China to be the biggest luxury market by 2025, say consultants, after Chinese spending in sector doubled from 2019 to 2021

Sales of luxury leather goods, fashion, jewellery and cosmetics are surging in China and on track to exceed those of all other markets in three years, Bain says
In 2021 more than a fifth of global consumer spending on luxury goods was in China, driven by online spending and duty-free shopping, the consulting firm says

Luxury in China

SCMP Reporter

Published: 7:15am, 26 Jan 2022

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Around 21 per cent of global consumer spending on luxury goods in 2021 came from China. According to Bain & Company, the Chinese are expected to become the world’s largest luxury market by 2025.

In its China Luxury Report 2021, the global management consulting firm points out that the domestic sales of personal luxury goods in the Chinese mainland notched up a 36 per cent year-on-year increase to nearly 471 billion yuan (US$74.4 billion) in 2021. The sales figure had almost doubled when compared to that of 2019.

Categories of luxury goods grew at different paces in the Chinese market last year. Leather goods grew the fastest, with a growth rate of about 60 per cent, followed by fashion clothes and jewellery.

Duty-free shopping in the southern Chinese island province of Hainan spurred the growth of the country’s luxury market, with about 95 per cent of Hainan’s duty-free sales coming from personal luxuries last year. More than half of the goods were luxury brand cosmetics, stated the report.

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In 2021, China’s online personal luxury sales increased by about 56 per cent. This is faster than the offline stores – the conventional and primary distribution channel for the luxury industry.

The Covid-19 pandemic and related travel restrictions have had an impact on where purchases have been made – over 90 per cent of Chinese consumer spending on luxuries was domestically.

“Overall, we expect Chinese consumers’ personal luxury purchases to recover to pre-Covid-19 levels between the end of 2022 and the first half of 2023,” said Xing Weiwei, a partner at Bain & Company and co-author of the report.

Additional reporting by Xinhua