Page 256 - 2023 White Paper on the Business Environment in China
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3 White Paper on the Business Environment in China
player, accelerated its expansion in China with digitalization and the continued repatriation trend
plans to open a new store in Shenzhen, Guangdong owing to COVID-19-related international travel
province. The move is part of the group's strategic restrictions. China's share of the luxury market has
scaling-up plan which aims to have 10 stores in the grown to 21% of the world's total in 2021, putting
country by 2025. This is expected to be a major the country on track to becoming the top global
economic boon to the areas they open stores market by 2025, regardless of future international
in and is expected to draw other international travel patterns. While luxury spending is not
businesses to the region. The acceleration in significant in absolute terms for total consumer
attracting domestic luxury consumers is in line with spending, it shows that consumers are feeling good
the country's rising local consumption for high-end about themselves, the environment and their own
merchandise. China's share of the global market perspectives of development. So it contributed in
has almost doubled in two years to 21% in 2021, another way by reflecting consumer confidence and
according to the consultancy firm Bain & Co. In optimism. Individual luxury spending surged 36%
2021, the majority of offline retailers suffered from in 2021 to nearly 471 billion RMB (US$73.59 billion),
a decline of customer traffic due to the impact with some brands gaining a 70% odd year-on-year
of COVID-19. Consumers who would have gone sales increase. Leather goods were labeled as the
shopping abroad in the normal course but are fastest-growing category with about a 60% growth
now buying luxury goods in China as they cannot rate, followed by fashion and lifestyle at around
travel overseas due to the COVID-19 situation, have 40%. While luxury beauty spending increased just
supported the high-end shopping centers. Such around 20%, it is the category that accounted for
places now offer terrific shopping experiences to more than half of personal luxury expenditure in
their target consumers. Duty-free shopping has Hainan province's duty-free shopping zone. It is
likewise gained from its opportunities. In the island estimated that Hainan already represents one-
province of Hainan, it reported 49.5 billion RMB of quarter of the luxury beauty market through official
offshore duty-free shopping in 2021, up 80% year- channels in China. But the remaining segments in
on-year. More than 70 million items were bought the luxury realm see Hainan as a clear opportunity
by 6.72 million shoppers. The per capita shopping with favorable policies, so brands are willing to
amount registered in the offshore duty-free shops adjust their footprints and cater to consumer
(DFS) of Hainan was recorded at 7,368 RMB, an behaviors. In 2021, COVID-19-related travel
increase of 20.2% compared to the level in 2020. restrictions led the Chinese mainland's portion
Luxury consumers in China also prefer a good of the nation's global luxury purchases to rise to
bargain. The business performance of outlets has over 90%. The study found that online luxury sales
seen a rosier picture in 2022 thanks to discount grew faster than offline across all categories, with
prices offered on international luxury brands. For online personal luxury sales rising almost 56% and
instance, Florentia Village, a company owned by offline sales 30%. Luxury brands, like all consumer
RDM Asia, in 2022 opened an outlet as part of its brands, have been updating marketing approaches
second phase in Pudong district in Shanghai with and embracing, particularly the digital wave. Now
an additional 2,000 square meters which included brands will need to make adaptions one more
110 branded shops, marking a total coverage of time. It is not a big step, but an evolution of what
nearly 70,000 square meters and more than 300 they constantly do (Wei, “Double-Digit Growth in
shops. In 2021, the outlet logged sales revenue Luxury Sector Likely in 2022”).
of 2.7 billion RMB, and was visited by 4.5-million-
person times thanks to a booming recovery in the As their incomes rise and self-awareness grows,
local economy (Zhuoqiong). more Chinese women are pursuing a high-quality
life, becoming the main driver of consumption
China's personal luxury sector is likely to enjoy spending in the new era. Moreover, they actively
low double-digit growth in 2022 after the market engaged in financial and economic activities,
nearly doubled in size over the previous two years, painting a wonderful and promising portrait of
according to a latest projection by consultancy Bain the Chinese women. "She economy" was a term
& Co. Domestic spending in the luxury market will coined by the Ministry of Education in 2007 for the
be further strengthened by duty-free opportunities, market targeting women. Industry data show that
256
player, accelerated its expansion in China with digitalization and the continued repatriation trend
plans to open a new store in Shenzhen, Guangdong owing to COVID-19-related international travel
province. The move is part of the group's strategic restrictions. China's share of the luxury market has
scaling-up plan which aims to have 10 stores in the grown to 21% of the world's total in 2021, putting
country by 2025. This is expected to be a major the country on track to becoming the top global
economic boon to the areas they open stores market by 2025, regardless of future international
in and is expected to draw other international travel patterns. While luxury spending is not
businesses to the region. The acceleration in significant in absolute terms for total consumer
attracting domestic luxury consumers is in line with spending, it shows that consumers are feeling good
the country's rising local consumption for high-end about themselves, the environment and their own
merchandise. China's share of the global market perspectives of development. So it contributed in
has almost doubled in two years to 21% in 2021, another way by reflecting consumer confidence and
according to the consultancy firm Bain & Co. In optimism. Individual luxury spending surged 36%
2021, the majority of offline retailers suffered from in 2021 to nearly 471 billion RMB (US$73.59 billion),
a decline of customer traffic due to the impact with some brands gaining a 70% odd year-on-year
of COVID-19. Consumers who would have gone sales increase. Leather goods were labeled as the
shopping abroad in the normal course but are fastest-growing category with about a 60% growth
now buying luxury goods in China as they cannot rate, followed by fashion and lifestyle at around
travel overseas due to the COVID-19 situation, have 40%. While luxury beauty spending increased just
supported the high-end shopping centers. Such around 20%, it is the category that accounted for
places now offer terrific shopping experiences to more than half of personal luxury expenditure in
their target consumers. Duty-free shopping has Hainan province's duty-free shopping zone. It is
likewise gained from its opportunities. In the island estimated that Hainan already represents one-
province of Hainan, it reported 49.5 billion RMB of quarter of the luxury beauty market through official
offshore duty-free shopping in 2021, up 80% year- channels in China. But the remaining segments in
on-year. More than 70 million items were bought the luxury realm see Hainan as a clear opportunity
by 6.72 million shoppers. The per capita shopping with favorable policies, so brands are willing to
amount registered in the offshore duty-free shops adjust their footprints and cater to consumer
(DFS) of Hainan was recorded at 7,368 RMB, an behaviors. In 2021, COVID-19-related travel
increase of 20.2% compared to the level in 2020. restrictions led the Chinese mainland's portion
Luxury consumers in China also prefer a good of the nation's global luxury purchases to rise to
bargain. The business performance of outlets has over 90%. The study found that online luxury sales
seen a rosier picture in 2022 thanks to discount grew faster than offline across all categories, with
prices offered on international luxury brands. For online personal luxury sales rising almost 56% and
instance, Florentia Village, a company owned by offline sales 30%. Luxury brands, like all consumer
RDM Asia, in 2022 opened an outlet as part of its brands, have been updating marketing approaches
second phase in Pudong district in Shanghai with and embracing, particularly the digital wave. Now
an additional 2,000 square meters which included brands will need to make adaptions one more
110 branded shops, marking a total coverage of time. It is not a big step, but an evolution of what
nearly 70,000 square meters and more than 300 they constantly do (Wei, “Double-Digit Growth in
shops. In 2021, the outlet logged sales revenue Luxury Sector Likely in 2022”).
of 2.7 billion RMB, and was visited by 4.5-million-
person times thanks to a booming recovery in the As their incomes rise and self-awareness grows,
local economy (Zhuoqiong). more Chinese women are pursuing a high-quality
life, becoming the main driver of consumption
China's personal luxury sector is likely to enjoy spending in the new era. Moreover, they actively
low double-digit growth in 2022 after the market engaged in financial and economic activities,
nearly doubled in size over the previous two years, painting a wonderful and promising portrait of
according to a latest projection by consultancy Bain the Chinese women. "She economy" was a term
& Co. Domestic spending in the luxury market will coined by the Ministry of Education in 2007 for the
be further strengthened by duty-free opportunities, market targeting women. Industry data show that
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