Second- And Third-Rung Cities Drive Growth For China's Luxury Goods Market

China’s overtaking of Japan as the world’s largest consumer of luxury goods is driven by spending that came from the country’s tiers 1 and 2 cities. Data from marketing and media company Startcom MediaVest Group revealed more than third of the country’s luxury goods spending already comes from cities other than Beijing, Shanghai, and Guangzhou. While the company predicts consumer spending on luxury products will grow 8 percent in tier-1 cities, luxury spending by consumers in tiers 1 and 2 cities is forecast to grow at almost 16 percent. For example, the average income among tier-2 city Chendu’s 7 million residents has increased at 14–21 percent over the last three years, according to the city’s Statistics Bureau. Also, the city’s business attracts consumers from across the Sichuan Province, which has a population of more than 80 million and is home to more than 25,500 millionaires.