Ultra-Wealthy May Cut Back On Luxury This Year, But Middle- And Upper-Middle Class Should Open Wallets
Fickle gift recipients or regular shoppers have contributed to the rise of the luxury second-hand shop in China
According to the newest China Luxury Report by Beijing’s University of International Business and Economics (UIBE), 2012 should be another good year for luxury brands in China, though a growing number of ultra-wealthy consumers may cut back in the face of falling property prices and a bearish stock market. Though 48 percent of “ultra-high income consumers” plan to increase their expenditure on luxury goods this year (compared to 41 percent of “high” earners and 33 percent of “average” earners), 17 percent of them say they may cut their budget for luxury goods in the future and 30 percent remain undecided. Among average and high-income respondents, however, only five percent of average earners and eight percent of high earners plan to lower their luxury spending.
As Zhou Ting, director of the Research Center for Luxury Goods and Services at UIBE, said this week, the growing number of ultra high net worth respondents that plan to decrease luxury spending over time reflects the fact that many are highly leveraged in volatile assets like real estate and the stock market. In the face of concerns in these areas in 2012, Zhou noted, some ultra-wealthy Chinese may sell some of their high-end goods for quick cash. This, Zhou concluded, means that the second-hand luxury market should be a segment in which we see huge industry growth this year.
According to UIBE’s report, the main participants in the second-hand luxury market in China are wealthy individuals between the ages of 30 and 40, who tend to focus on buying or selling handbags, accessories and apparel. Among older participants, aged between 40 and 50, the most widely traded items are artwork and antiques.
Though, as always, it’s important to take these findings with a grain of salt — as China’s ultra-wealthy tend to be highly discreet and, as such, we can’t know for certain whether the sampling in the study are reflective of the whole — the proliferation of second-hand luxury boutiques throughout China over the past few years has been unmistakable. As Jing Daily noted this past November, demand for second-hand luxury goods among China’s middle- and upper-middle class (and supply from ultra-wealthy consumers in need of cash, apparently) is not only fueling profits for established second-hand chains like Hong Kong’s Milan Station, it’s also contributing to the rise of dozens (if not hundreds) of upstarts.
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