China To Be Top Luxury Market by 2020

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Transcript by Newsy BY JACQUELINNE MEJIA You're watching multisource global video news analysis from Newsy...
Transcript by Newsy BY JACQUELINNE MEJIA You're watching multisource global video news analysis from Newsy Watch out Paris and Milan--there’s a new fashion insider on the luxury goods map. Investment research group CLSA Asia-Pacific Markets says China is set to climb to the top of the luxury goods market by 2020 accounting for 44 percent of the market share. The report indicates... “Luxury goods companies are expanding rapidly in China to accommodate demand that will account for half of their forecasted global growth in the next 10 years. Handbags, leather goods, watches and jewelery are expected to see the fastest growth.” But euronews says luxury retailers don’t have to wait to see rising profits. “A growing appetite for luxury goods in China helped LVMH (Moët Hennessy • Louis Vuitton) post a 13 percent rise in sales in the final three months of last year. The world’s biggest luxury group made profit of 4.3 billion euros for all of 2010.” So what’s creating all of this buzz for an emerging luxury market? The Wall Street Journal says - economic growth and social customs. “Appearing ostentatious isn’t a faux pas in China, it’s often the goal. Cash-heavy consumers are eager to appear flashy and are willing to pay premium prices to catch second glances.” Although the CLSA report points out that men are buying more luxury goods than women, the CEO of Ferrari North America tells CNN Money he's not ready to rule out the spending power of the brand’s Chinese female clientele just yet. “Women are really a key player. In U.S., we sell almost 1 percent cars to women, in China, 30 percent.” But a blogger for the Financial Times warns not everything that glitters is gold - China may be an up-and-coming player, but the economic climate in the country could make things difficult for luxury retailers. “Rents at high-end Chinese shopping malls can be sky-high, meaning that mainland stores cannot afford to function simply as walk-through adverts for those planning a trip to the Champs-Elysee. That leaves luxury goods makers in something of a pickle – how to get customers in their fastest growing market to buy at higher prices.” Whether Chinese consumers decide to buy their luxury goods abroad or at home, a Bloomberg market analyst says nothing will stop the indefinite growth of the luxury market. “Barclay’s Capital says Chinese luxury goods market has the potential to grow by 20-30 percent per anm for the next five years. Now not even measures to cool the economy or curb inflation will stand in the way.” So what do you think? Is China the next big player in the luxury retail game? Or is this contest above their pay grade? Get more multisource business news analysis from Newsy