Opportunity: Luxury consumer products

Country: China

Sector: Consumer goods

The middle-class continues to rise, China is expected to add another 71 million upper-middle and high-income households, Even during challenging times, premium brands still outperform mass brands. Despite rising anxiety over the economy and their personal incomes, when they do spend, consumers still trade up to more premium brands when they’re looking to reward themselves. The strong growth of upper-middle and high-income households and the spending power they bring to bear has proved a boon for high-quality and premium brands.

Bain & Company has noted that 21% of global personal luxury goods spend took place in China, luxury brands continues to target this market with new store openings. This is evidenced in the fact that 55% of all new store openings were in China.

The Covid-19 crisis has also made Chinese consumers more aware of sustainability and the environment, and it has increased interest in spending on health and wellness, as well as essentials such as casual apparel, skincare, and home products—all trends that Scottish companies are well placed to respond to.

Chinese consumers will account for nearly 50% of the global luxury market—valued at €320-330 billion EUR—by 2025.

Luxury consumption on the Mainland remained strong in 2021. All luxury categories experienced year-on-year increases, the total value of luxury purchases in China was an astounding $74 billion. Although China market was severely disrupted by Covid containment policies in 2022, according to a worldwide consumer survey recently conducted by McKinsey in August 2022, 49 percent of respondents in China agreed that “the economy will rebound within 2-3 months and grow just as strongly or stronger than before COVID-19”, compared with 11-26 percent of consumers in mature markets.

This opportunity is open to:

• Scottish companies that are ambitious and can invest in long-term strategies for developing the China market.
• Brands in fashion and accessories, home and interior, and sports and personal care categories with unique selling points (e.g. heritage, craftsmanship and innovation).

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