China Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

China Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The China luxury goods market is projected to register a CAGR of 4.6% during the forecast period (2022-2027).

The first and second waves of the COVID-19 pandemic have negatively affected China's fashion industry as factories, stores, and public events were strictly banned to prevent the spread of the coronavirus. For instance, the pandemic caused the cancellation of the Beijing and Shanghai Fashion Weeks, scheduled between March 25th and 31st, 2020, which ultimately affected the brand communication with prospective customers.

Over the medium term spending in China’s market is expected to boom owing to the solid consumer confidence and willingness to buy luxury items supported by the economic development. The trend is prevalent, especially among young generations. For instance, the consumer study published in 2020, in the international journal of market research shows that around 13% of respondents favor cosmetics and shoes as luxury purchases in China.

Over the long term, the increase in disposable income, urbanization, and digitalization are the main factors anticipated to drive the growth of the luxury goods market in China.

Key Market TrendsEmergence of E-commerce Channels

Online sale of fashion goods continues to gain share in China, with customers increasingly influenced and enabled by digital channels, also in their physical purchases. The number of online shoppers has increased in China in the study period, which in turn influences key brands to restructure their digital marketing and online retailing strategies. According to International Trade Administration, in 2020, China’s cross-border e-commerce imports reached a value of $88.2 billion, an increase of 16.5% over 2019. In addition to their websites, key brands are partnering with leading e-commerce platforms such as Secoo, VIP, RED, Tmall Luxury Pavilion, and JDluxury platform to market and sell luxury fashion products in China.

Increase in Duty Free Shops

Offshore duty-free shops emerged as a new sizable luxury hub. These duty-free shops provide much lesser prices on goods and services compared to other brick and motor stores and e-commerce sites. As per the Hainan Provincial Department of Commerce, offshore duty-free sales in South China's Hainan province reached about $7.2 billion between July 1, 2020, and June 30, 2021, soaring 226% year on year. In July 2020, the duty-free shopping policy has increased the annual tax-free shopping quota in Hainan from 30,000 yuan to 100,000 yuan per person incrementally each year, the policy has also expanded the categories of duty-free goods from 38 to 45 which has increased the growth of luxury goods sales in the country.

Competitive Landscape

The China luxury goods industry is fragmented with the presence of many international and local players. Major players in the market include LVMH Moët Hennessy Louis Vuitton, Chanel SA, Cartier SA., Rolex SA, and Kering SA. Key players in the market are diversifying their products and expanding their distribution circles to reach prospective consumers. Further, these companies are experimenting through online channels to acquire a competitive edge in the market. For instance, in December 2020, Gucci announced the opening of two new flagship stores on Alibaba's online platform.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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