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    Inland Chinese Luxury Shoppers Take The Lead In Hong Kong

    As Hong Kong waves goodbye to ultra-wealthy tourist-shoppers from China's top-tier cities, mainland Chinese consumers from second- and third-tier cities are increasingly picking up the slack.
    Hermes store on Hong Kong's Canton Road
    Jing DailyAuthor
      Published   in Finance

    Consumers From Top-Tier Cities Doing More Luxury Shopping Overseas, Online, Even Locally#

    As Hong Kong waves goodbye to ultra-wealthy tourist-shoppers from China's top-tier cities, who spent the past several years boosting the city's luxury market and are now doing the same in Paris, mainland Chinese consumers from second- and third-tier cities are increasingly picking up the slack. According to the latest figures from the Hong Kong Tourism Board, the city recorded a 16 percent increase in arrivals last year, with 35 million of the 49 million total visitors to Hong Kong coming from the Mainland. However, owing to less frenzied spending by visitors from inland provinces, retail growth remained in the single digits.

    Yet losing super-wealthy Beijingers and Shanghainese to Printemps or Galeries Lafayette may not hurt brands and retailers in Hong Kong too badly over the long-term, and may prove more sustainable owing to the growth of the inland middle class. As UBS analyst Spencer Leung told Caijing, 54 percent of mainland Chinese visitors to Hong Kong in 2001 were first-timers, a figure that dropped to 20 percent by 2009 and has steadily risen since 2010 as inland Chinese have 'rushed' to Hong Kong to sidestep high import and luxury taxes in the Mainland and top-tier consumers have gone off to Europe to do their high-end shopping.

    Though first-time visitors from second- and third-tier mainland Chinese cities tend to purchase smaller luxury items in Hong Kong (such as belts and small handbags), their average spending per trip remains high, and returning tourist-shoppers regularly "trade-up" to bigger-ticket items.

    This is not terribly surprising, as the vast majority of new wealth creation is currently happening in second- and third-tier cities. With many wealthy consumers in these areas unable to get their hands on certain brands (or unwilling to pay a 40+ percent premium on imported luxury items), Hong Kong is the most convenient and accessible destination.

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