Page 254 - 2023 White Paper on the Business Environment in China
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3 White Paper on the Business Environment in China
gaining steam. Retail sales of consumer goods, 2021 in China. The category of leather goods was
a major indicator of the country's consumption the fastest growing with a growth rate of about
strength, hit a record high of 44 trillion RMB 60%, followed by fashion clothes and jewelry.
(US$6.3 trillion) in 2021, 2.1 times the figure in The offshore duty-free shopping in the southern
2012, according to a report released by the National Chinese island province of Hainan had boosted
Bureau of Statistics. China has kept its economic the country's burgeoning luxury market, as about
growth within a reasonable range, which is leading 95% of Hainan's duty-free sales volume came from
to the steady growth of personal incomes, the personal luxuries in 2021 and more than half of the
report said, noting that the country's consumer luxury goods were cosmetics under luxury brands.
market has great potential and resilience. Despite In 2021, China's online personal luxury sales
the disruptions brought by COVID-19, China's total increased by about 56%, faster than the offline
retail sales of consumer goods rose 12.5% year-on- stores, the conventional and primary distribution
year in 2021, and the average annual growth during channel for the luxury industry. However, due to
the 2020-2021 period hit 3.9%, the data showed. the impact of the COVID-19 pandemic and related
China's urban consumption logged stable growth travel restrictions, over 90% of Chinese consumer
over the past decade thanks to rapid urbanization spending on luxuries was done on the Chinese
progress. In the 2013-2021 period, retail sales of mainland. Bain & Company overall expect Chinese
consumer goods in urban areas climbed 8.1% consumers' personal luxury purchases to recover
on average each year. During the same period, to pre-COVID-19 levels between the end of 2022
retail sales of consumer goods in rural towns and and the first half of 2023 (Xinhua, “China to Become
villages respectively expanded an average of 10.4% World’s Largest Luxury Market by 2025”).
and 9.8% each year, as rural residents saw their
income growth surpass that of urban residents, Shopping online is serving as key channels
narrowing the urban-rural income gap. Over for the luxury sector's recovery worldwide
the last decade, online shopping has become a in the pandemic era. In China, luxury brands
bright spot in China's consumer market, and it is continue to strengthen their control over retail
a typical example of the country's emerging forms distribution channels by working together with
of consumption. From 2015 to 2021, the average leading shopping malls in first and second-tier
annual growth of online retail sales of physical cities as consumers prefer to shop nearby. Some
goods topped 20%, and online retail sales of organizations such as SKP require strict COVID-19
physical goods accounted for 24.5% of China's total prevention measures and strive to provide a safe
retail sales of consumer goods in 2021 (Xinhua, and thoughtful shopping environment to ensure
“China’s Consumption Market Expands With Strong customer comfort. According to the commercial
Impetus Over Decade”). property complex retail sales ranking compiled
by West South Cloud, Beijing SKP tops the chart
Luxury Goods and Cosmetics at 23.9 billion RMB (US$3.73 billion) in 2021. The
figure in 2020 stood at 17.7 billion RMB. Leading
Around 21% of the global consumer spending property experts say that luxury brands provided
on luxury goods came from the Chinese mainland tailored products and often debuted their goods
in 2021 and China is expected to become the at SKP. By cultivating local brands through well-
world's largest luxury market by 2025, according designed display and supply chain as well as the
to the global management consulting firm Bain store layout, SKP and SKP Select have provided
& Company. The company released its China local brands with shopping experiences on the
Luxury Report 2021 in January, highlighting that same level as international brands. A top team of
the domestic sales of personal luxury goods in buyers who have strong capacity in pricing and
the Chinese mainland notched up a 36% year- in selecting merchandise of niche brands from
on-year increase to nearly 471 billion RMB (74 abroad add more incentives for trend following
billion U.S. dollars) in 2021. The sales figure almost buyers. In addition to domestic shopping centers,
doubled compared to that of 2019. Categories international retailers have stepped up their
of luxury goods posted varied market growth in investment in the sector. For instance, Galeries
Lafayette, a leading French department store
254
gaining steam. Retail sales of consumer goods, 2021 in China. The category of leather goods was
a major indicator of the country's consumption the fastest growing with a growth rate of about
strength, hit a record high of 44 trillion RMB 60%, followed by fashion clothes and jewelry.
(US$6.3 trillion) in 2021, 2.1 times the figure in The offshore duty-free shopping in the southern
2012, according to a report released by the National Chinese island province of Hainan had boosted
Bureau of Statistics. China has kept its economic the country's burgeoning luxury market, as about
growth within a reasonable range, which is leading 95% of Hainan's duty-free sales volume came from
to the steady growth of personal incomes, the personal luxuries in 2021 and more than half of the
report said, noting that the country's consumer luxury goods were cosmetics under luxury brands.
market has great potential and resilience. Despite In 2021, China's online personal luxury sales
the disruptions brought by COVID-19, China's total increased by about 56%, faster than the offline
retail sales of consumer goods rose 12.5% year-on- stores, the conventional and primary distribution
year in 2021, and the average annual growth during channel for the luxury industry. However, due to
the 2020-2021 period hit 3.9%, the data showed. the impact of the COVID-19 pandemic and related
China's urban consumption logged stable growth travel restrictions, over 90% of Chinese consumer
over the past decade thanks to rapid urbanization spending on luxuries was done on the Chinese
progress. In the 2013-2021 period, retail sales of mainland. Bain & Company overall expect Chinese
consumer goods in urban areas climbed 8.1% consumers' personal luxury purchases to recover
on average each year. During the same period, to pre-COVID-19 levels between the end of 2022
retail sales of consumer goods in rural towns and and the first half of 2023 (Xinhua, “China to Become
villages respectively expanded an average of 10.4% World’s Largest Luxury Market by 2025”).
and 9.8% each year, as rural residents saw their
income growth surpass that of urban residents, Shopping online is serving as key channels
narrowing the urban-rural income gap. Over for the luxury sector's recovery worldwide
the last decade, online shopping has become a in the pandemic era. In China, luxury brands
bright spot in China's consumer market, and it is continue to strengthen their control over retail
a typical example of the country's emerging forms distribution channels by working together with
of consumption. From 2015 to 2021, the average leading shopping malls in first and second-tier
annual growth of online retail sales of physical cities as consumers prefer to shop nearby. Some
goods topped 20%, and online retail sales of organizations such as SKP require strict COVID-19
physical goods accounted for 24.5% of China's total prevention measures and strive to provide a safe
retail sales of consumer goods in 2021 (Xinhua, and thoughtful shopping environment to ensure
“China’s Consumption Market Expands With Strong customer comfort. According to the commercial
Impetus Over Decade”). property complex retail sales ranking compiled
by West South Cloud, Beijing SKP tops the chart
Luxury Goods and Cosmetics at 23.9 billion RMB (US$3.73 billion) in 2021. The
figure in 2020 stood at 17.7 billion RMB. Leading
Around 21% of the global consumer spending property experts say that luxury brands provided
on luxury goods came from the Chinese mainland tailored products and often debuted their goods
in 2021 and China is expected to become the at SKP. By cultivating local brands through well-
world's largest luxury market by 2025, according designed display and supply chain as well as the
to the global management consulting firm Bain store layout, SKP and SKP Select have provided
& Company. The company released its China local brands with shopping experiences on the
Luxury Report 2021 in January, highlighting that same level as international brands. A top team of
the domestic sales of personal luxury goods in buyers who have strong capacity in pricing and
the Chinese mainland notched up a 36% year- in selecting merchandise of niche brands from
on-year increase to nearly 471 billion RMB (74 abroad add more incentives for trend following
billion U.S. dollars) in 2021. The sales figure almost buyers. In addition to domestic shopping centers,
doubled compared to that of 2019. Categories international retailers have stepped up their
of luxury goods posted varied market growth in investment in the sector. For instance, Galeries
Lafayette, a leading French department store
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