China will soon account for one-fifth of the world’s luxury sales. But while Chinese consumers spent nearly $19 billion on luxury goods in 2014, high-end sales actually declined into the negative last year. CCTV’s Grace Brown reported this story from Beijing.
Sales of luxury goods in China hit negative numbers in 2014China will soon account for one-fifth of the world's luxury sales. But while Chinese consumers spent nearly $19 billion on luxury goods in 2014, high-end sales actually declined into the negative last year. CCTV's Grace Brown reported this story from Beijing.
According to Bain & Company, luxury spending has been slowing in China for several years, due to greater controls on luxury spending and changing consumption patterns.
But for the first time in recent years, luxury consumption here has actually fallen down one percent last year to -1 percent. The dip comes after growth of 7 percent in 2013 and 2 percent in 2012. Luxury watches were worst-hit, plunging 13 percent last year.
“We saw for the first time a decline in the market. There are three main reasons. One is the anti-graft campaign. The second is that Chinese consumers buy a lot of luxury products outside China or through ‘daigou’ agencies (companies that buy items cheaper overseas for consumers),” Bruno Lannes, head of consumer goods, retail, and luxury for Bain in China.
According to the study, less established and younger accessible brands fared better having endeared themselves to the growing upper middle class, which is expected to double by 2017.
“[buying luxury goods is] not important. I don’t buy them often. Quality is more important. The local brands are also very good,” one Chinese shopper who did not give a name said.
Due to import taxes, luxury brands cost up to two-thirds more than overseas brands, sending many shoppers abroad.
“We usually buy big brands overseas, or online, or ask friends to bring them back from holidays abroad, or we get them from Hong Kong,” another Chinese shopper who also did not give a name said.