Chinese Luxury – In The Bag?

Isaac Mostovicz writes that that the luxury market in China is still worth watching, despite a slowing in expansion...

A recent article on Wall Street Journal talks about a surprising new trend picking up speed in China – creating fake bags. Nothing new here, you might think, but these bags are not made of fabrics or leather, but rather are fake brand carrier bags.

Image from Bloomberg news

The article says

“The ability to flaunt Gucci and Chanel shopping bags has long drawn Chinese shoppers to luxury labels. But now China’s high-end showoffs are figuring out that there’s no need to spend thousands of yuan for a bag that’s available online for a mere fraction of the price.”

This clearly shows something about the value that is placed on luxury items in the country.

However, according to this Financial Times article, brands are becoming more cautious after a prolonged period of agressive expansion in the country.

The article reports:

“Some brands are making conscious decisions to reduce the pace of expansion and focus more on store performance improvement,” said Bain&Company in its latest report on China’s luxury market. The management consultants say growth gradually softened in the fourth quarter and quote luxury brand company executives as saying they are only “cautiously optimistic” for next year as they “don’t have enough visibility”.”

However, this is not because Chinese consumers are not buying luxury goods – the article goes on to say that Chinese consumers are still buying, but are choosing to do so abroad as it gives them better value for money.

It will be interesting to watch what happens to the luxury market in Asia as it goes seemingly from strength to strength.

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