China to become world’s largest luxury market by 2025
Around 21 percent of the global consumer spending on luxury goods came from the Chinese mainland in 2021 and China is expected to become the world’s largest luxury market by 2025, according to the global management consulting firm Bain & Company.
The company released its China Luxury Report 2021 on Thursday, highlighting that the domestic sales of personal luxury goods in the Chinese mainland notched up a 36 percent year-on-year increase to nearly 471 billion yuan (74 billion U.S. dollars) in 2021. The sales figure almost doubled compared to that of 2019.
Categories of luxury goods posted varied market growth last year in China. The category of leather goods was the fastest growing with a growth rate of about 60 percent, followed by fashion clothes and jewelry.
The offshore duty-free shopping in the southern Chinese island province of Hainan had boosted the country’s burgeoning luxury market, as about 95 percent of Hainan’s duty-free sales volume came from personal luxuries last year and more than half of the luxury goods were cosmetics under luxury brands, stated the report.
In 2021, China’s online personal luxury sales increased by about 56 percent, faster than the offline stores, the conventional and primary distribution channel for the luxury industry.
However, due to the impact of the COVID-19 pandemic and related travel restrictions, over 90 percent of Chinese consumer spending on luxuries was done on the Chinese mainland, according to the report.
“Overall, we expect Chinese consumers’ personal luxury purchases to recover to pre-COVID-19 levels between the end of 2022 and the first half of 2023,” said Xing Weiwei, partner at Bain & Company and co-author of the report.