Tai Xunmeng's Luxury Brand Begins To Be Cautious About China.

In the past year, Beijing has opened 3 shopping centers in about 2.6 square kilometres, and fourth will soon open. All shopping centers are full of luxury brand stores. Seeing this, people may think that soon after, the stores of LV (Louis Vuitton) and Ferragamo (Salvatore Ferragamo) will blossom everywhere in Beijing like bank branches or McDonald's restaurants.

But the fact may be changing. According to the new research report, luxury goods brands are becoming more cautious in 2011, though luxury goods sales have been good in China, because luxury goods in China have grown too rapidly in the past few years.

"Some luxury brands are making prudent decisions to slow down their expansion in China and to focus more on store sales," Bain said in its recent report on China's luxury market. Bain's management consultant said that the growth rate slowed down slowly in the fourth quarter of last year, and that the executives of luxury companies were only "cautiously optimistic" this year because they could not foresee too far.

According to Bain's report, sales of luxury goods in mainland China increased by 27% to 87 billion yuan in 2010. In 2011, Bain's sales increased by about 26% to 110 billion yuan, but the growth of leather products in 2011 will be unchanged from 30% in 2010, about 25% to 30%. This year, the sales of luxury watches will decline from 45% last year to 40%.

Bain also predicted that the growth rate of shoes, cosmetics, perfume and personal life will stop, but sales of men's clothing and women's clothing will continue to grow.

These data do not mean that wealthy Chinese are unwilling to buy luxury goods. They just keep buying in a smarter way. Because the renminbi is currently increasing, wealthy Chinese consumers prefer to buy overseas, which makes their banknotes more valuable. Bain said that Hongkong and Macao still occupy more than half of Chinese luxury consumers' overseas purchases, and this trend will continue this year.

In mainland China, luxury brands began to focus on details. Although China's growth share still comes from new consumers, existing consumers will account for 37% of annual sales growth.