China’s luxury market returns to form
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China’s luxury market returns to form

After a rocky few years, China is emerging once more as a massive driver for the luxury goods sector. In 2012, the country’s luxury market hit a peak as Chinese officials embraced conspicuous consumption and intensive gift giving – a Chinese cultural practice that opens business doors, but (according to the Chinese government) veers dangerously close to corruption. Beijing decided to crack down on this spending and, temporarily, the luxury sector suffered. But now, Chinese consumers are back – and their impact is being felt.

Luca Solca, head of luxury goods research at Exane BNP Paribas, said: “the anti-corruption campaign has removed the froth from the market, as spending and consumption is now very largely legitimate.”

China’s expanding middle class has adjusted quickly to the world it now occupies, and developed its own tastes and habits. Its spending will be so important over the next few years that researcher Bain & Co. claim it will be a main engine for luxury growth to 2020.

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Notably, female spending has become more important, as women shop for perfume and handbags, while the largely male driven conspicuous consumption of the past has been quelled. Serena Rovai, professor at La Rochelle Business School in France, wrote in her book Luxury the Chinese Way that this female dominance has emerged “thanks to the increasing purchasing power of women and the anti-corruption policy regarding often male-driven gift-giving.”

The impact of China’s return to prominence in the luxury world has already been felt in Dominion’s Luxury Fund, with companies like Burberry, LVMH and Kering all seeing exceptional performance over the first half of this year. If HSBC is to be believed, this strength will persist throughout the rest of the year, and high-end spending gains could beat a figure as high as 10% in Mainland China.


Dominion holds a number of companies in its Global Trends Luxury Fund that are exposed to the Chinese market.

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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.