Alibaba Group Holdings Ltd’s (NYSE: BABA) Cainiao Smart Logistics Network is expanding and has launched a new cargo air route between Hainan Island and Singapore with demand for luxury products in china booming.
Cainiao launches a cargo flight route between Singapore and Hainan Island.
According to General Manager James Zhao, the logistics arm will launch freights flights to duty-free shuttle products, watches, and handbags to mainland China. Cainiao will transport luxury items and goods between the southern Chinese port and Singapore seven times a week. Also, there is a possibility of similar flights between Japan, New Zealand, and South Korea, and Hainan. These are popular destinations among Chinese tourists who traditionally have been traveling abroad to buy high-end goods, but the pandemic curtailed this. As a result, brands are looking to serve Chinese customers at home by shipping luxury products to mainland China.
Analysts have projected a slow return to global travel. With luxury spending in China hit $53.3 billion last year, brands are looking for ways of bringing their products to one of the biggest luxury markets in the world.
The move to ship more luxury products to china comes as customers clear out boutiques. Companies are rushing to pivot strategies to leverage the over $110 billion luxury spending in Mainland China. Before the COVID-19 pandemic stopped global travel, Chinese shoppers were buying most of their luxury products abroad.
Luxury brands looking to bring their products to china
The spending surge in Hainan Island is essential for luxury houses depending in Asia to ride out the impact of a pandemic. For instance, Louis Vuitton and Christian Dior owner, LVMH, derived almost 50% of its revenue from Asia in Q1, with sales from the region apart from Japan surging by 86% on an organic basis. According to Bain & Co, despite COVID-19-related global travel disruptions, the luxury goods market in China grew 48% in 2020, according to Bain & Co. This growth is likely to continue and will put China on track to claiming the largest luxury products market share by 2025.