China gets ready for luxury

The Chinese luxury products market is expected to expand in the period to 2015 because the number of households with high purchasing power will grow at around 16% a year to reach some 4 million households by then, according to a new study from the McKinsey consultancy. The study indicates that this rapid enrichment of the Chinese population will lead luxury products companies, including those in the cosmetics sector, to strengthen their positions "to form the taste of consumers, their spending habits and their brand loyalties".

Last year an estimated 1.6 million households were estimated to have purchasing power of some €25,000 a year, equivalent in developed industrial country terms to about €70,000. This so-called bourgeoisification of China will not only affect the major cities but also the medium-sized towns in the regions. The major luxury goods companies are being exhorted via the study not to underestimate the importance of centres such as Chengdu and Wenzhou, especially when these locations number more rich people than Detroit or Atlanta.