After an "incredible" 2011 during which the global luxury goodsmarket grew 14 percent, the boom in emerging markets may boost thevalue of the market to 261 billion euros (US$340 billion) by 2014,CLSA said in Dipped in Gold, its annual report on the industry. Jewelry companies enjoyed the strongest sales growth last year,with Hong Kong's Chow Tai Fook seeing an exuberant 79 percent risein sales between April and September, compared with the previousyear, driven by consumers on China's mainland, the report found. Despite recent signs of a slowdown in luxury goods companies' firstquarter results, the global market will expand by 10 percent thisyear to 216 billion euros, CLSA found. Across China as a wholedemand will rise by 24 percent this year, a slowdown from 39percent last year. The power of the middle class in emerging markets means that by2020 these countries may account for 73 percent of all luxury goodspurchases, CLSA said. |
By 2015 the BRIC nations - Brazil, Russia,India and China - will be home to 1 billion middle class consumers,a rise of 378 million people in five years. China's middle classwill account for 45 percent of its population by 2015, up from 27percent in 2010. "We can see that luxury goods market growth has become morecorrelated to emerging-market growth," author Aaron Fischer wrotein the report. "Consumers in these countries today account foraround half of global luxury-goods sales." Despite the rapid pace of growth, vast swathes of China remainuntapped by the luxury brands. In the mainland market 15 billion euros was spent on luxury goodslast year, representing only at 4.6 percent of total consumerexpenditure on clothing, cosmetics, jewelry and travel goods.
Thiscompares with more developed economies such as Singapore and HongKong, where luxury spending made up 27 percent and 22 percent ofconsumers' spending respectively. In a country where luxury goods import taxes already mean pricesare between 30 percent and 70 percent higher than elsewhere,companies raise the cost of goods by an estimated 5 percent to 10percent year on year, CLSA found.
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