Thanks to high tariffs, China’s luxury consumers already purchase an estimated 60 percent of their luxury goods outside the mainland. According to a new Chinese-language article in iFeng, several China luxury experts predict that this trend will accelerate in the coming year due not only to the pricing issue, but to several additional factors. Below are three of the causes that are likely to continue to push Chinese luxury shoppers abroad in the coming year:
As niche labels and individualism become more popular in China’s luxury market, one main reason other than price that Chinese consumers go abroad is to buy luxury goods that they can’t buy at home. The article features an interview with the head of a custom luxury manufacturing company in Guangzhou, who states that luxury consumers are increasingly looking to avoid the embarrassment of running into someone with the same item at an event, or zhuang shan (literally, “when garments meet by accident,” 撞衫). “They attend all sorts of social events,” he says about China’s luxury consumers. “They frequently discover that other guests are wearing the same thing. … It makes them feel embarrassed.” As a result, consumers are opting more and more for one-of-a-kind goods and niche brands.
One major issue that compels Chinese shoppers to buy abroad is dissatisfaction with the quality of service at home. According to Ruder Finn’s China Luxury Forecast, 92 percent of China’s luxury consumers are not happy with mainland service, and thus their first choice is to shop at overseas locations, where they believe salespeople are more knowledgeable. In the iFeng article, consumer goods quality researcher Zhou Tingchen stated, “With the rapid maturation of the Chinese consumer market, our research found that the degree to which luxury consumers trust luxury brands is increasingly low.”
Fear of counterfeit items and avoidance of items that are frequently counterfeit in China is also a factor that discourages consumers from buying items locally. According to Zhou, the proliferation of fakes can cause consumers to gradually abandon brands. “To give an example, if a white-collar worker in Guangzhou can just spend a few hundred yuan on an A-quality fake bag in a subway station, a rich person who spent 30,000 on the real one will no longer spend money on the brand.” Zhou’s research has found that this is a very common issue in China’s luxury market. “The harm from counterfeits on luxury brands is huge,” he says. “This is an important factor in the flight of luxury consumers.”
There are several developments counteracting these issues that could prevent a mass exodus. First, niche brands are constantly becoming more readily available in China with the opening of new department stores and multi-brand boutiques, as well as the growing number of luxury e-commerce sites. In addition, some brands, such as Valentino, have opted to create China-specific items that won’t be released elsewhere in the world for a given period of time. Brands are also increasingly engaging in VIP services for Chinese clients and taking steps to fight the proliferation of fakes, such as Louis Vuitton’s recent agreement with Taobao.