China's luxury goods market became the world's third-largest in 2013 behind the US and Japan, and for Irish companies seeking to make a mark in China this sector seems a good way in.
Research company Euromonitor has produced a report, China Overtakes the US as the World's Largest Economy: Impact on Industries and Consumers Worldwide, based on the premise that China looks like overtaking the US as the world's largest economy this year.
Much of the rise in the luxury market is driven by flashy young consumers splashing the cash to show off their wealth, as well as reflecting the high level of income inequality in China.
“In 2013, people aged 30-34 had the highest average gross income in China whereas the age cohort enjoying the highest average gross income in the USA was 50-54,” it says.
The paper quotes David Brooks, president of Coca-Cola's greater China and Korea business unit, who said middle-class Chinese consumers are brand-conscious, with a keen interest in quality, sustainability, health and travel.
“Thanks to rising income levels and travel, Chinese consumers are becoming more adventurous, demanding and cosmopolitan. A crackdown on corruption has also led to a shift away from conspicuous luxury towards the experiential,” he said.
An interest in tourism is of course good news for Ireland, which is heavily marketing itself as a tourist destination.
In terms of international travel, China is set to overtake the US this year and knock Germany off the top spot in 2017 to become the largest outbound source market, with 105 million outbound trips.
And what about China’s obsession with bling? Another great opportunity for Irish companies, it seems.
“Value sales for personal accessories in China are set to be nearly 50 per cent higher than those in the US in 2014,” writes Sulabh Madhwal, Euromonitor’s personal accessories and eyewear research analyst.
“Nearly all of this difference can be accounted for by real jewellery. In the Chinese competitive environment, where jewellery dominates accessories purchases, other categories such as bags and watches have seen relatively little investment from local players.”
