China likely to contribute 40% of global luxury consumption by 2030: research report
Tourists check out in a duty-free shopping mall in Sanya, South China's Hainan Province on January 1, 2024. Photo: VCG
China's luxury market is expected to grow at mid-single-digit in 2024 following an overall rebound last year, while Chinese luxury consumption is expected to reach 35-40 percent of the world's total by 2030, according to a report released by global management consulting firm Bain & Company on Thursday.
In 2023, China's luxury market saw a 12 percent year-on-year increase, recovering from a decline due to the pandemic, led by all categories including fashion, lifestyle and jewelry, the report noted.
Duty-free sales in South China's Hainan Province grew by about 25 percent in 2023 year-on-year, thanks to a recovery in domestic travel and stimulus measures implemented by the government, according to the report.
Hainan, a renowned tourist destination, now has 12 offshore duty-free stores. Since the beginning of 2023, with the province introducing a number measures to boost the recovery of duty-free consumption, including simplifying purchase procedures, issuing duty-free consumption coupons, and holding duty-free shopping promotions.
As Chinese overseas tourism now returns to near pre-Covid levels, Bain expects domestic luxury spending to decrease to 70 percent in 2023. Notably, the recovery of Chinese tourists' luxury spending in Europe and Asia has been significant.
"Another year of recovery for Chinese overseas luxury consumption, particularly in Asian destinations, is expected," Xing Weiwei, a Hong Kong-based partner at Bain & Company, was quoted as saying in a press release sent to the Global Times.
In 2023, Chinese luxury consumption is estimated to account for approximately 22-24 percent of the world's total, with consumption in the Chinese mainland comprising about 16 percent, it said.
By 2030, Chinese luxury consumption is expected to reach 35-40 percent of the world's total, with consumption in the mainland reaching 24-26 percent, solidifying its position as one of the leading luxury markets globally, according to the report.
FAQs
Moreover, by 2030, the figure is expected to hit up to 40% of the world's total. Chinese consumers are attaching greater relative importance to fashion, lifestyle, and jewellery, and other high-end goods, signalling a robust appetite for luxury consumption.
Will Chinese shoppers make up 40 percent of all luxury consumers by 2030? ›
China is expected to grow from around 23% of global luxury spending to as much as 40% by 2030, data from consultancy Bain shows. In January, LVMH's finance chief told analysts that spending on luxury goods in mainland China has doubled since 2019.
How big is the luxury market in China in 2030? ›
China is expected to become the world's largest personal luxury market, with a market size of US$148 billion in 2030. Hong Kong, 15 April 2024 – PwC released its Mainland China and Hong Kong Luxury Market report at the fourth China International Consumer Products Expo.
Do the top 2 percent of luxury customers drive 40 percent of luxury sales according to Bain? ›
The top 2 percent of luxury customers drive 40 percent of luxury sales, according to Bain. Engaging and retaining these very important clients (VICs) will remain critical to brands that want to continue to flourish amid the broader market slowdown.
What is the future of the luxury market in China? ›
Future Prospects
Economic growth, increasing personal wealth, and digitalization are expected to continue driving demand. The luxury market in China is projected to reach $178 billion by 2025, according to McKinsey.
Will 50 of luxury brands disappear by 2030? ›
Without an authentic and unique story that vividly articulates what the brand stands for, the potential for creating extreme value becomes a distant dream. In fact, Équité Research predicts that up to 50 per cent of today's luxury brands will vanish by 2030—a reflection of poor brand storytelling.
Which country consumes the most luxury goods? ›
South Korea Leads World in Per Capita Spending on Luxury
- South Korea reportedly leads the world in per capita spending on personal luxury items.
- South Korea's spending on luxury goods reached $16.8 billion in 2022, a figure that was 24% higher than the year before, according to the report.
Bain & Company revealed that the country is responsible for nearly 35% of global luxury goods consumption, an impressive statistic that underscores its pivotal role in shaping the industry's trajectory.
What is the future of luxury 2030? ›
Over the next decade, younger generations, including Generation Z and Generation Alpha, are set to play a more significant role in luxury spending. Their engagement with luxury goods is expected to grow three times faster than that of other generations, making up about a third of the overall market by 2030.
What will China be like by the year 2030? ›
Per this forecast, China's GDP would surpass that of the US in 2030, and be twice as large by 2049, at which point there would be four times as many Chinese as Americans. Lin had previously made even more optimistic predictions.
Digital Influence: A study by McKinsey & Company highlighted that around 80% of luxury sales are now “digitally influenced.” This means that the majority of luxury consumers are doing their research online before making a purchase.
What demographic buys the most luxury brands? ›
Specifically, the largest share of luxury buyers are ages 25-34 (27% share, versus this group's 18% share of the general population), followed by 35-44-year-olds (24% vs. 17% gen pop share). Of note is that the 25-34 and 35-44 age groups are also the biggest spenders on luxury goods.
What drives luxury consumption? ›
Biological, socio-psychological, and structural factors drive consumers' desire for luxury. Luxury consumption combines traditional and novel forms of consumption, as well as forms of non-consumption. Consuming luxury yields costs and benefits at the economic, social, and psychological levels.
Why do Chinese people buy luxury goods? ›
Chinese consumers are eager to purchase luxury as a means of social advancement and self-differentiation. They are also highly accustomed to shopping during their travels, with over 70% of Chinese consumers planning to travel overseas after the lifting of the Chinese Mainland's quarantine requirements.
Why are luxury brands more expensive in China? ›
Pricing Strategies
Luxury brands may also adopt different pricing strategies depending on the region in which they operate. In China, where the demand for luxury goods is high and consumers are willing to pay premiums for exclusive brands, companies may opt to set higher prices to maximize their profits.
How big is the luxury fashion market in China? ›
Worth 460 billion yuan ($63 billion), China's personal luxury market is expected to register year over year growth of 4 to 6 percent in 2024, according to BoF and McKinsey's latest State of Fashion report.
What percentage of consumer goods are made in China? ›
Of the 2.7% of U.S. consumer purchases going to goods labeled “Made in China,” only 1.2% actually represents China-produced content. If we take into account imported intermediate goods, about 13.9% of U.S. consumer spending is attributable to imports, including 1.9% imported from China.
What is the 1 trillion Renminbi opportunity for Chinese luxury consumers? ›
By 2025, we forecast the value of the global luxury goods market to climb to 2.7 trillion RMB, with 1 trillion RMB being added over the next nine years. As they have in the past, Chinese consumers will account for a majority of this growth, and by 2025 will account for 44%of the total global market.
