Chinese Luxury Goods Market: Light Luxury Goods Suddenly Rise

Similar to the "battlefield fog" in military terminology, the overall sales scale of China's luxury goods also has a "market fog" which can not be seen clearly.

In October 2014, the global luxury market monitoring report released by the American Bain consulting company and the Italy Luxury Industry Association (hereinafter referred to as the bain report) predicted that the luxury market in mainland China in 2014 would be 15 billion euros, or about 117 billion 800 million yuan, which would be 2% lower than that in 2013.

Based on this data, the luxury market in mainland China in 2013 was about 120 billion 200 million yuan.

However, according to the statistics of China's luxury goods industry association, the total consumption of luxury goods in China was 19458 billion yuan in 2013, which is 15 times higher than the above data.

According to experts from CIC Consultants Limited, the sales volume of China's luxury goods industry will reach 20209 billion yuan in 2014, which is 17 times higher than that of the bain report in the same year. Compared with the 2013 industry market regulation released by the Chinese Luxury Association, the domestic luxury market scale in 2014 will not decrease by 2% as compared with that of Bain, but increase by 9%.

Obviously, there are great differences in the statistical scope and methods of luxury goods in China.

Even more puzzling, ArmandoBranchini, vice chairman of the Italy luxury industry association, said in an interview with Hongkong Phoenix Satellite television that in 2013, China's share of world luxury goods market rose from 29% in 1995 to 63 billion in 2013, which is very different from the 15 billion euro in the bain report jointly released by the Association and Bain company.

Although there are different opinions on the scale of China's luxury goods market, the industry's views on the development trend of domestic commodity market in 2014 are basically the same: the sales of luxury goods in mainland China showed a "cold shrink" state, and this "cold air" has emerged since 2013.

The central government's "eight provisions", "six prohibitions", strict control of the "three public" consumption, and strict management of the party and the continuous fight against corruption have led to a sharp reduction in public expenditure and gift sales in luxury consumption.

According to the analysis data released by China luxury goods industry association, the average annual growth rate of luxury consumption in the past 10 years is over 20%. In 2013, it only increased by 6.1% in the past year, the lowest growth rate in recent years. In 2014, the real increase of some luxury goods was only 2%~3%.

The bain report also revealed that from Rolex watches to Armani suits to Ferrari sports cars, the first performance decline in China in 2014 has been seen for many years.

In addition, Remy Martin strong liquor maker Remy Martin announced that sales fell 15.5% in the first half of the year.

France's famous brandy Martell and top wine Lafite also encountered Napoleon style "Waterloo" in the Chinese market.

In 2014, sales of high-end liquor such as Moutai continued to decline.

Before and after October 2014, the reports released by the major luxury groups also showed that China's domestic luxury market was in a doldrums: the luxury goods giant Louis Weedon's sales growth dropped sharply to 4% in the first three quarters; Italy's Prada said its interim results were 21% lower than that of the same period last year, with a sharp drop of 20.6% in profits and a 7% decline in the first half of the British luxury luxury brand.

According to foreign institutions, Chinese men are the core consumers of luxury goods, and most of them buy luxury goods for their gifts rather than for their own use.

StaceyCartwright, chief financial officer of the world famous luxury goods company, admits that China's gift giving culture is the main source of the company's revenue in China.

It goes without saying that the ongoing anti-corruption campaign in China has a strong impact on the sale of luxury goods in China. Bain's report also believes that "anti-corruption" has caused a fatal blow to the sales of luxury goods in China, especially for the senior watches and senior men's wear of the typical products of official gifts.

The Tencent website's survey of 52 thousand netizens in China also shows that more than 80% of people believe that it is precisely because corruption prevents luxury goods from selling well.

In addition to the factors of anti-corruption, domestic luxury market sales are "cold".

In 2014, compared with the cold market of luxury goods, the heat of overseas purchases remained undiminished.

Although the growth rate of luxury goods market in major economies such as Europe, America and Japan is decreasing in 2014, the overall situation is far better than that in China. Among them, there are two main factors of China's outbound consumption and "Hai Tao" buying.

Laudickey Dalpizzio, a luxury research expert, said: "Chinese people spend 2 times more on luxuries abroad than in China."

According to the report released by the Institute of wealth research, China luxury Research Institute, in 2013, the Chinese bought 47% of the world's total.

A total of 102 billion US dollars, while only 28 billion US dollars remain in the mainland of China, and the consumption outflow rate is as high as 73%.

In 2014, luxury consumption in China further shifted to overseas, and the US and Europe will grow by 7 and 6 percentage points respectively over the previous year.

Obviously, this phenomenon is related to many factors, such as excessive price of domestic luxury imports, excessive price, development of multinational (border) electricity providers, global logistics facilitation, and the continued warming of Chinese tourists overseas.

Foreign media pointed out that a boblie windbreaker in Britain priced 29 thousand yuan on the Chinese website, while in Japan only 330 thousand yen (about 19 thousand yuan), and 2395 euros (equivalent to 18 thousand and 800 yuan) in France.

In recent years, there are signs that light luxury goods are in progress.

China has become a new consumer of a larger consumer group.

The so-called light luxury goods are usually originally designed by top designers with excellent technology and quality, but the price is only a fraction, a ten or even a few scores of the high-end luxury goods.

In the mainland of China, this kind of light luxury goods from the ordinary white-collar workers to the "gold collar" people at all levels are very fond of and acceptable in price.

In 2014, more and more such light luxury goods were selling well in the Chinese market. Apart from the reputation of brands rather than high-end luxury goods, many luxury products were of high quality and highly personalized in design, and the prices were very "close to the people". Some of them were the secondary line products set up by the first line of fashion, such as Miao Mu's Prada and Emprio Armani's.

Wait.

Some experts pointed out that it is a pity that the development of Chinese local enterprises' light luxury brands started late and the climate was not successful. We only wish to speed up R & D and compete to become a branch of "China's creation" and expand the consumption of the new "blue ocean".

According to the latest report released by Credit Suisse Bank in October 2014, about 1 million 180 thousand people in China have reached or exceeded US $1 million in assets, of which the number of assets exceeds US $50 million is second only to that of the United States, ranking second in the world.

The Chinese accounted for 1/3 of the 1 billion middle class population defined in the report.

Experts predict that although the high-end luxury goods market in China is likely to continue to cool down in 2015, the outsourcing market will continue to be a growth trend. It will continue to show "cold inside and hot outside", and the luxury consumption of Chinese people is greater than that of domestic luxury goods sales. The proportion and total consumption of personal consumption will continue to rise. In the meantime, the sales curve of high-end luxury goods in China will also rise and flourishing, and the light luxury goods, including domestic brands, will grow much faster than the former, creating a huge market for tens of millions of consumers in the mainland of China.