Luxury: 102billions of dollars spent in 2013 in China
Chinese people are becoming the largest consumers of luxury products with $102 billions spent in 2013, which is half of the world’s expenditure in luxury goods. The Chinese people are used to travel abroad and come back with luxury products from Paris, Tokyo and New York like shoes, clothes, jewellery, bags and watches. This huge purchasing power that can be seen emerging amongst the Chinese accounts for the growing economy and the strength of the Chinese currency as well as a confidence in product quality when purchased abroad and of course the evident price difference.
Luxury Brands in China
The number of luxury brands entering the Chinese market speaks for itself. Not only are they opening stores but they are also opening multiple stores across the country aiding in a huge surge in purchasing of these goods. However, there is a prediction made by Fortune Character Institute, which divides the consumer market into core consumer, edge consumer and potential consumer. This study states that while the boom is happening currently and people are buying luxury products like never before, it may not last for long.
High net worth individuals who currently have the purchasing power will slowly reduce leaving the edge consumer and potential consumer to take over the market. However, these two segments of consumers will not possess the same purchasing power at the same rate of growth and hence they may not be able to carry forward the purchase of these luxury goods at the same level.
This may eventually lead to a recession. This is their study of the market today. However, they feel that Chinese brands will see a positive growth and they will soon be able to offer the market better products and will also acquire foreign brands.