Less gloss in the Chinese luxury business
Believe it, or not, but the Chinese luxury business is losing its gloss. At least this is the statement from Hong Kong to mainland China. It reminds at times when America made an outcry: “Buy only American” and probably none of us would have thought that the new five year plan would have a rather quick effect by directing Chinese consumers to become some sort of a backbone of economy and obviously to buy more Chinese made goods of improving quality
This is one side of the medal but there is also a trend that more Chinese are travelling the world and they buy luxury goods outside of China (75 % is the external share of luxury goods) in order to save high taxes and to make use of the weak EUR and also USD. The number of Chinese trips abroad increased over the last five years on average by 8.5 % annually and 2011 the rate was at estimated 13.3 %.
The reverse side of the medal indicates that over the last decades the luxury business has been growing three to four times stronger than the total economic development. Top brands were able to even top these marks and showed results four to five times of the GDP growth. Luxury goods are seemingly growing also in the future but the path of growth might be in the lower double digits.