Sales of luxury goods to Chinese consumers seem to be rising across the board and around the world. While there have been some impressive growth in sales for international retailers, domestic Chinese sales have also posted substantial gains this year. According to the National Bureau of Statistics, Chinese retail sales of gold, silver, and jewelry have risen by 8 percent during the period between January and March this year compared to the same period last year. March, in particular, saw a big jump with 20 percent growth.

March saw a 20 percent rise in the sales of gold, silver, and jewelry in China

Strong growth within China is good news for international retailers and luxury brands. With prices for these goods higher in China than elsewhere, growing sales in China imply that demand for at least some luxury goods is holding strong in China and brands will have to worry less about daigou re-sellers buying their goods abroad and selling them in China.

Around the world, 2018 is shaping up to be a big year for retailers looking to sell to Chinese consumers. Hong Kong, in particular, has seen a 22 percent rise in sales of jewelry, watches, clocks, and other “gift” items for the period of January to March. French luxury watch sales posted a substantial rebound in 2017 with the return of large numbers of Chinese tourists. LVMH’s Q1 sales for 2018 also represented growth of 13 percent, thanks to growing demand from Chinese consumers.

The rise in domestic sales of some luxury goods in China coincides with an overall rebound in luxury sales driven by Chinese consumers around the world

Regardless, it is still domestic Chinese demand for these goods that international brands have been most concerned with over the past few years. With value-added taxes and tariffs raising the prices of luxury goods substantially higher than abroad, it has created a thriving grey market for daigou buying and reselling of luxury goods on online marketplaces in China.

However, this has led to a plethora of fakes on Chinese e-commerce sites and takes away from the ability of brands to control how their goods are displayed and sold. For brands looking to provide consumers an exclusive, luxury experience, this is understandably frustrating.

Of course, without broader figures for sales in perfumes, cosmetics, leather-goods, and other luxury fashion goods, it’s hard to pin down the health of domestic demand for luxury goods in China. Still, steady growth in one sector may imply that Chinese consumers are simply more willing to stay at home and buy, giving more control to companies as to how Chinese consumers interact with their brands.

The price difference between luxury goods in China and the rest of the world has fallen dramatically since 2011

Moreover, improving the quality and pricing of domestic offerings is something the Chinese government has been increasingly willing to pursue. After all, Chinese tourists or daigou going abroad to buy means fewer tax dollars at home and less domestic consumption, the latter becoming an increasingly key pillar of Beijing’s strategy to boost economic growth. The Chinese government has made efforts to reduce import duties and brands have increasingly recognized that Chinese consumers are becoming more price conscious when it comes to luxury goods.

The combined result has been a decrease in the average price difference between luxury goods internationally and China. In 2011, luxury goods were on average 68 percent more expensive in China as compared to average global prices, but by 2017 they were only 16 percent higher.

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