Growth in China’s luxury goods market has slowed down from 21% in 2012 to an estimated 2% in 2014, but that does not mean the opportunity window for foreign and domestic is closed. In fact, L2’s just-released Digital IQ Index: Luxury – China finds that global luxury brands will depend on China as a stimulator of growth.
Much of China’s consumption in the upcoming years will be from travel. Chinese consumers are expected to account for 30% of global purchases in 2014 as the world’s top tourist spenders. And that’s just for the 5% of Chinese that hold a passport. By 2020, they are expected to account for 50% of global luxury purchases.
There’s also room for brands to improve their digital presence in China to reach more potential customers. Just 21% of Fashion brands and 17% of Watches & Jewelry brands sell online in China compared to 79 and 40% respectively in the U.S. And among the brands that don’t sell online, just seven display pricing information. Interest from the consumer side remains strong as Baidu daily query volume for luxury brands is up 36% year on year, leaving it up to brands to capitalize on that interest.
For more on the digital developments of 95 foreign and five domestic brands in China, download an excerpt of the L2 report.