China’s luxury market shrank 10% in 2022 – Bain

By Sophie Yu and Brenda Goh

BEIJING (Reuters) – China’s luxury market shrank 10% in 2022, posting a five-year streak of high growth as Beijing’s zero-COVID policy and a slowing economy squeezed spending, Bain & Company said in a report on Tuesday.

The luxury market grew 42% annually between 2019 and 2021, but its fortunes changed in 2022 after China doubled down on COVID-19 eradication with citywide lockdowns and a government crackdown that hit the property sector and fueled unemployment.

The number compares to a 1% growth between 2012 and 2016 and a 26% increase in sales between 2016 and 2019, Bain said.

Echoing recent 2022 results from companies including French luxury goods group LVMH and Italy’s Salvatore Ferragamo, Bain said all luxury categories were affected to varying degrees over the course of the year.

While categories with high online penetration, like luxury beauty, suffered single-digit declines, the watch market fell the most, with sales falling 20% ​​to 25% as of 2021.

Fashion and lifestyle saw a 15% to 20% decline, while sales of jewelry and leather goods fell 10% to 15%.

But Beijing’s decision to lift the zero-COVID policy in early December should bring growth back this year as mall traffic improves and consumer sentiment recovers, Bain said.

“We expect 2021 sales to be reached sometime between the first and second half of 2023,” said Weiwei Xing, a Hong Kong-based partner at Bain & Company.

“While optimism abounds, there are also risks. Brands need to close price differences between China and Europe before international travel resumes,” she said.

($1=6.7868 Chinese Renminbi Yuan)

(Reporting by Sophie Yu and Brenda Goh; Editing by Clarence Fernandez)

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