source: http://www.msnbc.msn.com/id/30670835/
China’s 6 billion euro ($8 billion) luxury market accounts for just 3 percent of global sales, compared with 38 percent in Europe, 33 percent in South and North America and 12 percent in Japan, according to Bain & Co. But China and Brazil are projected to be the two fastest-growing luxury markets through 2012, according to consulting firm Bain & Co.
And sales of designer clothing, jewelry and other luxury goods in China will climb 7 percent this year, while worldwide luxury revenue could fall 10 percent, Bain & Co. forecast. Last year, luxury sales surged 25 percent in China while they were flat worldwide.
Just as more mainstream brands like Starbucks Corp. and Yum Brands Inc.’s KFC are expanding fast in China, higher-end brands such as Salvatore Ferragamo and Gucci are adding stores here — while many retailers have postponed or limited expansion in listless U.S., European and Japanese markets.
“The China market is growing fast. Beside the global downturn, which affects every country, China is quite stable,” Michele Norsa, chief executive of Salvatore Ferragamo SpA, said in an e-mail response to questions. “Definitively, we are optimistic.”
China’s luxury shoppers are strikingly young, many of them self-employed or part of a growing professional class. According to consulting firm McKinsey & Co., 80 percent are under 45, compared with 30 percent of luxury shoppers in the United States and 19 percent in Japan.
Liu Hongyan, a 34-year-old marketing director for a culture magazine in the western city of Chengdu, just bought a Coach purse to replace her Chanel, two necklaces and a bracelet from Tiffany and some Estee Lauder cosmetics.
“Like many of my friends, my job is stable and not affected by the financial crisis,” she said. “Now that we are finished buying apartments and cars, we are buying luxury goods.”
Fueled by a three-decade-old economic boom that created a still-growing urban elite, China’s appetite for luxury goods is surviving the sharpest global economic slump since the 1930s. And Beijing’s multibillion-dollar stimulus plan appears to be reviving the economy. Recent reports show gains in factory output, retail sales and capitalinvestment.
By 2015, China will have more than 4 million households with annual income above 250,000 yuan ($37,000), McKinsey predicted in a recent report. That will make it the world’s fourth-largest country in terms of its number of households with substantial purchasing power after the United States, Japan and the United Kingdom. McKinsey said the benchmark was adjusted for purchasing power parity for each country.
And most of that money likely will be spent in China. McKinsey said its research found wealthy Chinese do 70 percent of their luxury spending at home, contrary to the industry wisdom that Chinese people make at least half their purchases abroad.
