Like many other luxury service providers in the world, we’ve been keeping an eye on China’s market to see what the global luxury world has in store. Recently, Jing Daily, the go-to source for Chinese luxury and business news, ran a review of five predictions for the country in the coming year. Here’s a quick summary of their predictions:
1. Shoppers will spend most of their time in Asia.
Wealthy Chinese shoppers frequently travel to Europe and the US to buy luxury goods, and are responsible for boosting sales on both of those continents. However, most will continue to shop within Asia for convenience’s sake. In particular, Chinese travelers will continue to spend the most in Japan, which enjoys a booming exchange with its neighbor.
Last year, various safety concerns prevented Chinese shoppers from venturing much to other Asian countries like South Korea and Thailand. However, due to improved conditions, travelers will have more incentive this year to branch out beyond the Chinese and Japanese markets.
2. Daigou isn’t going anywhere.
Daigou refers to the “gray market” where luxury goods purchased overseas are sold to customers in mainland China. This channel of commerce is hugely popular, since sellers profit and buyers get a bargain. But the enormous cost difference between daigou goods and domestically manufactured ones has caused concern among government officials as to the effect it will have on the Chinese economy.
Lately, officials have been trying to incentivize buying domestic goods by making tariff cuts and developing duty-free shopping, as well as cracking down on smugglers. A few luxury brands have lowered their Chinese prices, as well, but daigou shows no sign of disappearing in the next year, at least as long as students and travelers make money within it.
3. Athleisure will heat up the market.
The global style trend of incorporating workout wear into high-end ensembles means that Chinese consumers will be investing more money in healthy lifestyles and their accoutrements, like air purifiers and nutritional supplements. Health, wellness and sportswear goods will become highly competitive in the Chinese market in the coming year. Additionally, luxury consumers will direct their yuan towards medical tourism for plastic surgery as well as other medical procedures.
4. Fewer fakes, but they’ll still be an issue.
The Aliaba platform for luxury merchandise has come under fire for selling counterfeit luxury merchandise, and has been subject to a Keurig lawsuit and criticism from international commerce groups. As a result, Aliaba is making greater efforts to sniff out fakes and prevent them from being sold, a boon for Chinese manufacturers of legitimate luxury items. There’s still work to be done, however: Fakes are still being produced in China in droves and can be sold over popular social media platforms like WeChat, which are subject to minimal regulation.
5. Anti-corruption efforts will stay strong.
The Chinese Communist Party has undertaken anti-corruption campaign for past several years, indicting over 100,000 government officials in the process. The campaign may have reduced corrupt spending by authorities, but it has also hurt sales of luxury goods. That being said, however, the market remains strong, and perhaps with developing incentives for ordinary buyers to purchase domestic goods, things will even out.
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