Asia’s Luxury Rebound Powered By Economic Optimism

MasterCard Worldwide Index of Consumer Confidence Higher Than Last Year In 8 Of 14 Asian Countries Surveyed

Asian economic optimism is driving a rebound in the luxury market

Asian economic optimism is driving a rebound in the luxury market

Yesterday, Jing Daily noted the results of a recent Marriott survey of Chinese business travelers that showed 81% of Chinese respondents said they think their economy will improve in 2010, compared with 35% from the U.S., 33% from the UK, and 33% from Germany. Encouraged by broad economic optimism, Chinese travelers — whether for business or pleasure — appear to be tying their shopping habits to their perceptions of their country’s future economic prospects. Recent reports from McKinsey, Bain and — most recently — the Chinese Academy of Social Sciences validate the idea that general economic bullishness is one of the greatest factors propelling Chinese shoppers to go upmarket, projecting that China will surpass Japan to become the world’s largest luxury market within the next five years.

This week, a new MasterCard report concludes that the Asia-Pacific luxury market — powered mostly by China, Vietnam and Singapore — has quickly rebounded from its post-2008 dip, with more faith in the region’s economic recovery enticing consumers to increase their luxury spending. From Reuters (via Luxury-Insider):

“The Asia/Pacific region rebounded in economic growth as early as the second half of last year, and regional recovery has continued to gain traction this year,” said Yuwa Hedrick-Wong, MasterCard Worldwide’s economic adviser for the Asia/Pacific.

“While consumers in this region were amongst the first to cut back drastically on discretionary spending 18 months ago, they now seem confident and ready to significantly increase their discretionary expenditures … thereby contributing to the momentum of recovery,” he said in a statement.

The survey, which in the Middle East, Africa and Asia Pacific involved more than 10,500 people, gave the Asia Pacific an index score of 69.1 compared to 66.3 six months ago.

Leading the uptrend were China, Vietnam and Singapore, which showed the highest levels of consumer confidence in the region.

Singapore, Taiwan and the Philippines were the most confident their incomes would increase within the next six months and even pessimism levels in Japan, which is struggling to shake off an economic recession, were declining.

In addition to these results, the MasterCard survey found that younger respondents were the most optimistic — perhaps not surprising, especially in places like China where the average luxury shopper is 15-20 years younger than his counterpart in the U.S., Europe and Japan.