With annual consumption of RMB 471 billion, China's luxury goods market is developing rapidly

Consulting firm Bain & Company said in its annual report on the luxury industry that although Chinese consumers cannot easily travel abroad due to epidemic restrictions , their spending on luxury goods at home is increasing .

Bain data shows that personal luxury goods sales in mainland China increased by 36% year-on-year in 2021 to 471 billion yuan (US$73.59 billion) , more than double the mainland's luxury goods sales of 234 billion yuan in 2019 before the epidemic .

The report mentioned that sales of leather luxury goods increased by about 60%, making it the fastest growing category, followed by fashion and lifestyle- related luxury goods , which increased by about 40%.

Hainan duty-free shops are a key driver of the domestic luxury goods market. Over the past two years, new policies have cut taxes and other business-friendly measures aimed at turning the Hainan region into a free trade port and international consumption center.

According to Bain, luxury goods sales at Hainan duty-free shops increased by 122% year-on-year in 2020 and 85% year-on-year to 60 billion yuan in 2021. Last year, Hainan duty-free shop sales accounted for 13% of the total personal luxury goods market on the mainland, up from 9% in 2020 and 6% in previous years.

Bain analysts said the biggest reason for Hainan's success is the deep discounts it offers. For some products, the significant difference between the official listing price and the Hainan duty-free shop price has led to a slowdown in other sales channels.

In fact, before the outbreak of the epidemic, when there were no restrictions on travel abroad, some luxury brands had begun to relocate their luxury stores from Hong Kong to Hainan and other parts of mainland China due to protests in certain regions.

Bain's data also reflects the growth of the domestic market as an investment destination for international brands . According to Bain, mainland China's share of the global luxury market also increased from 20% in 2020 to 21% in 2021.

Although overall retail sales in China have declined since the outbreak of the epidemic in early 2020 , luxury goods sales have grown . Bain said that regardless of how international travel patterns change in the future, this growth is expected to continue, making China likely to become the world's largest luxury market by 2025 .

Luxury

China

Hainan Duty Free