The global luxury market shrank by just under 10 percent last year, to USD229 billion. Luxury-goods sales in the US fell by 16 percent, in Europe by 8 percent and in Japan by 10 percent. These losses could have spelled disaster for luxury-goods manufacturers, who operate at the extreme end of the discretionary spending spectrum. Instead, they found China standing ready to boost its spending on luxury items by USD7 billion.
"Asia will progressively become the [top] luxury market worldwide and China is the main market in the region," says Michel Phan, professor of marketing at the ESSEC Business School in Paris, where he holds the LVMH chair. "LVMH grew by 10 percent in Asia [excluding Japan] during the 2009 fiscal year whereas [it] saw a drop of 4 percent in Europe, 7 percent in the US and 19 percent in Japan. Richemont saw 14 percent growth in Asia-Pacific [excluding Japan], 5 percent in Europe and an 11 percent decline in America."