The major luxury brands have begun to invest in millions in the Chinese luxury market to construct flag ship stores, in second and third tire cities. Some academicians are concerned about the conspicuous consumption of luxury goods is not a standard measure for the true growth of the country, hinting the distorted vision into the economic development of the country.
The World Luxury Association said that as consumption of luxury item is declined in Japan, China will replace Japan with its increasing demand, and would be world’s top consumer of luxury items by 2012. The value of luxury goods in the market of china this year will be $14.6 billion excluding luxury cars, private jets, and yachts.
According to the survey, Chinese luxury market ranks second at 27%, slightly lower than 29 percent of Japan and higher than 18 percent of Europe and 14 percent of The U.S. From Europe itself, China bought $50 billion worth luxury goods last year with its fast annual growth. Now Chinese market will be targeted by more luxury brands, eyeing for expansion as there is no room for further sales growth for another three years in Japan, Europe and the United States.
Those companies who have already firmly rooted in first tier cities are tapping their opportunities in 2nd and 3rd tier cities. Currently the luxury market in Japan at its lowest ebb, due to the devastation by the earth quake in March, approximately about fifty percent of the luxury stores are forced to stop their business activity for one month after the great mishap. With the purchasing power of luxury goods in China, it is expected that seventy percent of luxury brands would diversify in the Chinese market.