China is the world’s fastest-growing market for “vanity” spending

China is the fastest growing market for the consumption of self-indulgent goods and services aimed at enhancing one’s appearance or status. According to a research note from Bank of America Merrill Lynch, China leads the world growth in the category of so-called “vanity capital,” which includes spending on jewelry, cars, jets, make up, and health supplements, as well as private schools, ivy league universities, and clubs.

The market grew an average of about 15.6% a year for the past five years in Greater China, which includes mainland China, Hong Kong and Taiwan:

Growth_in_-vanity_capital-_by_region_annualized_growth_2009-14_chartbuilder (1)

The bank credits things like women marrying later, social media-induced envy, and the ease of internet shopping for the increase in spending. Men in Asia are also splurging more on beauty products for themselves.

Research consultancy Euromonitor puts the size of this market globally at about $3.7 trillion, Bank of America said in its report, and expects it to expand to about $4.5 trillion by 2018, thanks to emerging markets like China.

Vanity_spending_by_region_Market_size_chartbuilder (2)

China may already be the world’s largest consumer of luxury goods—by some estimates, almost half of all luxury purchases were made by Chinese shoppers last year. But, in contrast to the high hopes of China’s economic planners, most of this consumer spending is happening outside of the country.

China accounts for about 12% of the world’s consumption of luxury goods, but only 2% of those purchases are made within the country. Most purchases are made abroad by Chinese tourists. That’s in part because of hefty import taxes, but also because buying goods in France or England lends China’s newly-rich bragging rights about their foreign travel, too.

China’s luxury spending contracted slightly, by 1% last year, because of a continued crackdown on corruption and conspicuous spending by Chinese officials. But consumption by Chinese tourists continues to be healthy—spending was up a record 122% in March, according to the retail tourism company Global Blue.

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