BAIN: CHINESE LUXURY SPENDING SHIFTS FURTHER ABROAD WITH 2% DOMESTIC DECLINE
After heading into the red last year amidst a market slowdown, China’s luxury market decline sunk even further in 2015, according to Bain & Company’s annual industry report.
As Chinese consumers continued to opt to make their luxury purchases abroad, Bain found that the value of mainland China’s luxury market declined by 2 percent to 113 billion RMB in 2015. The decline was driven by large slumps in men’s watches, clothing, and leather goods, says the report.
The bright spot for the global luxury industry remains Chinese spending overseas. Although China’s economic growth is slowing and the country’s anti-corruption campaign continues, Chinese consumers still upped their luxury spending abroad by 10 percent in the past year. Japan was a main beneficiary of this trend, with the report stating that Chinese luxury spending in the country increased by over 200 percent. Favorable exchange rates and lower prices also made South Korea, Europe, and Australia popular shopping destinations, while spending in Hong Kong and Macau dropped by one-quarter.
This increase in travel spending didn’t lead to an increase in daigou shopping, however, which is likely a welcome development for luxury retailers. According to Bain & Company, the daigou market contracted to become worth about 43 billion RMB after being hit by efforts to contain it, including increased customs restrictions and a weak RMB. In addition, cross-border sales websites contributed to the daigou decline, and accounted for 48 billion of 293 billion RMB spent by Chinese consumers on luxury overseas in the past year.
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