China Expected To Become World’s Largest Luxury Market By 2025: Bain & Co.

Since the start of the pandemic, we’ve seen consumers around the globe shift much of their spending from services and experiences to goods, and consumers in China were no exception, according to a recent report by consultancy firm Bain & Company.

Last year, luxury sales in China reached 471 billion yuan ($74.3 billion), an increase of 36% from 2020 and almost double the amount from 2019. What’s more, the country represented $0.21 of every dollar spent globally on high-end goods from apparel and handbags to fragrances and cosmetics to luxury automobiles.

Bain believes China’s personal luxury market can enjoy low double-digit growth again this year.

Much of the spending in 2021 was driven by online and duty-free shopping, particularly in the southern Chinese island-province of Hainan, which has transformed virtually overnight into a popular luxury mecca for consumers restricted from international travel.

Says Bruno Lannes, a partner at Bain, China is now on track to surpass the Americas and Europe to become the world’s biggest luxury market in as little as three years. By 2025, China is estimated to represent between 40% and 45% of global luxury goods sales, compared to the Americas’ 21%-23% and Europe’s 16%-18%.

World’s Largest Middle Class Expected To Continue Rapid Expansion

Bain’s prediction is in line with the rapid growth of China’s middle class, already the largest in the world. One estimate, by the Brookings Institution, says that China’s middle-class expeditures in 2020 totaled a whopping $7.3 trillion in international dollars, compared to $4.7 trillion for the U.S., the world’s number two consumer.