China's appetite for luxury goods grows as wealth soars
By Wang Yanlin 2008-4-19  
 
CHINA may overtake the United States to become the world's second-largest market for luxury goods this year after Japan, industry experts said at the First Luxury Brands Forum yesterday.

"There is an explosion of demand for luxury goods in China with some people's soaring wealth."

"Meanwhile, luxury-brand owners are equally eager to explore the emerging markets like China to expand their business and grab new opportunities," said Wang Depei, vice chairman of the China Economic System Reform Research Association. Wang was making a keynote speech at the two-day forum organized by the China Europe International Business School.

China was ranked the third-largest consumer of luxury goods last year with a 12-percent share of the global market and posted an annual growth of more than 10 percent in recent years.

The accounting firm Ernst & Young predicted earlier that China would likely become the largest consumer of luxury goods in 2015.

Paolo Zegna, president of Italian luxury garment maker Ermenegildo Zegna Group, expected China to lead the growth of its company over the next few years.

"To have a seat in China is the requirement for a company with global views," said Zegna, who predicted China will take a much bigger market share this year in its sales.

Last year, when Ermenegildo Zegna had been in China for 16 years, Chinese consumers bought 12 percent of the company's output.

However, the penetration of the high-end market also means some changes for the luxury brands.

For example, the capital requirement for expanding into emerging markets may turn many family businesses involved in making luxury goods into public companies.

Also, the market, once confined to a few elite companies, may lose its values of art and elegance in the pursuit of profit and embrace mass production, people said at the forum.

As well as being a major consumer of luxury goods, Chinese manufacturers will also be keen to make them. Zegna suggested companies try to find their own way and not follow their Western predecessors.