Nov 15, 2012
China’s ‘affluent’ class to double by 2020, a boon to luxury
Nov 15, 2012
Between 2010 and 2020, China’s affluent class, "which is richer than the middle class but not as wealthy as the super-rich," will grow from 6% to 21%, already a much higher proportion of the population than the same group in India, Brazil or Russia, according to the BCG report.
Currently 120 million people are considered to be affluent in China, earning on average $40,000 per year per household, with many also earning more than $200,000 annually.
Under strong social pressure "to assert their status," this group wants to be "ahead of the trends" and are developing increasingly sophisticated taste for expensive items as a way to stand out from the crowd, said the BCG report.
This group of affluent Chinese will grow to 280 million by 2020, accounting for 35% of Chinese consumption and 5% of world consumption alone, according to BCG. In 2020, China is expected to represent 40% of the global luxury market, the report noted, with luxury, cosmetics, clothing and cars benefiting the most from the consumer boom.
It comes as no surprise that the biggest buyers of luxury will come from the the upper range of this affluent class, and their numbers are growing very rapidly. In 2011, China had 700,000 households with an annual income greater than $250,000 and that number is expected to more than double by 2015 to 1.5 million, according to BCG. Interestingly enough, 70% of these "new rich" were still not classifed as such in 2005.
According to its estimates, the BCG says that China will become the largest luxury market worldwide in 2015, representing 23% of the global market for luxury goods, which itself is estimated to be worth around 298 billion euros.
Bain & Company forecasts the global horizon for personal luxury goods to be somewhere between 240 to 250 billion euros in 2015.
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