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China remains top consumer of luxury products
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CHINA remained the world's largest consumer of luxury products last year even though domestic sales contracted for the first time due to the ongoing anti-graft campaign and increasing overseas purchase.
Chinese spending on luxury goods increased 9 percent year on year to 380 billion yuan (US$61.3 billion) in 2014, accounting for 30 percent of total global spending, according to Bain & Company’s 2014 China Luxury Market Study released today.
Sales of luxury products on mainland fell 1 percent from a year earlier to 115 billion yuan, the consulting firm said.
“The mainland’s market fell for the first time as continued impact of anti-corruption and frugality campaigns undermined luxury gifts and economic slowdown also exacerbated the issue,” said Bruno Lannes, a Bain partner and author of the study.
Consumptions of watches and men’s wear on mainland contracted the most by 13 percent and 10 percent respectively, while purchases of women’s wear continued a strong momentum, growing at 11 percent.
Chinese are increasing their spending in overseas luxury markets to circumvent steep import duties and enjoy richer product categories.
Consumers who bought their luxury goods while traveling abroad contributed to 55 percent of Chinese luxury spending last year, with Japan and Korea being the hottest destination due to exchange advantages, easier visa applications and convenient flights.
Daigou, or overseas purchase of luxury goods via friends, relatives and agencies, accounted for 15 percent of the total spending last year.
“Daigou market has grown quickly, mainly aided by increasing number of bargain-hunters who are more aware of price differentials and development of professional daigou agencies and cross-border logistics firms,” Lannes said.
In a survey of 1,400 consumers conducted by Bain & Co, 70 percent of them said they have purchased luxury goods via daigou and 59 percent of them expected they will increase spending through daigou.
Meanwhile, China’s emerging free trade zones are expected to fuel the prosperity of cross-border e-commerce in luxury market with their advantages in prices and cost-saving opportunities such as fewer margins to distributors through direct sales and lower inventory risk in bonded areas, the accounting firm said.
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