According to Morgan Stanley, the recovery in luxury goods spending is well underway in China. The superperformance of groups like LVMH and Richemont is proof of this. Chinese buyers are changing their consumption habits and are expected to account for 60% of total luxury goods spending growth by 2030.
In a note released after returning from a trip to China, U.S. bank Morgan Stanley said demand for high-end products is expected to be boosted by 20 percent in 2023. Longer term, the Chinese are expected to account for 60 percent of total personal luxury spending growth through 2030.
“The recovery in luxury goods spending is on track in China despite a weaker than expected recovery in consumer spending.”
“Based on” their “discussions in China”, the authors thus expect “an imminent and dramatic acceleration in luxury brand marketing spending in China.”
However, it is in Europe, where prices can be 30% lower than in China, that purchases could be most significant.
Disparate performance
“Divergent performance persists in the luxury sector in China”, Morgan Stanley further emphasizes.
The bank says Louis Vuitton, Dior, Hermès, Loro Piana, Brunello Cucinelli, Moncler and Chanel “are experiencing bullish brand momentum and are clearly outperforming the luxury space, thanks to the resilience of high-net-worth individuals (while factors such as persistently high youth unemployment are impacting middle-income consumer sentiment).”
According to Morgan Stanley, this implies that the industry’s growth is driven by increased spending per existing Chinese customer, not just new customer recruitment. However, the banking institution notes that the market’s increasing bias toward ultra-high-end brands is also a key driver of this growth.
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