US-based Bain Capital Private Equity has recently agreed to buy Japanese apparel company Mash Holdings for JPY200 billion ($1.43 billion). Mash, which is the owner of luxury loungewear brand Gelato Pique, aims to grow its international footprint, especially in China, with this deal, says GlobalData, a leading data and analytics company.

Mash plans to leverage Bain Capital’s investment experience across a wide range of industries to further strengthen its business foundation and accelerate medium- to long-term business growth from a global perspective.

The demand for luxury apparel, which witnessed an unprecedented fall globally during the COVID-19 pandemic, rebounded in 2021. GlobalData forecasts the global apparel sector sales value in the luxury price band to increase by 9.9% in 2022 and 8.6% in 2023 with the Asian apparel sector’s sales value in the luxury price band growing by 10% and 9.8% in 2022 and 2023, respectively⁺.

Raviteja Neralla, Retail Analyst at GlobalData, comments: “China will be a crucial market for the Gelato Pique brand to expand luxury loungewear sales internationally. The country’s rapidly growing apparel sector in the coming years will play a key role in making it an important market for the brand. According to GlobalData’s China Apparel Market Forecast Report, the country’s apparel market value will grow at a CAGR of 7.5% during 2021–2026.”

GlobalData’s 2022 Q3 consumer survey reveals that 51% of Chinese respondents typically purchase clothing and footwear from foreign/global multi-national brands, as they perceive these products to be high quality*.

Globally, this proportion is only 45% according to the survey, indicating that Chinese consumers are more receptive to foreign brands^{^}. Such positive perception of foreign clothing & footwear brands makes China an attractive market for foreign apparel brands such as Gelato Pique.

China is forecast to account for 27.4% of the total luxury apparel sales in 2023, and the market’s growth at 9.1% is set to surpass that of the world at 8.6% during the year.

Neralla continues: “The Asia-Pacific region will retain the largest share in the global luxury apparel market. This dominance is driven by Chinese consumers’ sustained demand for luxury fashion, the rising middle class, and continued urbanization in the country. Other contributing factors are the high growth rates forecast in major Asian markets such as India and the Philippines.”

However, China’s sluggish economic growth and a string of COVID-19 restrictions still in place as part of its zero-COVID policy are likely to dent the consumers’ purchasing power and create headwinds for the luxury apparel market in 2022.

In addition, external factors such as the Russia-Ukraine war and global interest rate hikes to control inflation will also hamper the Chinese economy and in turn consumers’ purchasing power. As a result, the growth of China’s luxury apparel sales at 6.3% will remain much lower than that of the world at 9.9% in 2022⁺.”

Neralla concludes: “Nevertheless, China’s extensive online retail network, established e-commerce players, and consumers’ strong tendency to shop online also provide an immense opportunity for external apparel players to thrive. E-commerce players in China offer much greater support for foreign brands than hosting brands. For instance, Tmall Global, an online retailer and a subsidiary of Alibaba, helps sellers with consumer analytics capabilities with reduced entry costs. Furthermore, Chinese consumers have started buying imported goods online more than before amid the pandemic.”

+GlobalData Apparel Intelligence Center—Market Analyzers, accessed in November 2022

*GlobalData 2022 Q3 Consumer Survey—China, with 532 respondents, published in August 2022

^GlobalData 2022 Q3 Consumer Survey—Global, with 21,267 respondents, published in August 2022