Increased disposable income and changing consumer habits have resulted in a growing number of Chinese consumers being able to indulge their passions for luxury goods. Indeed, the massive increases in wealth amongst many have meant that spending on luxury goods has made Chinese consumers the second-largest group of those purchasing these products in the world. Investment group CLSA projected that continued spending by newly affluent Chinese consumers would make China the single-largest global market for luxury items by 2020 with a 44% global spending share. Luxury goods popular among Chinese consumers include clothing and accessories, wines and spirits, furniture, vehicles and high-technology products. Demand for luxury goods is related in part to the Chinese tradition of giving gifts, not only to friends and family but as a means of lubricating the wheels of business.
Many Chinese consumers travel to Japan, Hong Kong and even to Europe and the US to procure the latest luxury items. Over one-half of all spending on luxury items by Chinese consumers is actually rung through tills in Hong Kong and Macau rather than on the mainland. This is due to the heavy import taxes consumers face on luxury goods bought in China. Indeed, owing to these hefty import taxes prices of a basket of 20 luxury brands of watches, suitcases, clothing, liquor and consumer electronics are 45% higher in mainland China than they are in Hong Kong, 51% higher than in the US and 72% higher than in France, according to a 2011 study by the Ministry of Commerce.
Consumers are not using internet retailers when buying luxury goods as often as they do when they buy other types of products. A McKinsey survey, conducted in 2011, found that 44% of consumers in China said they preferred to see, hold and try on items before purchasing. Thus, they avoid internet retailers other than to conduct research and check prices. As well, many consumers tend to not trust internet retailers to provide buyers with the genuine articles, an issue that is slowly being resolved as e-commerce develops in China.
Amy for Daxue Market report China