In the International Finance Center (IFC) in Pudong, Shanghai, long queues are seen on Saturday in almost every luxury store including Louis Vuitton. Photo: Cao Siqi/GT

Bucking the global downward streak amid the fallout from the COVID-19 pandemic, China's luxury sales last year rose by a stunning 48 percent to about 350 billion yuan ($54 billion), buoyed by a consumption comeback as travelers were unable to shop overseas, a boost in online sales and duty-free policies in South China's Hainan Province, observers and industry reports said.

Riding on the trend, the country's luxury market is on course to become the world's largest in the next few years, analysts said.

A long list of luxury brands announced price hikes at the beginning of 2021, particularly handbags. Starting from January 8, Gucci has raised the price of handbags by up to 20 percent, according to media reports. Other top luxury firms such as Hermes, Louis Vuitton and Chanel also increased their prices in a range from 1 percent to 13 percent.

As global sales have been falling, a number of luxury brands have been employing the strategy of price hikes to mitigate the revenue contraction and loss of sales due to COVID-19. Louis Vuitton raised prices by 5 to 9 percent in May, while Chanel also increased prices of some handbags and small leather goods globally in May, followed by Prada in July.

While price hikes could be an effective measure to recoup losses, it is clear that more luxury brands are placing their bets on China, where demand is high and luxury consumption is recovering.

According to a report issued by Bain & Company, China's luxury goods market will likely achieve 48 percent growth in 2020 and will be worth nearly 346 billion yuan.

China's share of the world luxury goods market nearly doubled last year, growing from about 11 percent in 2019 to 20 percent in 2020, while the global luxury market declined at an expected rate of 23 percent in 2020, the report showed.