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Luxury

© 2017 Beyond Summits

Summary：

• In 2016, China’s luxury goods consumption fell to the lowest since 2009, which was mainly due to

the slowdown in China’s economy. By 2025, it is expected that Chinese consumers will contribute

44% of global luxury market value, which is equivalent to the total sales volume of the US, UK,

France, Italy and Japan in 2016.

• Among all people searching for luxury goods, for age distribution, people aged 20-29 account

largest for about 45% of the total population.

• The participation of luxury consumers in digital channels continues to increase, and brands will

continue to increase their digital marketing-related budgets; some brands are testing and launching

online channels (through branded websites or third-party platforms).


2

Source：Mckinsey & Company, China Luxury Report 2017

By 2025, the global market value of luxury goods will increase by 1 trillion yuan to 2.7 trillion yuan.

It is expected that Chinese consumers will contribute 44% of this amount, which is equivalent to

the total sales volume of the US, UK, France, Italy and Japan in 2016. .


3

12% 21%

32% 36%

44% 1,111

1,171

1,142

1,389

1,512

0

500

1,000

1,500

2,000

2,500

3,000

2008 2012 2016 2020E 2025E

Chinese consumers’ Contribution to the Global Luxury Market Value (CNY trillion yuan)

Other GlobalConsumers

ChineseConsumers

1,263

1,482

1,679

2,170

2,700

+3%

Annually

（2016-

2025）

+9%

Annually

（2016-

2025）

106

116 115

113

0

20

40

60

80

100

120

140

2012 2013 2014 2015

China’s Luxury Market Scale (CNY billon yuan)

30% 25%

20% 18%

22% 25%

30% 32%

15% 15% 13% 12%

11% 10% 13% 11%

6% 7% 5%

6%

6% 6% 7% 8%

5% 5% 6% 7%

5% 7% 6% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015

China’s Luxury Market Scale by Products Category

Accessories

Women's Clothing

Shoes

Jewelry

Men's Clothing

Bags and Luggage

Cosmetics, Perfume,Products for PersonalUseWatches

Source：Bain & Company, China Luxury Market 2015

Mckinsey & Company, China Luxury Report 2017

In 2016, China’s luxury goods consumption fell to the lowest since 2009, which was mainly due to

the slowdown in China’s economy. Among them, the total consumption of luxury goods such as

watches, bags, and men's clothing dropped significantly.


4


• Since 2015, China's luxury goods consumption has shifted from first-time consumption to

incremental consumption. Therefore, luxury investors should focus on fostering customer loyalty

instead of focusing on developing new customers.

• In addition, the consumption characteristics have also changed. The main consumers of luxury

goods in China have changed from high-income people (annual household income of 100,000

to 300,000 yuan) to rich people (annual household income of more than 300,000 yuan).


5

60% Luxury consumption in 2007-2008 was from

First consumption

53% Luxury Consumption in 2015-2016 was from

Incremental consumption

68% Luxury consumption in 2008 was from

High-income people

88% Luxury consumption in 2016 was from

Rich people


6

Luxury goods that Chinese consumed in Hong Kong and Macao showed a decline from 2014’s

18% to 12% in 2015. Yet the consumption for luxury goods in Japan increased significantly. The

price sensitivity of China's affluent people has led them to prefer shopping in department stores,

specialty stores and other official channels or duty-free shops.

30% 28%

18% 12%

6%

7%

14%

11%

16%

19%

2%

5%

4% 5%

10% 13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015

Luxury Consumption outside Mainland China

Others

South Korea

Japan

Europe

US

Taiwan

HongKong/Macao

MainlandChina

Source：Bain & Company, China Luxury Market 2015 Note: Only for the consumers living in mainland China

Mckinsey & Company, China Luxury Report 2017

Downdown Duty-free Shop

Airport Duty-free Shop

Department Store

Brand Independent Store

Specialty Store in Shopping Center

Brand Independent Discount Store

Multi-brand Discount Shop

Online Shop

Chinese Rich People’s Preferred Shopping Channel


7

6-8 years ago, rich people paid more attention to material quality and workmanship rather than

brand awareness. Nowadays, brand excellence (namely the global popularity of the brand ) has

become the main factor impacting the consumers to purchase the luxury goods.


1. Excellent Brand

2. Superior Material

3. Classic Style

4. Elegant Workmanship

5. Creative Design

1. Excellent Brand

2. Classic Style


4. Superior Material

5. Creative Design

1. Excellent Brand


3. Classic Style

4. Long History

5. Social Status

TOP 5 Factors Impacting Customers to Purchase Luxury Goods


8

When Chinese rich people decided whether to go abroad to buy luxury goods, their first

consideration was price. In 2012, 60% of consumers were willing to accept a 20% spread, while

only 20% of them can tolerate it nowadays.


80%

75%

67%

64%

64%

55%

49%

Price

Novelty

Choice

Certified

Quality

Experience

Service

Chinese Rich People’s Consideration in Purchasing Luxury Goods Abroad



9

Cosmetics, Perfume,

Products for Personal

Use Watches

Bags and

Luggage Men’s Clothing

CHANEL

Dior

Estee Lauder

LANCOME

LANEIGE

Top 5 Luxury Brands in Mainland China

Cartier

Longines

OMEGA

ROLEX

Tissot

COACH

GUCCI

HERMES

LOUIS VUITTON

PRADA

Armani

HUGO BOSS

Burberry

Dior

Zegna

Jewelry Women’s

Clothing

BVLGARI

Cartier

CHOW TAI FOOK

Tiffany

Van Cleef & Arpels

Armani

Burberry

CHANEL

Dior

Max Mara

Accessories Shoes

Zegna

GUCCI

HERMES

LOUIS VUITTON

Montblanc

CHANEL

GUCCI

LOUIS VUITTON

Ferragamo

TOD’S


10

From January to December in 2015，Baidu generated 1.78 million searches for luxury goods

every day. Among all people searching for luxury goods, for age distribution, people aged 20-29

account largest for about 45% of the total population.

Source：Baidu Index

0%

10%

20%

30%

40%

50%

60%

70%

≤19 years old 20-29 years old 30-39 years old 40-49 years old ≥ years old

Age Distribution of People Who Searched Luxury Goods in Baidu


11

Among all luxury consumers in China, upstarts accounted for the largest proportion, followed by

metropolitan consumers and fashionistas.

Source：The Boston Consulting Group

12%

16%

7%

4%

6% 7%

8%

6%

22%

6%

0%

5%

10%

15%

20%

25%

Fashionista MetropolitanConsumer

Self-identity Experiencer Classic Lover Status Pursuer Social Wearer Absolute LuxuryConsumer

Upstarts Giver

Category of Luxury Consumers in China


12

With the rapid development of the Internet in China, the main way for consumers to obtain luxury

goods information is mainly the Internet and applications, and the proportion is still growing.

Among all Internet access, official websites and news websites were the most popular channels to

obtain luxury information. However, Weibo and App has sprung up in offering luxury information.

78%

31%

29%

20%

8%

7%

Internet & App

Magazine

Friend

Salesmen in Stores

TV Ads

Email

Access to Get Luxury Information for Mainland Chinese Consumers

60%

37%

31%

30%

29%

28%

9%

9%

Official Websites

News Websites

Weibo

App

WeChat

Celebrity Blog

BBS Forum

Video

Internet Access to Get Luxury Information for Mainland Chinese Consumers

Growth rate

2015 vs 2014

+3%

-4%

+1%

-2%

-1%

-2%

Growth rate

2015 vs 2014

-10%

-4%

+9%

+6%

+2%

+5%

0%

0%



13

China’s luxury consumers tend to be more willing to consume in entertainment industry. Compared

with 2014, more consumers would choose experiential luxury consumption in 2015. Among them,

the experiential consumption in luxury hotels and resorts accounted the largest proportion.

55%

36%

28% 25%

8%

58%

37%

33% 33%

9%

0%

10%

20%

30%

40%

50%

60%

70%

Luxury Hotels & Resorts Luxury Spa High-level Tourism Luxury Cruise Private Charter Service

Proportion of Consumers Choosing Experiential Luxury Consumption in China

2014 2015



14

An increasing number of high-end people, consumption upgrades, and China's norms for the

luxury goods industry all contribute positively to the overall luxury goods industry in China.

Clothing

Under the “Internet+”

e-commerce pattern,

the third-party luxury

e-commerce and its

value-added services

will become the

growth point for the

consumption of the

luxury clothing

industry in China.

Food

With the continuous

innovation of science

and technology and

the continuous

deepening of human

cognition, health

product innovation will

be the development

trend of high-end food.

Housing

Smart Home will

become the growth

point for luxury home

furnishing.

Transportation

Aircraft leasing will

play a leading role in

the future leasing

market.

Entertainment

High-end tourism will

become a consumption

breakthrough in the

tourism industry.

Meanwhile, the

customized route of

high-end tourism is

more in line with the

consumers’

consumption concept.

1 2 3 4 5

Source：Zero2IPO Research, China Luxury Industry Report 2015


15

According to the data of Zero2IPO Group, in 2015, the overall investment in the domestic luxury

goods industry was on the rise. Among them, clothes and entertainment still accounted for the

largest proportions, reaching 55.2% and 24% respectively.

Source：Zero2IPO Research, China Luxury Industry Report 2015

3.4

2.5

3.3 3.4

2.8

3.8

0

1

2

3

4

5

2010 2011 2012 2013 2014 2015

Investment Scale in China’ s Luxury Industry

Investment（CNY billion）

Clothing Shelter, 55.2%

Entertainment, 24.0%

Housing, 19.7%

Transportation, 0.9%

Food, 0.2%

Investment in Segmented Market of China’s Luxury Industry (2015)

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