Drawn by the country’s constant annual economic growth that exceeds 10%, exclusive western names from Cartier to Chanel to Versace opened big stores in the most expensive neighbourhoods of big cities. But according to Ivan Kwok, Ivan Kwok, a manager at Boston Consulting Group, so far, only about 10% have reaped the anticipated benefits.
Analysts say the annual average income of urban households, even after doubling since 1996, is just ,327, about as much as a single Louis Vuitton handbag costs.
Jonathan Anderson, chief
But most of the Chinese middle class do not enjoy, as opposed to other countries, free or low cost services of health, education and housing to name a few. So a good part of their income is pumped into paying housing, medical expenses including possible future costs, and their children’s education.
What’s more, luxury products are heavily taxed by duties and tariffs that push prices up by as much as 35% compared to
What experts say for certain is that those interested in such products are the 15 million Chinese with an annual income of more than 250,000 yuan (,970), according to researchers at AC Nielsen.
However the hottest and most successful products must be a status symbol and sought after, so firms must spend a lot of money on publicity in the big country.
Nigel Luk, Cartier's managing director for
The market remains enticing for future prospects: there were 320,000 millionaires at the end of 2005 with an increase of 6.7% over the year, compared to 2.7 million in the
Some products have already enjoyed instant success. Bloomberg said that in Shanghai, the 900-square-meter Louis Vuitton shop immediately ran out of supplies of the trendiest bag that costs 24,200 yuan (,096) and now they have a waiting list that is weeks long.
Luxury goods like cars are in a class of their own: even a few sales are fine. In November, the Beijing Auto Show, Rolls-Royce Phantom on display was bought for 6.6 million yuan (8,681) and a Bentley Arnage Mulliner sold for 6.48 million yuan. In 2005, Bentley sold 64 cars, 30 of which were Arnage models, with the minimum price 3.88 million yuan. Also in 2005, Jaguar sales in