While the global luxury market has shrunk by almost 23 per cent during 2020, mainland China’s share has almost doubled – from 11 per cent to 20 per cent – as Chinese consumers increasingly buy domestically.
The Chinese luxury market is expected to grow by 48 per cent by the end of the year to reach a value of almost $52.9 billion (RMB 346 billion), according to a joint report by Bain & Company and Tmall.
The mainland China market has rebounded largely due to four main drivers: repatriation, growth in Millennial and Gen Z spend, digitalisation of luxury sales, and increased sales from Hainan duty-free stores.
“Many brands are showing a stronger commitment to a comprehensive digital strategy, including a presence on all key digital channels,” said Bain & Company’s Carrie Zhang.
“Moreover, luxury brands are now instilling sophistication, quality and attention to detail – core components of luxury players’ engagement strategies that did not fully transfer when brands first rushed to digital – into these new engagements.”
And, based on what can be forecasted for the years ahead, it’s unlikely that global conditions will return to normal before 2023, and Chinese consumers are likely to remain cautious about international travel even as borders reopen.
As such, the Chinese luxury market can potentially expect domestic growth to potentially grow by another 30 per cent.