Hong Kong - China will be the world's biggest luxury goods market by 2020, a report said Wednesday, as its economy booms and an emerging middle class spends a growing chunk of their cash on high-end items.
Over the next decade, Chinese consumers - including a surging number of billionaires - will account for 44% of global spending on goods such as bags, vehicles, watches, shoes and clothes, the report by brokerage CLSA said.
The nation's luxury goods sector was worth about $25bn in 2009, or about 10% of the world market, including purchases by consumers in Hong Kong, Macau and Taiwan, CLSA said. Travel spending could boost that figure as high as 15% of the current world market.
The country was "well on track" to surpass Japan within three years, CLSA added.
"As incomes rise, China's burgeoning middle class is adopting previously unattainable high-end lifestyles and is transitioning from a saving to spending culture," said the report, entitled "Dipped in Gold: Luxury lifestyles in China and Hong Kong."
"Chinese consumers enjoy displaying their wealth and success and are not just spending on themselves but also purchasing gifts for friends and family."
The report was based on a survey of 340 consumers and 31 luxury store managers in cities across China, CLSA said, adding that more than half the consumers polled have made or are planning a luxury purchase.
Those who did splash out on a pricey items in the past year spent an average of 10-12% of their total household income on them, "demonstrating a high propensity to spend," it said.
Luxury goods firms are moving quickly to meet this soaring demand, with Louis Vuitton's biggest customers already hailing from China.
The country accounts for 18% of sales at Gucci, 14% for Bulgari and 11% at Hermes, the report said, while Italy's Prada has also jumped into the market.
Homegrown luxury brands are also expected to appear on the scene, but likely in areas that "China has a perceived fundamental advantage, primarily in the use of materials such as jade, porcelain or precious woods that can be used in jewellery, homeware and furniture," the report said.
Consultancy PricewaterhouseCoopers has already predicted that China will be the world's top buyer of luxury goods by 2015, even sooner than CLSA's forecast
According to the Hurun Rich List, the Chinese equivalent of the Forbes or Sunday Times rich lists, there are now 875 000 Chinese people worth more than $1m and almost 200 of these are billionaires.