The Analysis of the Competitive Strategies of Korean Firms Entering the Shanghai Luxury Consumer Goods Market and Its Implications
6 Pages Posted: 9 Dec 2013
Date Written: November 8, 2013
The Rise of the Chinese Luxury Consumer Goods Market:
Since its reform and liberalization in 1978, China has recorded rapid economic growth over the past 30 years because of its growth in trade and investment. However, with the worsening of the external economic conditions that started in 2008, the country has been placing emphasis on domestic demand as the new growth engine that will drive continued economic growth. It was declared in the 12th Five-Year Plan for National Economic and Social Development (2011-2015) that consumption is at the core of the country’s strategy for expanding domestic demand, and similarly, at the National People's Congress in March 2012, it was emphasized that the central agenda for the year 2012 was the expansion of domestic demand that is centered around consumption. In fact, the contribution share of consumption to the growth of China’s GDP has been steadily increasing.
In particular, as the purchasing power of the Chinese consumers is increasing and as their purchasing pattern is changing — the luxury consumer market has been growing rapidly in the recent years. The consumption of luxury consumer goods in China has continuously risen by 25% every year, and the total amount of national consumption of luxury goods in 2008 reached USD 8.6 billion, which already makes up 1/4 of the world’s market. Moreover, the World Luxury Association (WLA) has predicted that China (not including Hong Kong and Macau) will become the world’s largest center for luxury consumer goods trade and consumption in 2012, with the amount of consumption reaching USD 14.6 billion.
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