It's no wonder global luxury brands from Gucci to Louis Vuitton are investing heavily in China. Despite the slowing economy and a crackdown on conspicuous consumption, there's a new wave of cash-rich millennials.
They form part of a whole generation of only-child youngsters, who will inherit fortunes from parents who were brought up to save their money.
Now these 20 to 34 year-olds are buying luxury brands from a young age, are purchasing more frequently, and splurging on everything from jewellery and fashion, to cosmetics and handbags, according to luxury brand industry experts.
These same millennials are choosing to remain in the country’s outlying provinces, shunning more expensive, larger cities such as Beijing and Shanghai, thanks to rapid industrialisation and urbanisation.
Which has prompted global names to move further afield from China’s first-tier cities like Beijing, the previous engines of growth.
Prada, which reported strong half-year earnings bolstered by Chinese consumers, opened seven stores this year in Xi’an, home of China’s Terracotta Army in the northwest. Three were for the Prada label, two for its Miu Miu brand and two for Church’s.
LVMH opened a store in the sprawling central city of Wuhan, home to 11 million people, while jewelry brand Chaumet opened a store in the city of Wuxi, outside Shanghai. Hermes is launching a store in Xi’an in September.
A report by McKinsey showed Chinese luxury shoppers account for over $73 billion (around R1 trillion) in annual spending, representing almost a third of the global luxury market.
Even so, luxury firms are wary of demand softening in the second half of the year as the trade tariff war between China and the United States continues.
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