China to be biggest luxury market in 9 months

In just nine months, China will replace Japan to become the world's largest luxury goods market, the US-based non-profit World Luxury Association (WLA) forecast at its annual summit held in Beijing on Thursday.

The prediction is three years earlier than more conservative estimates from Mckinsey in April as well as the new Business Bluebook from the China Academy of Social Sciences.

The country's share of the global luxury market rose 2 percent to 27 percent over the five months until the end of May, while Japan's share dropped 5 percent to 29 percent and the US share fell 1 percent to 14 percent, according to the WLA's 2010-2011 Blue Book Report.

Sales of luxury goods in China are expected to jump 36 percent year-on-year to $14.6 billion in 2012, not including private high-end jets, yachts and vehicles, breaking the previous growth record of 13.8 percent in 2010, the report said.

"Some 200 million well-heeled consumers with sybaritic taste are increasing consumption by at least 15 percent annually," Michael Ouyang, the WLA'S China CEO, told the Global Times.
The booming market reported an average 20 percent growth in the first five months as many luxury brands expand into second-tier and third-tier Chinese cities, Ouyang said. High-end jewelry, handbags and clothing are the top three segments.

These figures could explain Prada's recent HK listing, its plan to open another 30 outlets in the next three years on the Chinese mainland and Louis Vuitton's exhibition for its 20th year in the National Museum of China in Beijing, he added.

Though China imports items from nearly 70 percent of global luxury brands and will further open the market by 2013, its 15 percent to 25 percent tariff on luxury goods has held back blockbuster growth.

Minister of Commerce Chen Deming vowed to lift the tariff in March, but no concrete timetable for the move has been announced.

"We have to balance rapid development and sustainability to guarantee a healthy luxury goods market," said Zhang Chaomei, director of Foreign Trade Affairs under the Ministry of Commerce on Thursday, responding to speculation that the process would last a year at most.

"Ministry of Trade negotiations with the General Administration of Customs will take longer than expected," Ouyang predicted.China's first Luxury Trade Commission was also established on Thursday to promote trade and build domestic luxury tea, wine, jade and furniture brands.