Once upon a time, luxury spending used to be restricted to the major cities. Think New York, London, Milan, Paris etc..
China has changed that way of thinking with luxury spending soaring in smaller cities. No longer is Shanghai or Beijing the epitome of the luxury landscape in China.
AFP reports that China is forecasted to be the world’s top buyer of luxury goods such as handbags, watches, shoes and clothes by 2015, and analysts say those living in smaller cities such as Chengdu in Sichuan province are driving the growth.
One young woman, named Li Xingyi splashed out 17,000 yuan ($US2,600) on a Louis Vuitton monogram bag.
“I liked it, I could afford it, so I just bought it.” She said.
This is the sentiment of many living in China. If they can afford it, they will buy it.
Whilst the majority of China’s 1.34 billion-strong population live in rural areas, a growing number of people are moving to the cities where many have benefited financially from soaring property prices and rapid economic growth.
Chinese shoppers are expected to spend $US15.6 billion on luxury products this year, up 20 per cent from last year, according to Shaun Rein, managing director of China Market Research Group in Shanghai.
An interesting figure is that only 40 per cent of the purchases are made in China. To avoid the mainland sales tax of up to 17 per cent, consumption tax as much as 56 per cent and hefty import duties, locals are travelling to Hong Kong or Europe to get their luxury fix.
Luxury companies are exploring their options to open more boutiques in the second-tier cities, but there is a lack of real estate befitting their brand.
“They can’t open anywhere because there needs to be a reasonably good shopping centre,” Aaron Fischer, regional head of consumer research for CLSA Asia-Pacific Markets in Hong Kong told AFP.
“These European brands can’t go from 10 stores in China to 150 stores in a year. They spend a lot of time identifying the right location.”
The MO Down reported a little while ago on the latest craze to hit Korea and that is that consumers want to tote around luxury paper bags. It seems that China are getting in on the act now.
Luxury means status.. and Chinese consumers will show their status however they can.
The China Daily reports that there are more than 80 online stores selling Chanel paper shopping bags, whilst another 70 are selling Gucci.
It is believed that a lot of these are imitations… One store sold more than 600 paper bags with a Louis Vuitton logo, priced at 3 yuan a piece within 30 days.
At The MO Down, we say… Fakes are for Frauds!
Image credit: jingdaily.com
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