Shanghai is the most popular city in China's mainland for buying luxury goods and will be so for a while, according to recent research.

Of 1,000 Chinese luxury goods buyers questioned, 12.4 percent said Shanghai was their first choice, followed by Beijing, according to research by Asian market research firm Albatross Global Solutions together with Ruder Finn Asia.

The purchasing power of Shanghai should keep it as the luxury center on the mainland, the report said.

Although Shanghai is far behind Hong Kong - chosen by nearly half the respondents as their top luxury destination, consumption in Shanghai was shored up by mainland consumers willing to spend.

Nearly 90 percent of mainland respondents would not change their buying behavior during the economic crisis. In contrast, 77.7 percent of respondents from Hong Kong said they would reduce spending on luxury goods.

"Despite the luxury industry seeing a universal decline in the demand of luxury goods, the economic downturn has had a limited impact on the Chinese mainland, where the luxury goods market continues to develop," said Christophe Cais, executive director of Albatross Global Solutions.

The research also found second-tier cities catching up in the luxury stakes and their purchasing power not far below those living in first-tier cities.

"The second-tier cities are anticipated to be the key to the success, in terms of achieving the sustainability in the Chinese market," said Jean Michel Dumont, chairman of Ruder Finn Asia.

A thousand luxury consumers with an average yearly income of more than 240,000 yuan from 21 cities, including Shanghai, Beijing and Hong Kong, were interviewed in April and May.

(Shanghai Daily July 7, 2009)