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Luxury, China slows down after five years of growth

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Luxury, China slows down after five years of growth

After five years of exponential growth, the luxury market in China has slowed down, losing 10% of its value in 2022. But it was a temporary stop, linked above all to the zero-Covid policy which blocked the country for months before the Beijing government decreed its end last December. Already at the end of the first quarter of this year, the study predicts, the consumption curve will begin to rise again. These are the main data that emerged from the new “China Luxury Report” by Bain & Company.

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If between 2012 and 2016 the growth of luxury purchases in China, the second global market for high-end goods, remained constant but very low, in the order of +1% on average per year, a much more significant was recorded between 2016 and 2019, equal to an average annual +26%, and even more between 2019 and 2021, equal to +42%. On the other hand, the purchases of personal luxury goods by 10% between 2021 and 2022 contributed to the harsh lockdowns, but also the drop in consumer confidence, caused by the slowdown in the real estate market, by the forecasts of a slowdown in GDP growth and rising unemployment.

All the product categories were involved, although not to the same extent: the products of the big brands and those with greater online penetration had a less intense drop, as in the case of beauty products which with a penetration of 50% suffered only a -6% of sales. The watch segment, one of the most linked to physical retail, was instead the one that lost the most, between 15 and 20%, followed by jewelery and leather accessories, with a drop of 10-15%. The fashion segment lost 15-20%.

In the world, the purchases of the wealthiest 2% of customers represent 40% of total luxury sales. And in China the so-called Vic (very important clients) are both constantly increasing and are least affected by the consequences of the slowdown in the national economy. Some Chinese luxury brands have achieved sales 40% above the global average through the Vics; this type of customer has also played a leading role on online channels.

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