Dear Audience, state capitalism has made many Chinese people rich, and created a new and fast-growing market for western luxury brands. But companies like Louis Vuitton and Gucci will have to make some adjustmentsif they are to benefit fully from the boom.
China: the future of luxury – strategic management
The Chinese economy is sending out conflicting signals. On the one hand, luxury goods manufacturers are optimistic about sales prospects, and annual growth of 25 percent is perfectly feasible. In 2015, Chinese consumers will spend an estimated EUR 57 billion on luxury goods, increasing their share of the world market to 34 percent. On the other hand, growth slowed significantly in some segments of the luxury market during the first half of 2012. It is too early to predict whether this is part of a long- term downward trend, but there are increasing signs that it may be the case. The faltering world economy and the euro crisis are putting the brakes on spending by affluent consumers in mainland China, Hong Kong, and Macau.
Observers believe that this year, China has once again been the world’s fastest-growing luxury market, and European and US brands have little to worry about for now. But the slowing pace of expansion is a reminder that when market growth ceases to be unlimited, the battle for market share will intensify. And the forces at work in China’s economy could change the whole face of the industry …