When I owned a café in the QVB in Sydney, it was located
directly opposite the Coach store. During the Boxing Day sales there was always
a line up outside the shop, similar to this image. Customers waiting eagerly to get their hands on
bargain designer handbags. I have to say
that at least 80% of these potential customers were of Chinese decent. Coach is
actually the 4th most popular brand of designer handbags in China in
term of sales.
Any luxury retailer will now tell you that their most
valuable customers are from China. The post 2008 years have not been the
easiest for luxury brands, but China's addiction to luxury goods has made up
for the slowing down of European sales. Most of the Chinese population have only
just recently started making enough money to survive and to splurge on luxury
items was once unheard of. However, the new Chinese middle class has grown enormously
over the past couple of decades and the number of millionaires is soaring.
The Chinese people now seek social-status signals such as branded
goods, luxury items and designer handbags. Travel abroad is high on many of the people's
wish-lists, but for about 80% of Chinese travellers, shopping is a crucial part
of their travel plans. They are happy to spend hours of valuable tourist time
queuing for expensive bags and other luxury items. In Britain, alone, it is
reported that they spend nearly £1,700 ($2,800) per person per trip which is three
times the market average. And much of it is spent on retail shopping - Chinese tourists have no problem buying Prada designer handbags by day but sleeping in two-star hotels by night.
The main reason why the Chinese prefer to buy abroad is
price. China has heavy import tariffs and consumption taxes, as well as higher
pricing strategies. This can increase the prices of luxury goods in China by
50%. According to LVMH, a French luxury conglomerate, a Louis Vuitton handbag
costs 30% more in Beijing than in Paris.
The second major reason that the Chinese prefer European or American
stores over their own is the guarantee of authenticity. They feel
more secure that they are not buying fakes. Many Chinese consumers prefer
buying products from outside their home country because they're seen as less
likely to be counterfeit. And they're not bothered by the two- to three-week
delivery time if they buy on-line. In fact, they like the wait because it
provides some confirmation the goods really are from overseas.
The Chinese also shop abroad for the “experience” and the
stories they can tell afterwards. Bragging rights are a crucial reason to buy
abroad. Chinese people love to show that they have been abroad, so a “Made in
Italy” is much more of a status symbol than “Made in China”. Bragging also
takes the form of giving expensive luxury goods as presents. Successful men and
women simply cannot return home without a sizable excess-luggage bill!
.
China is
now the world's second-biggest economy, and it’s 1.36 billion people are the
biggest market for everything from cars to shoes to smartphones and especially
for designer handbags. In recent years there has been a huge change in the
Chinese market. China is now full of globalized shoppers who took more than 100
million trips out of the mainland last year.
In fact,
in 2013, Chinese people bought an estimated 47% of the world's luxury goods,
and mainly in countries, located nearby. By some estimates, more than half of
the world’s luxury spending will come from Chinese pockets this year. The
Chinese taxman, however, is missing out because nearly 33% of luxury products
bought by Chinese are purchased outside the country. And the silly thing is
that most of these products are actually made in China.
And the
boon is not just the Chinese spending so much on luxury goods abroad. They are
also spending online. China has over taken the U.S. to become the number one
e-commerce market. Its middle class buys a wide range of products online
ranging from baby formula, health foods, vitamins, milk powder, skin care
products, Purina for their dogs and as well they splurge luxury items such as designer
handbags. China's consumers have gotten savvier and are now looking to buy top
quality brands.
In short, the Chinese market is now a more mature market with
the new middle class having a lot of disposable income at their fingertips. Of
course the huge multinationals have loved the size of this market and have
profited from it.
However, China's boom years symbolized by double digit
growth could not continue forever. The Chinese
economy has definitely slowed down over the past year and this has affected the
luxury market to a certain degree. There has also been an official crackdown
on corruption and lavish gifting which has affected the luxury market. No
longer will you see plane-loads full of $800 bottles of wine. But the new Chinese middle classes still see
luxury goods as a way to show they have made it and brand names such as Dior
and Rolex remain popular search terms on Chinese blogging sites. The Chinese
shopping-spree looks set to continue, and China's Ministry of Commerce expects
China’s lucrative cross-border trade to become a US$1 trillion market this
year.
The psychology behind why the
Chinese love luxury items so much is possibly linked more to aspiration and the
images of wealth, sophistication and civility that brands from fashion-houses
like LVMH represent. French and Italian fashion-houses permit the Chinese
customers to enter into a world of elegance and opulence, allowing them to
escape from grimy city-life, smog and poverty
The Chinese President, Xi Jinping, has adopted a phrase for
what's happening: the "new normal.
In some cases, of course, China's government has put a chill
on foreign businesses. It built a Great Firewall that blocks most people in the
mainland from accessing Facebook, Twitter and Google search, allowing
local internet companies to thrive. And now local brands are making gains as
their quality and marketing improves.
When I was in Guangzhou just over a year ago, the brand
stores were not flamboyantly displayed, but were found among the regular market
stores The majority of stores sold cheap China made goods. When I did decide to
but one of the designer handbags on sale, the merchant got out his calculator
are started tapping away. He came up with a price more expensive than if I had
purchased the same bag in Sydney, and no proof it was authentic. Better to buy your designer handbags online at www.largepurseshop.com
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