The growing potential of Chinese luxury market makes it impossible for the global luxury product manufacturers to ignore the 'dragon nation'.
Luxury brands thrive in the soil of China. Their luxury market including jewelry, leather products, fashion apparels, perfumes etc. reached around $8 billion USD during 2007. A statistics states that, China accounts to 18% of the global luxury consumption. Almost 80% of the top global luxury brands have entered into China. Luxury mavens predict that by 2015, luxury consumption in China will constitute 32% of the global market.
In the recent past many international luxury brands were attracted by the market potential of China. Numerous luxury brands like Versace, Rolex, Chanel, Omega, Dior, Prada, and Zegna have dipped their toes in the country. Lots of luxury brands are manufactured in China. Coach, Prada, Furla, and LV are made in China in big numbers. Numerous factories in Guangdong make a range of brands which are sold in the market for a fortune. Cities such as Shanghai and Beijing have attracted the investments of retail giants like Giorgio Armani.
II and III tier cities fuel the luxury market:
China has 100 cities with population exceeding one million. With the increasing number of consumers' disposable income, and their inclination to acquire a social strata, and willingness to express uniqueness in their lifestyle, luxury market is fuelled up even in the II and III tier cities. I tier cities like Shanghai, Guangzhou, and Beijing have advanced retail infrastructures and high per capita GDP. The II and III tier cities are also catching up with the former ones. Middle class population in China is estimated to grow and reach 250 million by 2010. With the growing interest of middle class people towards luxury products, the market is heating up. Social status is now becoming imperative for middle income people as well. Luxury products enable the consumers to project a social class. Consumers from II and III tier cities feel the need to 'close the gap' and build up a I tier image. They go in for buying branded items with a hefty price tag only to display their status to others.
Advent of the Chinese 'chuppies':
The young and profligate Chinese generation in between the age group 20-30 known as 'yuppies' or 'chuppies' in China; meaning one to spends all he earns. They are raising a wave of unprecedented commercialism. The chuppies are young, urban, and middle class consumers who are generally white collared, having 100% disposable income. They will be the most powerful consumer group; not only in China but all across the globe within the next 15 years.
This young generation population has a strong preference towards Western brands, and luxury products. They prefer their accessories to reflect their personality and clothes, footwear, and cosmetics occupy a major portion of their expenditure. They are eager to shop for status enhancing products in lavish packaging. Women choose to buy cosmetics in Western or American packing instead of buying plastic packing even if it contains more quantity.