As Western economies continue their economic recovery, China's consumer luxury goods market is outpacing every other luxury market on the planet. Overall economic growth in China is projected at 9.9 percent in 2010. But when full-year sales of luxury goods are tallied, they're expected to reflect a 23 percent increase over 2009, according to Bain research—and the growth rate is 30 percent when represented in Euros.

To gain insight into what consumers want and how best to serve them, Bain surveyed nearly 1,500 luxury consumers throughout China of varying ages, educational backgrounds, gender and incomes as well as 18 luxury brand executives and experts.

Six key trends have been identified in the China luxury goods market:

• Continued trend of increased domestic shopping (vs overseas)
• Tier 2 and tier 3 cities continue to be the new battleground
• Consumers expect comprehensive and differentiated service experience
• Continued importance of online platforms
• Brand building efforts are more localized and are increasing
• Gifting is increasing and is more diversified

Based on the market overview and the key trends, we identified the main challenges for luxury brands in China in terms of brand building, talent building, after-sales service and client relationship management. To succeed, the companies need to progressively shift their focus from land grabs and store openings to delivery of a consistently great consumer experience.