Buying power of wealthy Chinese unlikely to slow
In 2007, Chinese purchases of luxury goods represented a mere 5% of global luxury sales and reached a staggering 25% in 2012. According to a recent report by HSBC China’s luxury sector far from maturity, the analysts remarking that: “China remains above all a market where brands are recruiting customers rather than serving repeat ones.”
One factor powering growth is the expansion by retailers from China’s leading metro areas to smaller cities and regional hubs — a trend that means luxury shops are opening for the first time in cities with populations nonetheless as large as Paris or San Francisco. A clever move from the luxury houses targetting outside the main cities, which is handsomely paying off.
Though Chinese nationals continue to account for a large proportion of luxury purchases, only about 10 per cent of those sales are actually made in mainland China. The rest of the purchases are frequently made overseas in territories like Hong Kong and countries like Australia, where a booming influx of Chinese visitors routinely spend triple the amount compared to the average American tourist. We must also note Europe as a popular destination as well where the Chinese find the products cheaper to purchase than in their own country.
Lower taxes aren’t the only reason for the out-of-country buying trend. In-store service is often higher quality in established luxury markets, and counterfeit goods are not as prevalent. In addition, travel to exotic destinations by China’s upper class is increasing, allowing for more holiday indulgences.
In Australia, for example, visitors from China spend an average of $US3000, compared to only $US1000 for American and European tourists, according to HSBC.
adapted from MO Down