economy - Only big brands make a profit in luxury market

Cracking the market for the more expensive luxury goods is still hard in China, discovered Bloomberg. Only the top one, two and three make a profit, the rest is losing money and often on a larger scale than anticipated.

Official statistics overestimate the size of the urban middle class, which controls the bulk of China's disposable income, says Jonathan Anderson, Hong Kong-based chief Asia economist at UBS AG. The group's real size is between 65 million and 75 million, not the 250 million to 300 million reflected in government figures, he says.

Stiff competition for the relative small top-end of the consumer market, high import taxes contribute to the losses. On top of that, many of the smaller brands lack status among the China shoppers who tend to focus on the - often fake - Louis Vuitton products. A continued tendency to keep on saving money equally does not help.