Breakneck Development Of Luxury And Cultural Sectors In Last 20 Years Indicates That Chinese Luxury Consumers Will Be A Huge Global Force For Foreseeable Future
Over the last few weeks, as the ongoing global economic woes further put China, and its relative insulation from the worldwide crisis, in the spotlight as a luxury and business “success story” we have seen a much stronger focus on the Chinese consumer. Observers look to Chinese consumption as one of the keys to a faster global recovery, and luxury watchers see news like store openings in China, auction results, and even stories of wealthy Chinese tossing their wealth around freely as signs that the Chinese upper-middle and upper class are spending again. Today, an article in Wealth Bulletin hints that luxury executives who are worried that the Chinese market is not solid enough to invest their full faith into that consumer class can breathe a tentative sigh, as they cite the Julius Baer Luxury Brands Fund’s 27% rise in Euro terms, versus a 17% rise in the MSCI World:
Julius Baer said in a report today it predicts profit margins will remain in double digit territory for many luxury companies, despite the global economic slowdown.
These bullish findings indicate that the global wealthy are still buying luxury goods, which is, in some ways, unsurprising — but this has to be qualified by looking into how these numbers have risen. Although the Julius Baer index notes a rise, it does not break down the demographics of who is buying high-priced luxury goods. Based on other data, it seems that the influence of emerging wealthy consumers from places like China and, to a lesser extent, the Middle East and India, who are bolstering the luxury market.