2011 Bain China Luxury Market Study

Overall business environment remains positive with some uncertainties Macro economy Consumer Regulatory environment Increasing number of HNWIS, affluent households & middle class with rising disposable income • Slow down of store expansion -High-end shopping malls becoming increasingly important compared to department stores, powered by booming commercial real estate market • Consumer confidence remains high - Individual luxury spend expected to maintain or increase • Rising level of sophistication - New needs & expectations to be satisfied • Still male dominant market; women categories catching up - Business gifting still important part of luxury spending • Potential reduction of luxury import tariff may impact domestic/overseas consumption of certain categories • New regulations on prepaid cards to curb corruption • More stringent quality standard and process for importation may cause delay of new product introductions into China market This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent SHA 2011 Bain China Luxury Market Study_Media release_vf 23

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