Asia, particularly China, will continue to drive growth in the luxury market despite a slight slowdown in recent years, according to new research.

The report, from The Economist Intelligence Unit (EIU) titled 'Rich Pickings', says Asia, which already accounts for around one-third of the global luxury goods market, is forecast to make up 50-60% of luxury revenue within ten years.

Although demand will be driven by China, where there will be 12.8m households with more than US$150,000 in annual income in 2030, other Asian markets will also show strong potential.

India will have more than 30m households with annual incomes exceeding US$50,000 by 2030, and the country will become a "key battleground" for luxury brands as the retail market opens up to foreign investment, the report notes.

In Indonesia, a wealthy elite has emerged because of the global commodity boom, driving rapid growth in luxury sales. Malaysia and Thailand, meanwhile, are becoming shopping destinations in their own right, with the former benefiting from low import duties on luxury goods, the research explains. 

Japan, however, will be hampered by the weakness of the yen, fragile consumer confidence and a saturated market. Counterfeit goods, a clampdown on gift-giving in China and regulation of foreign retail investment in India, and pricing will pose challenges for luxury goods companies.

The combined revenue of Kering (formerly known as PPR), LVMH Moët Hennessy Louis Vuitton, Richemont and Hermes is expected to reach EUR121.93bn in 2023, up from EUR51.47bn in 2012. 

Of this, Japan is expected to account for 4%, while Asia (excluding Japan) will make up 50%, contrastring with the 10% share Japan had in 2012 and the 30% Asia held.

EIU chief retail and consumer goods analyst Jon Copestake said: "Fears of a slowdown have been heightened recently by China's crackdown on displays of wealth and Japan's shifting exchange rate.

"But even in this climate some luxury firms have continued to deliver strong sales. With Europe stagnating and North America subdued, the focus is firmly on Asia's potential."

Looking forward, the report adds that if luxury firms position themselves carefully, they can benefit from the fast growth of smaller cities in China and the rising number of wealthy entrepreneurs in India or Indonesia.

Western luxury firms are expected to increasingly tailor their brands towards Asian culture, and develop local brands to compete or work with domestic companies.