China leapfrogs rivals to become world's largest luxury goods market

26 September 2023 3 min. read
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The Chinese market for luxury goods is expected to grow to 25% of the global market by the end of this year. That share is expected to reach around 40% in by 2030, making China the largest market for luxury goods in the world, overtaking Europe and the Americas.

With the increasing popularity of luxury brands and higher overall levels of wealth, China’s luxury market is expected to reach around $80 billion in 2023, on the back of a year-on-year growth of 8%. That is according to a new study from consulting giant Deloitte, conducted in collaboration with Douyin, China’s domestic version of Tiktok.

“In 2023, China’s luxury sector is on a trajectory for a robust recovery, solidifying its position as a critical market in the global brand landscape. Our analysis indicates a maturing Chinese consumer base, where luxury items are increasingly seen not merely as social capital, but as assets for personal enjoyment and long-term investment,” said Tianbing Zhang, partner at Deloitte.

China leapfrogs rivals to become world's largest luxury goods market

Source: Deloitte

This remarkable growth will be underpinned by several factors, including the spending propensity of high-net-worth individuals, the infusion of new demand from the post-90s generation, the expanded presence of online channels, and the successful fine-tuning of pricing, products, and marketing strategies by luxury brands.

From a products perspective, bags and suitcases account for over one third (35%) of the total market for luxury goods in China, with clothing at around 23% of the market, and jewelry and watches at 19% and 15% respectively.

Among the segments experiencing the highest growth are jewelry, watches, and bags. Their appeal lies in their investment potential and asset preservation, the exclusivity of their brand and design elements, as well as their versatility, said the authors.

China leapfrogs rivals to become world's largest luxury goods market

Source: Deloitte

Asked what the key considerations are for buying luxury products, much cited preferences included practicality for everyday use (49%), the sense of self-reward (47%), and stylish design (35%).

Notably, Chinese consumers exhibit a keen interest in unraveling the narrative behind a brand. In this regard, short videos and livestreams emerge as optimal conduits for delivering authentic content that can communicate stories and offer entertainment value.

The report also highlights the need for luxury brands to build ‘luxury experiences’, across the entire omnichannel journey spanning both physical and online interactions.

“Online platform and digital experiences are reshaping consumer behavior in China. Online channel adoption has now exceeded 50% across the country,” states the report. However, consumer expectations from luxury brand are notably higher than for traditional brands, meaning that luxury brands have to live up to these expectations – or fail being left behind.

previous report on the Chinese luxury goods market also showed that luxury brands largely expect significant growth in China, with local apparel brands making up much of the expanded market share.