According to the latest PricewaterhouseCoopers study (PwC), China will become the world's largest marketplace for individual luxury goods by 2030. The United States and Europe will take the lead in this regard.
After crucial fluctuations during the pandemic, last year the Chinese luxury goods marketplace reached sales worth $69 billion (about PLN 279.77 billion).
The main origin of this increase became revived after the collapse of the Chinese tourist activity. PwC analysts foretell that by 2030 the Chinese luxury goods marketplace will scope USD 148 billion (about PLN 599,61 billion). This represents 25% of its global value.
The share of the United States and Europe in global retail luxury products is expected to fall from the current level of 27% to 23%.
PwC's optimistic forecast for China is based on predicting the fast growth of the Chinese market, the wealth of the young generation, the expansion of online sales of luxury brands, and the increasing effect of HaiNan. HaiN, the confederate island-province on which a peculiar economical region was established, plans to implement a customs strategy independent of the remainder of the country by 2025. Thanks to this system, most of the goods imported to HaiNan will be free of duties. Moreover, companies and individuals operating there will benefit from taxation incentives (reductions and discounts). Local authorities are besides planning to importantly mitigate visa requirements as well as another efforts to make HaiN a "free trade centre with global impact".
The study predicts that this island will shortly become the 3rd after Hong Kong and Macau Chinese offshore region, offering various taxation incentives and generating immense business opportunities. It will be a key Chinese area for the sale of luxury goods.
PwC experts note a fresh luxury brand strategy on the Chinese market. They are beginning to open more and more shops in Chinese cities of the second and 3rd circles. According to the report, nearly three-quarters of the 277 fresh luxury stores that were opened in China last year were outside the 4 first level cities (circle), i.e. Beijing, Shanghai, Canton and ShenZhen. This was a 64% increase compared to 2022 and 56% increase compared to 2021.
As an example of this trend, the PwC study states that last year the town of LanZhou, the capital of the semi-developed state of GanSu in north-western China, became the place where the largest number of fresh luxury brands opened. During the same period, ShenZhen was only the second choice for the owners of luxury brands to launch a fresh point of sale.
The study besides notes that luxury brands in China usage many divergent strategies.
Since 2022, any of these brands have been focusing on improvement in the largest cities of the country and doubling their efforts to gain and keep contact with VIC (Very crucial Client). It is simply a section of customers who are prone to regular purchases, which are at the same time more resilient to the economical situation. At the same time, brands like Michael Kors are increasingly looking at smaller cities, where they primarily sale online, utilizing circumstantial Chinese tools like livestreaming, trying to scope fresh audiences, somewhat neglected by large, robust brands. Companies that have adopted specified a strategy, referred to as “accessible luxury”, are heavy dependent on middle-class spending and peculiarly severely affected during the pandemic.
In conclusion, the PwC study suggests luxury abroad brands to focus on VIC customers and the second generation of millionaires, as their main customers, offering high-quality ultra-premium products, especially those highly personalized.
According to PwC advisors, this is to be a magical expression for achieving success in the Chinese marketplace in the long term.
Source:
- pwccn.com;
- retailasia.com;
Author: 梁安基 Andrzej Z. Liang, 上海 Shanghai, 中国 China
Email: [email protected]
Editorial: Leszek B.
Email: [email protected]
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