Reports say China's luxury sector is on the upswing
China's luxury market is expected to rebound as favorable conditions are expected to return before the end of the first quarter.
After seeing their first contraction in five years last year, China's luxury sales will rebound to 2021 levels around mid-2023, according to the latest Bain & Company report.
The fundamentals of consumption in China are still intact, and it will still be the growth behemoth, with mid- and high-income consumers set to add 250 million between 2022 and 2030, Bain's study says.
In 2022, China's personal luxury market declined 10 percent, ending a five-year growth spurt, but early positive signs would emerge in the first quarter of this year with the return of foot traffic, it noted.
"Bigger brands have outperformed smaller players on average, and those with iconic portfolios did better than those with trendy or seasonal merchandise," commented Bruno Lannes, a senior partner at Bain & Company.
With the macroeconomic environment stabilizing, the market would return to an annual growth rate of five to six percent in the long run, he added.
The market rebound would be driven by various factors, including visitors returning to shopping malls, the increasing number of high-net-worth individuals, the expanding middle class, regular shoppers and impulse shopping.
According to a separate luxury industry analysis conducted by PwC, China's luxury market will overtake the US and Europe by 2025, accounting for 25 percent of the global market.
China's total luxury spending is expected to record a 16 percent annual increase to reach 816 billion yuan (US$112 billion) by 2025.
China's high-net-worth individuals with personal assets of 10 million yuan make up around 0.3 percent of the total population but contribute to 42 percent of luxury sales. They're also favoring tailor-made service and first-hand information through direct customer service channels.
The proportion of online luxury spending has also expanded, with an estimated 45 percent of total spending in 2022.