By  on September 6, 2005

PARIS — Thanks to extravagant offshore spending, Chinese consumers are likely to account for almost a quarter of global luxury goods purchases by as early as 2014, up from 11 percent today.

However, China will be no Eldorado for mediocre brands that aren't already faring well in Europe, the U.S. and Japan. Only the biggest and strongest players — particularly LVMH Moët Hennessy Louis Vuitton, Compagnie Financière Richemont and Swatch — are most likely to benefit from this powerful clientele.

Those are among the key conclusions of a new report by Merrill Lynch luxury analyst Antoine Colonna, who also considers the potential and perils of two other key emerging markets, Russia and India.

Colonna notes that nationality is key, not country of purchase, as luxury shoppers from emerging markets spend roughly two to three times more on high-end goods while traveling than at home.

For example, mainland China accounts for less than 1 percent of luxury revenues. But by as early as 2009, Chinese customers are poised to overtake Americans as the number-one purchasers of luxury goods in the world.

According to the French tourist board, Chinese traveling in France already spend more than people arriving from the United States or other European countries.

At present, LVMH is considered a leader in China, with a share of about one-third of the upscale accessories and premium spirits markets. Worldwide, Chinese customers account for 13 percent of Vuitton sales, according to company figures obtained by Colonna.

Swatch controls about a third of the watch market, and Richemont dominates jewelry, while Ermenegildo Zegna and Hugo Boss have a strong lead in apparel.

By contrast, brands that are prominent in China now, but not in other key luxury markets, have a low probability of succeeding in the medium turn in the Asian country, according to Colonna.

These would include brands like Pierre Cardin, Givenchy, Dunhill and Rado, which have capitalized on strong male demand in China. However, travelers are increasingly likely to "compare what they have seen at home to what is available abroad," the report says.

At present, India and Russia each house between three million and five million luxury consumers, reflecting the early stages of the former country's development and the latter's vast elite.

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