SHANGHAI, Sept. 15 (Xinhuanet) -- China is expected to surpass the United States to become the world's second largest consumer of luxury goods in the coming decade, said a recent market research report made by Ernst & Young, one of the world's four leading CPA (certified public accountant) firms.
The consultant service provider predicted that between 2005 and 2008, the sales of luxury goods will grow by 20 percent annually, and that the rate will cool down to 10 percent in the 2009-2015 period. The sales will exceed 11.5 billion US dollars in 2015, or 29 percent of the world's total.
It seems that the rosy outlook for luxury goods consumption described by the Ernst & Young report, named China: a luxurious buying spree, is not so harmonious with the idea of building a thrifty society, which is being advocated vigorously by the Chinese Government.
Conway Lee, a partner of the Ernst & Young, explained, "In our report, the concept of 'luxury goods' refers to those providing an elegant and exquisite life style for consumers. They focus on taste and quality and target at high- and medium-end markets."
It is estimated that currently, sales of luxury goods on the Chinese mainland averages some 2 billion US dollars annually.
Conway Lee said, "By 2015, China will replace the United States to become the world's second largest luxury goods consumer, next only to Japan."
The luxury goods consumption is also and will continue to be driven up by Chinese traveling abroad, whose number is now on the rise rapidly, said the Ernst & Young report.
According to statistics provided by the Chinese Academy of Social Sciences, along with a continuous growth in wealth and a loosened restriction on visa provision, Chinese people going abroad for sightseeing numbered 28 million last year.
The figure will increase to 49 million in 2008, 60 million in 2010 and 100 million in 2015, the Britain-based Economist Intelligence Unit predicted.
Last year the Chinese traveling abroad consumed 25 billion US dollars worth of goods, and the value will rise to 30.5 billion dollars in 2008, the Unit forecast.
"Chinese tourists usually show a strong intention of consuming abroad and the traveling helps improve their awareness of prestigious brands,"David Lung, another partner of Ernst & Young, said.
According to Lung's analysis, more and more Chinese will go abroad to buy luxury goods, as the domestic market has limited varieties of such products.
Another factor behind the growing overseas consumption is high import duties and consumption taxes for luxury goods. Such products on the mainland are priced 20 percent to 30 percent higher than in the adjacent Hong Kong Special Administrative Region.
In comparison with such matured luxury goods markets as France,Italy and the United States, the most outstanding difference in the emerging Chinese market lies in consumption patterns, said the Ernst & Young report.
On the Chinese mainland, consumers are after the most novel fashions, which is in the commodity-driven consumption pattern. But in western matured markets, people opt for experience-driven consumption, including luxurious traveling and services with high added value.
Most of the world's leading luxury goods suppliers are expanding their operations on the Chinese mainland. They had better establish partnership or build joint-venture companies so as to enhance their presence on the Chinese market that is "complicated and challenging", the Ernst & Young suggested.