Analysis of the Current Situation and Development Trends in the Luggage Industry in 2023
2023-04-13
Source: National Bureau of Statistics, China Customs, China Leather Association
Over the past 20 years, the Chinese luggage industry has experienced rapid growth. Currently, China's luggage production accounts for over 50% of the world's total production, and its exports represent more than 33% of the global total, making China the world's largest producer and exporter of luggage. In recent years, as the national economy has rapidly developed, people's lives have become more prosperous. Business trips and leisure travel have become increasingly frequent, and luggage has become an indispensable daily consumer product.
Luggage, used during long-distance travel to store clothing, personal care items, and souvenirs, comes in various types and styles. Different consumers have varying preferences, applications, and demands regarding material, size, design, and style.
Luggage can also be categorized into hard-shell and soft-shell luggage based on the exterior. Hard-shell luggage is more impact-resistant, suitable for protecting fragile contents. Soft-shell luggage is generally lighter and more flexible in terms of capacity but may be prone to zipper bursts if overpacked.
The sizes of luggage available in the market are typically standardized based on the dimensions set by airlines for carry-on and checked luggage. For example, Cathay Pacific Airlines stipulates that the maximum dimensions for checked luggage must be less than 158 centimeters in total, whereas carry-on luggage dimensions should be smaller than 56x36x23 centimeters.
Market Demand in the Luggage Industry
Consumer demand for luggage is closely tied to the popularity of domestic tourism. Consumers often choose luggage sizes based on the length and season of their trips. As travel scenarios become more diverse, the proportion of large (26-inch and above) and small (under 20-inch) luggage sales is increasing. Search trends on Tmall reveal that there is higher demand for large and extra-large luggage during Christmas and the Spring Festival, while small-sized luggage is more popular during the summer peak travel season in July and August.
As luggage is closely associated with travel, it benefits from the growing interest in national tourism. Over 60% of luggage consumers are female, and the consumption ratio is around 60% in first and second-tier cities, with even higher consumption growth rates in third-tier cities and below. Cross-industry collaborations, including intellectual property (IP) and co-branding, are becoming a trend in the luggage industry.
Current State of the Luggage Industry
According to statistics from the National Bureau of Statistics, in 2022, the average disposable income per capita in China was 36,883 yuan, representing a nominal year-on-year increase of 5.0%. The median disposable income per capita in China for 2022 was 31,370 yuan, marking a growth of 4.7%. The median income is equivalent to 85.1% of the average income. The increase in consumer purchasing power has provided a foundation for the growth of the luggage industry.
Regarding changes in sales revenue in China's luggage industry, rising living standards, combined with the prevalence of consumption-driven by the middle class, have led to a significant increase in demand for luxury products. Competition from Southeast Asian luggage products has also improved. These factors have led to a continuous decline in domestic luggage exports and a simultaneous increase in imports. In addition, the effects of the pandemic have reduced domestic consumer purchasing power, resulting in a decline in sales revenue for Chinese luggage companies. In 2021, the industry showed a slower recovery than expected, with total sales revenue reaching only 133.03 billion yuan. In 2022, sales revenue in the first half of the year was slightly lower, with a modest year-on-year increase of 57.85 billion yuan compared to the same period in 2021.
Looking at changes in total profits among scale luggage companies in China, a noticeable trend of declining profitability has emerged, particularly as revenue decreases. Profits have been gradually decreasing in recent years, with a sharp decrease in 2018, a slight increase in 2019, and a substantial decrease in export profits due to the pandemic in 2020. Although exports improved in 2021, the overall growth in domestic demand was limited. The data shows that in 2021, total profits for luggage companies with scale in China reached 5.91 billion yuan.
Concerning changes in import and export amounts in China's luggage industry, China is one of the world's largest luggage exporting countries, with exports greatly exceeding imports. As domestic per capita consumption capacity has risen and the demand for luxury items has grown, imports have also increased. Prior to 2020, China's luggage exports showed a continuous decline, primarily due to rising labor costs in domestic manufacturing, a shift toward higher-end luggage products, increasing competitiveness of lower-end products from countries in Southeast Asia, and the impact of the pandemic. However, exports showed a notable rebound in 2021, reaching a new high since 2016 at 27.856 billion US dollars.
According to the research report "2022-2027 China Luggage Industry Development Trends and Investment Risks" from the China Research Industry Research Institute:
China, as a major producer of luggage, has built a complete industry chain that includes raw material manufacturers, luggage manufacturers, and retail luggage brand operators. China ranks first globally in luggage exports and production. However, it is primarily a producer and lacks significant big brands despite having over 20,000 luggage manufacturers. To further develop, Chinese luggage companies must create independent luggage brands by leveraging their manufacturing advantages.
In terms of industry brands, there are established luggage brands such as Louis Vuitton, originally known for luggage production, as well as American brands like Samsonite, Miss young, American Tourister, and Tumi. European brands include Delsey from France, Antler Luggage from the UK, and Rimowa from Germany. In China, there are brands like RIBEN ITO, and LANDLINE from Germany, among others.
Development Trends in the Luggage Industry
As the national economy experiences rapid growth, people's living standards are improving. Business trips and international travel are becoming more frequent, and luggage has become an essential consumer