Expansion guide for luxury brands in China

Some second- and third-tier cities offer a good market for luxury brands, according to the 2012 Luxury Report released by the Fortune Character Institute this month.

Cities such as Wuxi in East China's Jiangsu province; Hohhot, capital of North China's Inner Mongolia autonomous region; Xi'an, capital of Northwest China's Shaanxi and Nanning, capital of South China's Guangxi Zhuang autonomous region all have a high potential for consuming luxury goods, according to a ranking of the consumption activeness of Chinese mainland cities. The ranking, based on per capita annual retail sales of consumer goods, is an indicator of how active people are in general consumption in different cities.

However, Zhou Ting, head of the Fortune Character Institute, said these cities are overlooked by luxury brand operators. According to the China Luxury City Development Index, which suggests how active luxury brands are in different cities, Wuxi ranks 27th among all 62 cities surveyed, including 60 mainland cities, Hong Kong and Macao. But the city ranks 5th among all mainland cities surveyed for consumption activeness.

Similar cases can be seen in Hohhot, Xi'an, Nanning and other cities. Hohhot ranks 6th in the consumption activeness table while it does not even make its way to the first 30 cities on the China Luxury City Development Index.

Zhou said the luxury report can serve as a guide for luxury companies which want to open new stores in China.