Chinese Luxury: A New Normal
The boom years are over for the Chinese economy, with the country now facing a period of slower, steadier growth, according to a new report released this week from global management consultancy Bain & Company.
The report concluded that China's luxury sector would grow by 2-4% in 2014, down from a high of 30% in 2011. This reflects a broader shift in the rate of luxury consumption around the world, with growth rates set to slide from an average of 6.5% in 2013, to between 4% and 6% in 2014.
"With luxury goods, we are seeing the emergence of a new normal; the global market is maturing, stabilising and consolidating," said Claudia D'Arpizio, a Bain partner in Milan and leader of the firm's Global Luxury Goods and Fashion Practice. She advised luxury brands to focus on building growth organically.
Chinese luxury sales have been hit by a government crackdown on corruption, particularly in the form of luxury gifts. In addition, comparatively high prices are sending Chinese shoppers abroad to find the best value, making them some of the best global luxury consumers.
The report stressed that although growth projections had fallen, China is still a leading luxury market – estimating Chinese shoppers will account for more than 30% of all luxury purchases this year. "China, though maintaining low single-digit growth in real terms, continues to boast a customer base that leads the world in terms of overall luxury consumption," the report noted.
For more on the Asian luxury market, take a look at Luxury in China.