail consulting firm, Pao Principle, the luxury consumer is “highly educated and highly motivated to identify products that will complement his or her individuality and rising power.”
The appetite for luxury products is a hot social trend not only as a symbol of wealth and social status, but for the younger generation, luxury is ultra fashionable.