Lower- tier Cities in China Seen Fueling Luxury Growth

Cities in Tibet, Xinjiang and Yunnan — even most Chinese don’t know much about — showed strong buying power, according to Deloitte and Secoo.

Forget about Beijing, Shanghai and Guangzhou, or rising retail hot spots like Chengdu and Xi’an. The fastest luxury growth is coming from cities even most Chinese scarcely know such as Kizilsu Kirghiz, Shihezi, Nujiang Lisu, Shannan, Rikaze and Kelamayi, according to a report from Deloitte and Chinese e-commerce luxury platform Secoo.

The report examines luxury goods consumption in markets across China’s lower-tier cities, and what brands can do to seize the opportunity. It was released during the second edition of China International Import Expo in Shanghai.

China spent $145.7 billion on luxury goods, or 42 percent of the $347 billion global luxury goods market in 2018, according to Deloitte. Thanks to technological advancement and favorable government policies, the online consumption growth rate of luxury goods in China reached 37 percent, accounting for nearly 14 percent of the total domestic market, and in 2019, online sales of luxury goods are expected to exceed $7.3 billion in China.

First-tier and second-tier cities represent 56 percent of China’s luxury goods consumption, but lower-tier cities show strong growth in spending and purchasing power, according to online consumption data collected by Secoo over the past year.

Third-tier cities and below in Xinjiang, Yunnan and Tibet autonomous region and Gansu and Guizhou provinces swept the top 10 spots in all three categories: annual purchase frequency, the number of repeat consumers and three purchases or more among customers.

Kizilsu Kirghiz, meaning red water in the local language, ranked number one in annual purchase frequency, and ninth in three purchases or more. It is an autonomous prefecture city in the west of