Luxury goods in the People's Republic of China
Encyclopedia
The market for luxury goods in the People's Republic of China is very substantial, and comprises a significant proportion of all luxury goods sales worldwide. As of 2010, China
is the world's second largest consumer market for luxury goods, next only to Japan
, and having surpassed the United States
in 2009.
The World Luxury Association estimated the total amount of consumption for luxury goods in China was US$8.6 billion in 2008. This accounted for 25% of the world's luxury goods sales. According to Ouyang Kun, the Chief Representative of the World Luxury Association in China, "The disposable income of Chinese people has been constantly rising in recent years. Global luxury brands now see China as the next Japan."
According to a blue paper on commercial development in China, released in 2010 by the Chinese Academy of Social Sciences
(CASS), China's luxury goods market had increased to US$9.4 billion by the end of 2009. This accounted for 27.5% of the world's luxury goods market, an increase from 25% in 2008. On current growth rates, the luxury goods market in China is expected to grow to US$14.6 billion by 2014, which would likely surpass Japan to make it the world's largest.
counterparts, belonging to the 18-50 age group, compared to Europe's consumers who are generally in the over 40 age group. For this reason, China's luxury goods market is expected to grow faster than that of Europe's. Many of the young luxury goods buyers are self-employed or professionals. According to the consulting firm McKinsey & Company
, 80% of Chinese luxury goods buyers are under 45, compared with 30% of luxury goods buyers in the United States and 19% in Japan. According to a report by the World Luxury Association, Chinese consumers spend a larger proportion of their income for luxury goods compared to the world average of 4%.
According to 2007 Global Luxury Survey by Time
magazine, most luxury goods buyers in China buy luxury products as a status symbol
. The top five luxury watch brands in the country are Rolex
, Omega, Cartier
, Vacheron Constantin
, and Breitling
.
In a confidential report titled "China Luxury Market study 2010" in November 2010, the management consulting firm Bain & Company
noted the top three luxury brands in China are Louis Vuitton
, Chanel
and Gucci
. According to the report, watches and bags led the growth of the luxury market in 2010. The report documented the top three luxury brands in the country for the following products:
, BMW
, Audi
, and Lexus
have operations in the People's Republic of China. Audi, which has dominated China's luxury car market for more than two decades, is the market leader in the luxury car segment, with China being Audi's second largest market in the world. However Audi's market share in this category is gradually falling as BMW and Mercedes-Benz are adopting new strategies to boost sales. According to data from Global Insight
, Audi's market share in China decreased from 66% in 2004 to 42% in 2009, while the market share of BMW and Mercedes-Benz increased from 7% to 23%, and 9% to 16%, respectively. BMW is enlarging its current plant in China and building a second one.
Audi is still the dominant choice of car in the government fleet market. BMW sales are growing but is perceived to be for the newly rich. Mercedes is seen to be for old folks.
According to Stephan Winkelmann, CEO of Lamborghini
, "China's super car market is growing faster than our expectations, while the Western markets are declining. The strong demand will soon make China our second biggest market after the United States. If the high taxes on luxury cars are removed, China could very well become the biggest market."
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
is the world's second largest consumer market for luxury goods, next only to Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, and having surpassed the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
in 2009.
The World Luxury Association estimated the total amount of consumption for luxury goods in China was US$8.6 billion in 2008. This accounted for 25% of the world's luxury goods sales. According to Ouyang Kun, the Chief Representative of the World Luxury Association in China, "The disposable income of Chinese people has been constantly rising in recent years. Global luxury brands now see China as the next Japan."
According to a blue paper on commercial development in China, released in 2010 by the Chinese Academy of Social Sciences
Chinese Academy of Social Sciences
The Chinese Academy of Social Sciences , established in 1977, is the premier and highest academic research organization in the fields of philosophy and social sciences as well as a national center for comprehensive studies in the People's Republic of China. It was described by Foreign Policy...
(CASS), China's luxury goods market had increased to US$9.4 billion by the end of 2009. This accounted for 27.5% of the world's luxury goods market, an increase from 25% in 2008. On current growth rates, the luxury goods market in China is expected to grow to US$14.6 billion by 2014, which would likely surpass Japan to make it the world's largest.
Market characteristics
Chinese luxury goods consumers are younger than their EuropeanEurope
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
counterparts, belonging to the 18-50 age group, compared to Europe's consumers who are generally in the over 40 age group. For this reason, China's luxury goods market is expected to grow faster than that of Europe's. Many of the young luxury goods buyers are self-employed or professionals. According to the consulting firm McKinsey & Company
McKinsey & Company
McKinsey & Company, Inc. is a global management consulting firm that focuses on solving issues of concern to senior management. McKinsey serves as an adviser to many businesses, governments, and institutions...
, 80% of Chinese luxury goods buyers are under 45, compared with 30% of luxury goods buyers in the United States and 19% in Japan. According to a report by the World Luxury Association, Chinese consumers spend a larger proportion of their income for luxury goods compared to the world average of 4%.
According to 2007 Global Luxury Survey by Time
Time (magazine)
Time is an American news magazine. A European edition is published from London. Time Europe covers the Middle East, Africa and, since 2003, Latin America. An Asian edition is based in Hong Kong...
magazine, most luxury goods buyers in China buy luxury products as a status symbol
Status symbol
A status symbol is a perceived visible, external denotation of one's social position and perceived indicator of economic or social status. Many luxury goods are often considered status symbols...
. The top five luxury watch brands in the country are Rolex
Rolex
Rolex SA is a Swiss watchmaking manufacturer of high-quality, luxury wristwatches. Rolex watches are popularly regarded as status symbols and BusinessWeek magazine ranks Rolex No.71 on its 2007 annual list of the 100 most valuable global brands...
, Omega, Cartier
Cartier SA
Cartier S.A., commonly known as Cartier , is a French luxury jeweler and watch manufacturer. The corporation carries the name of the Cartier family of jewellers whose control ended in 1964 and who were known for numerous pieces including the "Bestiary" , the diamond necklace created for Bhupinder...
, Vacheron Constantin
Vacheron Constantin
Vacheron Constantin is a Swiss manufacture of prestige watches and a brand of the Richemont group. Considered by watch enthusiasts to be one of the finest traditional watch makers in the world along with Patek Philippe & Co., Jaeger-LeCoultre and Audemars Piguet.It employs around 400 people...
, and Breitling
Breitling
Breitling is a luxury brand of Swiss watches produced by Breitling SA, a private company headquartered in Grenchen, Canton of Solothurn . The company exclusively offered Certified Chronometers in all models since 2000...
.
In a confidential report titled "China Luxury Market study 2010" in November 2010, the management consulting firm Bain & Company
Bain & Company
Bain & Company is a global management consulting firm headquartered in Boston, Massachusetts. Bain is considered one of the most prestigious consulting firms in the world, with 47 offices in 30 countries and over 5,500 professionals on staff globally...
noted the top three luxury brands in China are Louis Vuitton
Louis Vuitton
Louis Vuitton Malletier – commonly referred to as Louis Vuitton , or shortened to LV – is a French fashion house founded in 1854 by Louis Vuitton. The label is well known for its LV monogram, which is featured on most products, ranging from luxury trunks and leather goods to ready-to-wear, shoes,...
, Chanel
Chanel
Chanel S.A. is a French fashion house founded by the couturier Gabrielle "Coco" Chanel, well established in haute couture, specializing in luxury goods . She gained the name "Coco" while maintaining a career as a singer at a café in France...
and Gucci
Gucci
The House of Gucci, better known simply as Gucci , is an Italian fashion and leather goods label, part of the Gucci Group, which is owned by French company PPR...
. According to the report, watches and bags led the growth of the luxury market in 2010. The report documented the top three luxury brands in the country for the following products:
| Product | 1st | 2nd | 3rd |
|---|---|---|---|
| Cosmetics, perfumes and personal care | Chanel Chanel Chanel S.A. is a French fashion house founded by the couturier Gabrielle "Coco" Chanel, well established in haute couture, specializing in luxury goods . She gained the name "Coco" while maintaining a career as a singer at a café in France... |
Lancôme Lancôme Lancôme Paris is a makeup brand. Owned by L'Oréal since 1964, Lancôme is part of the Luxury Products division, which offers skin care, fragrances, and makeup at higher-end prices.... |
Dior Dior Dior can mean:* Christian Dior SA, a French clothing retailer* In J. R. R. Tolkien's fictional Middle-earth legendarium:**Dior Eluchíl, a Half-elven of the First Age**Dior , a Steward of GondorDior is a surname, and may refer to:... |
| Watches | Rolex Rolex Rolex SA is a Swiss watchmaking manufacturer of high-quality, luxury wristwatches. Rolex watches are popularly regarded as status symbols and BusinessWeek magazine ranks Rolex No.71 on its 2007 annual list of the 100 most valuable global brands... |
Omega | Cartier Cartier SA Cartier S.A., commonly known as Cartier , is a French luxury jeweler and watch manufacturer. The corporation carries the name of the Cartier family of jewellers whose control ended in 1964 and who were known for numerous pieces including the "Bestiary" , the diamond necklace created for Bhupinder... |
| Suitcases and handbags | Louis Vuitton Louis Vuitton Louis Vuitton Malletier – commonly referred to as Louis Vuitton , or shortened to LV – is a French fashion house founded in 1854 by Louis Vuitton. The label is well known for its LV monogram, which is featured on most products, ranging from luxury trunks and leather goods to ready-to-wear, shoes,... |
Gucci Gucci The House of Gucci, better known simply as Gucci , is an Italian fashion and leather goods label, part of the Gucci Group, which is owned by French company PPR... |
Chanel Chanel Chanel S.A. is a French fashion house founded by the couturier Gabrielle "Coco" Chanel, well established in haute couture, specializing in luxury goods . She gained the name "Coco" while maintaining a career as a singer at a café in France... |
| Menswear | Giorgio Armani Giorgio Armani Giorgio Armani is an Italian fashion designer, particularly noted for his menswear. He is known today for his clean, tailored lines. He formed his company, Armani, in 1975, and by 2001 was acclaimed as the most successful designer to come out of Italy, with an annual turnover of $1.6 billion and a... |
Ermenegildo Zegna Ermenegildo Zegna Ermenegildo Zegna is a leading Italian fashion house, specialing in men's clothing. Founded in 1910, it is now managed by the fourth generation of the Zegna family and remains in family ownership. As well as producing suits for its own labels, it manufactures suits for labels such as Gucci, Yves... |
Versace Versace Gianni Versace S.p.A. , usually referred to as Versace, is an Italian fashion label founded by Gianni Versace in 1978.The first Versace boutique was opened in Milan's Via della Spiga in 1978, and its popularity was immediate. Today, Versace is one of the world's leading international fashion houses... |
| Jewelry | Cartier Cartier SA Cartier S.A., commonly known as Cartier , is a French luxury jeweler and watch manufacturer. The corporation carries the name of the Cartier family of jewellers whose control ended in 1964 and who were known for numerous pieces including the "Bestiary" , the diamond necklace created for Bhupinder... |
|Tiffany and Co | NA |
| Shoes | NA | Prada Prada Prada S.p.A. is an Italian fashion label specializing in luxury goods for men and women , founded by Mario Prada.-Foundations:... |
Chanel Chanel Chanel S.A. is a French fashion house founded by the couturier Gabrielle "Coco" Chanel, well established in haute couture, specializing in luxury goods . She gained the name "Coco" while maintaining a career as a singer at a café in France... |
| Womenswear | Chanel Chanel Chanel S.A. is a French fashion house founded by the couturier Gabrielle "Coco" Chanel, well established in haute couture, specializing in luxury goods . She gained the name "Coco" while maintaining a career as a singer at a café in France... |
Burberry Burberry Burberry Group plc is a British luxury fashion house, manufacturing clothing, fragrance, and fashion accessories. Its distinctive tartan pattern has become one of its most widely copied trademarks. Burberry is most famous for its iconic trench coat, which was invented by founder Thomas Burberry... |
Giorgio Armani Giorgio Armani Giorgio Armani is an Italian fashion designer, particularly noted for his menswear. He is known today for his clean, tailored lines. He formed his company, Armani, in 1975, and by 2001 was acclaimed as the most successful designer to come out of Italy, with an annual turnover of $1.6 billion and a... |
Luxury cars
Major global luxury brands like Mercedes-BenzMercedes-Benz
Mercedes-Benz is a German manufacturer of automobiles, buses, coaches, and trucks. Mercedes-Benz is a division of its parent company, Daimler AG...
, BMW
BMW
Bayerische Motoren Werke AG is a German automobile, motorcycle and engine manufacturing company founded in 1916. It also owns and produces the Mini marque, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad and Husqvarna brands...
, Audi
Audi
Audi AG is a German automobile manufacturer, from supermini to crossover SUVs in various body styles and price ranges that are marketed under the Audi brand , positioned as the premium brand within the Volkswagen Group....
, and Lexus
Lexus
is the luxury vehicle division of Japanese automaker Toyota Motor Corporation. First introduced in 1989 in the United States, Lexus is now sold globally and has become Japan's largest-selling make of premium cars. The Lexus marque is marketed in over 70 countries and territories worldwide, and has...
have operations in the People's Republic of China. Audi, which has dominated China's luxury car market for more than two decades, is the market leader in the luxury car segment, with China being Audi's second largest market in the world. However Audi's market share in this category is gradually falling as BMW and Mercedes-Benz are adopting new strategies to boost sales. According to data from Global Insight
Global Insight
Global Insight is the world's largest economics organization, serving over 3,800 clients in industry, finance and government worldwide, with revenues of over $95 million and employing more than 600 economists and other staff in 23 offices in 13 countries...
, Audi's market share in China decreased from 66% in 2004 to 42% in 2009, while the market share of BMW and Mercedes-Benz increased from 7% to 23%, and 9% to 16%, respectively. BMW is enlarging its current plant in China and building a second one.
Audi is still the dominant choice of car in the government fleet market. BMW sales are growing but is perceived to be for the newly rich. Mercedes is seen to be for old folks.
According to Stephan Winkelmann, CEO of Lamborghini
Lamborghini
Automobili Lamborghini S.p.A., commonly referred to as Lamborghini , is an Italian car manufacturer. The company was founded by manufacturing magnate Ferruccio Lamborghini in 1963, with the objective of producing a refined grand touring car to compete with established offerings from marques like...
, "China's super car market is growing faster than our expectations, while the Western markets are declining. The strong demand will soon make China our second biggest market after the United States. If the high taxes on luxury cars are removed, China could very well become the biggest market."
See also
- Economy of the People's Republic of ChinaEconomy of the People's Republic of ChinaThe People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...
- Automotive industry in the People's Republic of China