2011 Bain China Luxury Market Study

Phenomenal growth in 2010 across categories; momentum continued in 2011 with a gradual softening in Q4 2010 Mainland China luxury goods market by product category RMB 87B CAGR (08-09) (09-10) (10-11F) 17% 27% 25-30% 100% Other 14% 15% Womenswear 14% 27% 80- Shoes 17% 20% ~15% ~30% 15-20% Jewelry 17% 22% ~25% Menswear 17% 24% 25-30% 60- Leather goods 20% 30% 25-30% Cosmetics, 40- perfume and 22% 22% ~22% personal care 20- Watches 0 China luxury market 12% 45% ~40% KEY HIGHLIGHTS • China's domestic luxury market growth picked up speed in 2010 and reached RMB 87B • 2011 expected to be another good year for China luxury; however a gradual softening in consumption appeared in Q4 • Watches and leather goods lead the growth - Watches saw a clear rebound after '09, driven by economic recovery and aggressive brand marketing - Leather goods expect to continue past growth trends, as major gift choice for personal and business *Growth in RMB is ~27%; growth expressed in Euros factoring currency appreciation is ~35% Note: Only premium cosmetics are considered luxury goods in the "Cosmetics" category Source: Expert interviews; Brand interviews; Literature search; Bain analysis 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 5

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