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11/22/2024 06:29:00 am

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China's Luxury Goods Industry set for Profitable Future: Experts

China's Luxury Goods Industry On its Way to a Profitable Future

(Photo : Getty Images) Experts say despite losses for the last two years, China's luxury goods industry will bounce back and make a killing in the coming years.

High-end retailers, investors, and industry insiders have been unanimous in saying that China's luxury goods industry is still well on its way to profitability despite losses it incurred for the second year in a row in 2015.

Bain & Co, a consulting firm, said China's luxury goods industry may have incurred losses for two years, but it has been enjoying the momentum of double-digit growth in recent years.

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The Fortune Character Institute's research findings confirms the optimistic outlook of Bain & Co on the status of Beijing's luxury goods industry

                                                 Luxury items

In 2015, Chinese consumers reportedly bought almost half of the world's luxury items - but 78 percent of the purchases were made overseas.

Reports indicate that high fashion Chinese consumers of luxury products are starting to be discerning in their shopping, buying only the best high-end brands that shops can offer.

Joining the high fashion bandwagon of Chinese consumers, Shandong Ruyi Group, one of China's top textile producers, has placed a bid for French Fashion group SMCP this year, according to Bloomberg.

                                                 $1 billion

SMCP, with assets estimated at $1 billion, owns affordable luxury fashion lines such as Maje and Sandro, a popular brand that has caught the attention of China's rising middle class.

Shandong Ruyi Group has been ranked as the fourth highest earner in China's leading textile industry with an estimated annual revenue of 30 billion yuan ($4.7 billion) in 2013.

"Any such acquisition would be just a drop in the bucket as the Chinese are fast climbing onto the upper chain of the luxury industry", said Zhou Ting, director of the Fortune Character Institute. "The luxury  market remains one of the most lucrative for now and shall remain over the next decade."

Zhou said if Chinese companies and investors want to have a share in the profits, then they should involve themselves more in every link of the supply chain from designing and manufacturing to marketing and retail. 

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