China is set to become the world's second biggest market forluxury goods after the United States in five years, overtaking France, Britain,Italy and Japan according to a recent industry report.
Developed countries still dominate the personal luxurymarket but economic woes are reducing demand while rising middle classes inemerging economies take up the slack, consumer research group Euromonitor said.
Luxury-goods sales could top $302 billion worldwide thisyear, up 4.0 percent from 2011, as buyers from developing nations snap updesigner handbags, clothes, jewellery, watches, fine wine, champagne andspirits, it said.
"Benefitting from a fast-growing middle class and afast-developing luxury distribution network, sales of luxury goods in Chinahave consistently outperformed the global market," Euromonitor said.
Japan is currently the world's second biggest market forluxury goods but its share has been shrinking as the country struggles witheconomic problems.
Demand for luxury goods has been lacklustre this year indeveloped Western markets and Japan due to rising prices and mountinginsecurity over jobs and pensions, Euromonitor said.
However, emerging markets led by the so-called BRIC grouping-- Brazil, Russia, India and China -- are making up for the shortfall.
The BRIC countries will account for 11 percent of totalluxury sales with a combined retail value of over $33 billion this year, upfrom only 4.0 percent in 2007, it said.
This is forecast to rise to $59 billion, or 16 percent ofglobal sales, by 2017.
The world's four biggest luxury goods markets -- the UnitedStates, Japan, Italy and France -- still accounted for almost half the value insales this year, the report said.
Designer apparel are expected to remain the best-sellingitems, accounting for 42 percent of total luxury goods revenue by 2017, butjewellery and timepieces are fast gaining popularity, it said.
While China's importance to luxury goods makers has soaredin recent years, signs have emerged of demand growth easing.
Last month saw shares in luxury clothing and accessoriesgroup Burberry tumble after the British firm issued a surprise profit warningwhich analysts blamed on China's economic slowdown.
