China top for luxury by 2020

On February 23, 2011, in International, Latest news, by OVG
China top for luxury by 2020

China top for luxury by 2020

According to a report by investment research group CLSA Asia Pacific Markets, China is set to become the world’s largest buyer of luxury goods by 2020.

Already equipped with bigger pay cheques and a strong desire to show off their new found wealth, the Chinese are buying up designer fashions such as handbags, watches and clothing.  Brands such as Louis Vuitton and Hermes have seen large increases in sales from their retail outlets in China.

According to the report, China will be spending roughly US$101 billion annually on luxury goods by the end of 2020.

The CLSA research group estimates that the worldwide luxury goods market will be worth in the region of US$ 522 billion by 2020.  This means that China’s US$101 billion share of the market will be roughly twenty percent of the global total.

China has continued to benefit from strong economic growth, producing large numbers of millionaires.  The number of Chinese who have assets of one billion yuan (US$152 million) or more reached 1,363 last year; a number that has been increasing at an annual rate of between fifty and fifty-eight percent since 2000.

In China it is customary to show off your wealth and Chinese consumers are happy to pay high prices to catch other people’s attention.

The biggest buyers of luxury goods in China are men, buying up items such as designer watches, leather goods and other extravagant gifts for colleagues and business partners.

In fact, it is very common for businessmen to pay 30,000 yuan (US$ 4,575) for a bottle of wine and last October three bottles of Chateau Lafite Rothschild 1869 were sold at a Sotheby’s auction in Hong Kong for US$230,000 each.

However, it’s not just retailers in China who are benefitting from this Chinese spending spree; the Chinese are heading overseas where luxury products are cheaper.  One UK newspaper, The Guardian, reported that many Chinese UK residents celebrated Chinese New Year with luxury shopping sprees.

One such person commented; “Who needs dumplings and fireworks in Beijing when you can have Burberry and Chanel in London?”

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