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Luxury goods gaining ground in China

 

Posted on May 12, 2008
Shu Wu

 

The rapid and constant economic development in China is attracting international enterprises in increasing numbers to enter the Chinese market. Luxury brands are no exception to this rule. Although many Chinese are still struggling to make a living, there is no doubt that considerable numbers of Chinese are already wealthy enough to buy “unnecessary” luxury goods. The data released by the WORLD LUXURY ASSOCIATION stated that the Chinese luxury market (private airplanes & yachts excluded) went to 8 billion US dollars in 2007.

Close to 80% of the world’s leading luxury brands have already disembarked in China, making the country one of the fastest growing luxury markets in the world. A few days ago, the Switzerland-based luxury goods retailer Richmont reported a 16 percent leap in sales over the year to the end of March driven by the Asia-Pacific region which grew by 21% compared to only 12% in Europe and a meager 3% in the Americas.

Chinese luxury consumers can be divided into 2 different groups. The first group is the one of emerging millionaires (there are an estimated 350,000+ millionaires in China). These consumers are not only regular buyers of personal luxury goods such as perfume, watches, bags and jewelry, but they are also the prospective buyers of very expensive luxury products such as yachts or sports cars. Last month, almost all of the more than 90 exhibited yachts on the 13th China International Boat Show received purchasing orders from local buyers.

The second group comprises the expanding Chinese middle classes. They may not be luxury brand’ VIP clients, but many of them would like to buy luxury goods on an irregular basis and regard it as the symbol of their social status and their extraordinary fashionable taste.

Nowadays, with more and more luxury brands trying to get a share of the big Chinese luxury market pie, the competition is getting fierce, especially in Tier I cities like Beijing and Shanghai. In order to strengthen their market share and to unearth the potential of the Chinese luxury market, many brands are extending their business to many Tier II and Tier III cities. Consequently, those brands have to face a problematic issue - how to find a balance between massive public popularity and their well guarded prestigious brand images.


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Sources :
- psfk
- Telegraph

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