The Luxury Market in China

China is the country in the world with the highest year-over-year growth forecast for personal luxury goods consumption per capita, with an estimated Compound annual growth rate (CAGR) of around 5% from 2019 to 2025. The personal luxury market is made up of soft luxury, which includes the categories of bags (customs tariff code 4202), leather goods (code 4203), beauty and personal care (codes 3303 and 3304), and hard luxury, consisting of jewelry (codes 7113 and 7116) and watches (codes 9101 and 9102).

In the luxury market, there is a positive correlation between global GDP, revenues, and profitability of the sector. In 2019, the size of the personal luxury goods market increased by 30% in mainland China, reaching a sales value of nearly EUR 17 billion.

The percentage of consumers, in general, is continuing to grow, increasing the number of Chinese consumers of luxury goods, which will come to represent 40% of global consumers in 2025.

The Foreign Trade

According to the division by product categories, all categories have been characterized by an increase in exports from China to the rest of the world of more than 4% in the last year, with watchmaking characterized by greater growth.

The main destinations for Chinese luxury exports are Switzerland for watchmaking, Europe for jewelry, Italy for leather goods, with Italy and France representing the main destinations for the bags and large leather goods category; and France, the first destination in the field of beauty and personal care. For its part, the destinations for exports of Chinese finished products are mainly the United States and the Hong Kong Special Administrative Region.

On the import side, imports have increased in all categories, and exceed 20 billion euros in value. The categories that have grown the most are jewelry (+ 67%), watches (+ 55%), and beauty and personal care (+ 41%), whose products come mainly from countries close to China such as Japan, South Korea, Russia, and the United States.

'Super premium' beauty and personal care, on the other hand, recorded a growth of 35% in 2019, with a value of 4.792 billion euros, ranking it as the fastest-growing category. The forecasts indicate a CAGR growth of 22% between 2019 and 2024.

The trend of Luxury in 2020 - 2021

2021 marked an overall increase of 36%, for a value of approximately 65.5 billion euros. The biggest growth figure for the luxury market in China was experienced by some Chinese brands, which recorded growth of up to 70%, mainly due to persistent travel restrictions due to COVID.

Among others, the Asian country's brands are driven by purchases such as those at the luxury hub of Hainan, but also by the extensive process of digitalization of shopping and the return of many consumers to their homeland. In detail, e-commerce increased by 56% (against an estimate of + 30% for offline commerce) while it was the students, in particular, returning from abroad, who gave further impetus to luxury consumption in the summer of 2020.

As in 2020 (a year which, moreover, closed with a growth of 48% for the luxury sector), also in 2021 leather products were the product segment with the greatest growth (+ 60% total). Those related to fashion and lifestyle follow (+ 40%). Instead, the world of jewelry followed a slower trend in 2021 than the previous year, albeit reaching + 35%. Finally, there are the high-end watches with sales increased by about 30% and, again, beauty by + 20%.

Do you want to know more about luxury consumption and the challenges that luxury brands face in China? Take a look at the video: