Sales of luxury goods in China reached 142 billion RMB ($22.07 billion) in 2017, 20% more than 2016, said a report issued by management consulting firm Bain & Company on Jan. 17.
The 20% rise was the largest jump since 2011, according to the report. The sales growth of cosmetics, women clothing, and jewelry outpaced that of the other items.
Bain & Company attributed the increase to China’s upgraded consumption, tighter control over freelance retail consultants, and price adjustments made by luxury brands.
Based on a 2017 investigation conducted by the firm, 48% of Chinese consumers were between the age of 20 and 34 when they bought their first luxury commodity.
It is a unique phenomenon that only happens in China, said Bruno Lannes, global partner of Bain & Company and author of the report. “Millennials have greatly accelerated the growth of luxury sales in China, especially in 2017,” he added.
Though online stores of luxury brands have maintained high-speed growth, they only accounted for a small proportion of the total volume. However, online promotion has become more important for these brands, and opening e-shops have become a common practice for them.
Increased spending on digital marketing was another highlight of the Chinese luxury sales market, accounting for nearly half of the total marketing outlay.
For instance, luxury brands have spent 30% to 60% of their marketing budget on advertisements on WeChat, a miraculously popular social application in China. Forty brands have launched official accounts on the platform and some of them have attracted 300,000 to 500,000 followers, with 40,000 to 60,000 readings daily.
Lannes noted that the Chinese luxury market takes up to 32% of the global share, having an increasingly significant influence on the global market.
He believes the Chinese market will maintain strong potential in 2018, but the growth may fall to 10% to 15% given the drastic rise over the last year.
