China Luxury Market Study 2010 - Bain & Company

China Luxury Market study 2010 Bain POV November 2010 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

Agenda

• China luxury market overview • Key trends of China luxury market • Implications for luxury brands in China

China Luxury Market study 2010 2 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

Asia over-performing, US spend jumping ahead of real recovery, and Japan still sluggish YoY ‘09 vs ‘08 @K

Worldwide Luxury Goods Market by Area

Rest of World Asia-Pacific

€153B 5%

YoY ‘10E vs ‘09 @K

-8%

-11%

+10%

+6%

-2%

-4%

+8%

+5%

17%

+10%

+9%

+22%

+19%

11%

-12%

-18%

-1%

-8%

30%

-14%

-18%

+12%

+7%

-9%

-9%

+6%

+4%

€168B 5%

15%

Japan

12%

Americas

30%

Europe

38%

37%

2009

2010E

@K = at constant exchange rates China Luxury Market study 2010 3

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

Total luxury spend by mainland Chinese reached ~RMB156B in 2009; but >50% spent overseas Key highlights • Domestic purchase as % of total luxury spend continued to increase, though still