A report on China’s luxury market released on December 16 shows that China has bucked the shrinking global trend of the luxury market, with consumption on the Chinese mainland having risen by 48% to 346 billion yuan.

Conducted by Bain & Company, a top global management consulting firm, the report said that from January to October this year, luxury goods sales on Tmall, Alibaba’s e-commerce platform, have increased by about 120% year-on-year, and the annual growth rate is expected to be around 130% to 140%. By 2025, China will probably become the world's largest luxury goods market.

Bruno Lannes, senior global partner of Bain & Company, believes that the novel coronavirus pandemic has had a serious effect on the global economy and social activities, causing the global luxury goods market to shrink. However, in China, four major engines have supported the market to uptick since April, namely the recovery of consumption, the rise of the new generation of consumers, digital development, and duty-free shopping stores on Hainan’s outlying islands.

Data shows that the Millennials, people born between 1980 and 1995, are the main force of Tmall’s luxury consumption, accounting for more than 70% of the overall market. Generation Z, those individuals born between 1996-2010, have the highest growth rate of luxury consumption and prefer niche designs and co-branded products.

From January to October, the consumption of Generation Z people in luxury co-branded and limited editions has surged by more than 300%.

“It is expected that the Chinese luxury market will continue its rising trend, so brands need to make preparations for it,” said the report.

With e-commerce as a growth engine, nearly 40% of consumers are likely to increase online luxury purchases in the next few years and luxury brands may seize the consumption resumption opportunity.