Between 2012 and 2015, China will have overtaken the United States to become the largest market for luxury goods in the world. The China luxury market is growing fast, and one city in particular is fueling this growth – Shanghai. As China slips on the mantle of the largest luxury market, Shanghai will be its luxury capital. A study conducted by the World Luxury Association found that Shanghai accounts for 18.3 percent of overall sales in the China luxury sector. Beijing comes in second with 16. 2 percent, while Hangzhou in the east trails with 13.4 percent. Wealthy Shanghai residents have benefited from the presence of luxury brands. Most international luxury brands have their China headquarters in this fashionable city.
The people of Shanghai have traditionally been stylish dressers. Moreover, Shanghai’s longstanding reputation as a commercial city has given it the edge over Beijing, which for a long time did not house luxury malls. It helps too, that Shanghai has 132,000 residents with a gross disposable income of 10 million yuan ($1.6 million). International luxury brands are therefore well within their reach, with French and Italian brands being the fastest movers.
In fact, French house Hermes launch Shang Xia last year – a brand that blends Chinese crafts with modern design. The brand is yet to generate profits but is performing really well. The Hermes boutique stands in Plaza 66, a mall that also houses luxury brands like Dior, Versace, Armani and Bulgari among others.
China’s millionaires are much younger than their counterparts in the West. This determines their preference for high fashion buys. Thus, fashion blogs have become instrumental in fuelling the boost in the China luxury market. Shanghai buyers love comparing prices. But that won’t stop them from paying 5,500 euros ($7,500) for a Birkin Bag. It is all about the brand, here in luxury-loving Shanghai.