Luxury consumers still spending big

High-end Chinese consumers spend more than 70,000 yuan monthly, according to a report from China Merchants Bank (CMB) on its unlimited credit card holders.

CMB, together with world credit card giant VISA Inc, unveiled its unlimited credit card in April 2008, targeting China's high-end consumers. Each cardholder spent an average of $85,000 (more of it on luxury products than anything else) in the first eight months after the card came out, according to data from VISA Inc.

The figure is 50 times higher than the average spending of ordinary CMB credit card holders, the bank report said. Unlimited credit card holders' overseas spending is also triple that of ordinary CMB credit card holders.

"Our high-end card holders pay a lot of attention to efficiency. High quality service is more important to them than cheaper prices. And 64 percent of them are between 31 and 64 years old, much younger than high-end consumers in other countries," the bank said.

China consumed $8.6 billion worth of luxury goods from Dec 1, 2007 to the end of January 2009, surpassing the US to become the second largest luxury goods market in the world behind Japan, according to the US-based World Luxury Association (WLA).

China's luxury market is less affected than others by the global economic slowdown. Luxury sales fell 20 percent and 25 percent in Europe and the US, respectively, this year, but only dropped 5 percent in China, according to figures from the WLA.

The WLA estimates China will catch Japan and become the biggest consumer of luxury goods by 2015, accounting for at least 32 percent of the market.

China has an estimated 300,000 millionaires and a 250-million strong middle class, who combine to spend 40 billion yuan a year on luxuries, according to figures from accounting firm Ernst & Young.

Struggling high-end retailers, such as Bulgari and Swatch, may start to see the country as a haven.

(China Daily 03/23/2009 page4)