Why Do Chinese Consumers Buy Luxury Goods From The Global 1/3?

In 2018, Chinese consumers spent 770 billion yuan on the global 1/3 luxury.

In April 26th, McKinsey China released the 2019 report on luxury consumption in China, which shows that the growth of the luxury market in 2018 is stronger than that in the background of the slowdown in China's economic growth.

According to Bain's "2018 China luxury market research", the overall sales of China's luxury goods market in 2018 continued to record a record growth in 2017, and the growth rate reached 20% in two consecutive years.

In fact, not only last year, 2012-2018 years, more than half of the global luxury market growth came from China. Such a strong purchasing power and high-speed growth trend, the Chinese market has become a major brand competition.

Chinese consumers coming from behind

According to the 2019 report on China's luxury goods consumption, after 80, the half of China's luxury market has been propped up.

In 2018, about 23 million 900 thousand Chinese consumers bought luxury goods, of which 43% accounted for 56% of the total consumption of post-80s consumers. From the perspective of per capita expenditure, 80% of those who are at the peak of their career and income spend 41 thousand yuan on luxury goods every year.

The consumption power of the post-90s should not be underestimated. In 2018, 28% of China's luxury consumers accounted for 23% of the total consumption.

Nowadays, the luxury market in China can be seen as the most prosperous one. No one will think of it. Twenty years ago, luxury goods for Chinese consumers were only a few of the rich.

The luxury consumption potential of ordinary consumers in China was released only in twenty-first Century.

Before the 90s of the last century, the international luxury market grew at an annual rate of 10%-20%, and the global market share of the heyday was over 250 billion US dollars (about 17190 yuan).

But after 2000, the development momentum of the world luxury market was obviously insufficient. Especially in 2000~2003, the demand for luxury goods in Europe and the United States decreased year by year, and the sales volume of the world luxury goods market plummeted from 170 billion US dollars (about 11725 billion yuan) to 65 billion US dollars (about 448 billion 300 million yuan), a drop of 62%.

To add insult to injury, after a series of events such as the "911" incident, the Afghan War (2001), the SARS (2002) and the Iraq War (2003), the number of tourists from the world began to decrease significantly, and the number of luxury consumption spannational consumers shrinks.

But at that time, China, Brazil, India, Russia and other emerging markets, due to the growth of local economy and the increase of residents' consumption desire, the demand for luxury goods is increasing year by year, which seems to be the trend of luxury consumption centers.

It was also at this time that the center of the international luxury market began to shift from developed countries such as Europe and the United States to developing countries such as Asia and Latin America.

At that time, the rapid development of China's economy has greatly increased the national income level, and a large number of high-income and wealthy people have emerged. The consumption power of Chinese consumers is gradually emerging.

According to Bain's luxury survey report, the luxury market has declined by 8% in the 2008-2009 years of the global financial crisis and the dramatic decline in consumption. However, the luxury market in China has been growing by 16%.

Now, over the past decade, China's luxury consumer market is still a blue ocean, and the momentum of development has only increased. This is mainly due to the advantages of the right place, the right place and the right people.

Bain believes that the Chinese government has lowered the import tariffs on luxury goods, the regulatory authorities have strengthened the control of the gray market, and the major luxury brands continue to adjust the price gap between the domestic and foreign markets, which are three important factors to promote the rapid growth of the domestic luxury market. More and more Chinese consumers choose to buy luxury goods in the mainland market instead of going abroad as they used to buy cheaper products.

Geographically, the Chinese consumer's luxury consumption position has shifted from abroad to China, and there has been a trend of consumer reflux. In the purchase channel, because of the emergence of e-commerce, showing a downward trend in the line.