Women pass by a Chanel advertisement in Beijing.

SHANGHAI — The luxury goods market in mainland China will likely achieve 48 percent growth in 2020, reaching nearly 346 billion renminbi, or $52.8 billion, according to a joint report by Bain and Tmall released Wednesday, doubling China’s overall share of the global luxury market this year.

On the e-commerce front, China’s annual luxury online penetration increased from about 13 percent last year to 23 percent in 2020, with Bain adding it expects that this reflects a permanent change in shopping behavior.

“Nearly 40 percent [of survey respondents] said they plan to increase their share of online luxury shopping over the next few years; another 40 percent said they plan to maintain their share,” the report said. “Most brands share the consensus that luxury online penetration (including omnichannel) will reach about 20 to 25 percent within three years.”

In the luxury beauty category, e-commerce grew by about 60 percent for the year to October and online penetration will increase from about 28 percent in 2019 to about 38 percent in 2020, driven by skin care and fragrance. The luxury fashion and lifestyle category, starting from a small base, has grown by more than 100 percent for the year to October and is expected to increase online penetration from about 5 percent in 2019 to about 7 percent in 2020.

Off-line, Hainan Island’s duty-free sales are one to watch. This year, they are set to grow 100 percent from 2019 and will account for 7 to 9 percent of China’s luxury market sales. Total Hainan duty-free sales had reached 21 billion renminbi by the end of October, with sales up 98 percent compared to 2019.

Despite the stellar growth, brands have their concerns. For starters, most brands manage Hainan through their global travel retail division, creating challenges for local teams to holistically plan and serve China’s luxury market.

Secondly, it is an entirely wholesale model — additional discounts offered from the retailer on top of tax exemption could create a problem for brand image.

“Price comparisons show that Hainan-listed duty-free prices for fashion and lifestyle goods can be 10 to 25 percent more competitive than official mainland-listed prices. For luxury beauty, those numbers jump to 25 to 40 percent,” the study said.

The report also said that “luxury brands have reservations about Hainan’s highly commercial and transactional shopping environment, which leaves consumers queuing for hours outside stores. They hope that new premium shopping malls will be developed over the next few years, in time to be ready when the whole island becomes duty-free.”

With the addition of COVID-19-related travel restrictions, mainland China’s portion of Chinese global luxury purchases this year reached a peak of about 70 to 75 percent. But this is expected to come down over the next five years as global travel conditions normalize. Pre-COVID-19, domestic luxury brands’ share of Chinese consumption varied from 20 to 50 percent.

“We expect China to progressively reopen its border, beginning with other Asian markets in Q2 or Q3 2021,” Bain said. “Global conditions are unlikely to return to normal before 2022 or even 2023. Besides, Chinese consumers will probably remain cautious about international travel even after borders reopen, and Hong Kong is unlikely to return to its pre-crisis level of luxury sales. Therefore, most luxury brands believe that positive domestic growth will continue in 2021 at about a 30 percent level, with challenges increasing during the second half of the year.”

Nevertheless, brands that operate in mainland China “will have at least one year and possibly two to woo shoppers and convince their consumers that domestic shopping is a better, more sustainable experience.”