Why Do Chinese People Reduce The Trend Of Buying Luxury Goods Overseas?

According to the world clothing and shoe net, in the past more than 10 years, wealthy Chinese tourists have been

One of the growth pillars of high-end consumer industries, such as brands, casinos and cruise ships.

But how long this power can last has become a question.

Whether it's Ginza in Tokyo or Fifth Avenue in New York, the effectiveness of past effective ways to attract Chinese tourists is decreasing.

In January this year, sales of high-end department stores in Tokyo suddenly declined due to the decline in the number of Chinese tourists.

Although sales of some department stores rebounded in the second quarter, sales of large department stores such as Isetan (Yi Shidan), Mitsukoshi (three Vietnamese), Sogo (Chong Guang) & Seibu (Xi Wu) and other large department stores during the Spring Festival in China did not achieve much growth compared to last year.

Danziger, a luxury industry analyst, said: "you can't rely too much on Chinese tourists to achieve growth. This is very dangerous."

According to the forecast, although the global economic environment is not prosperous and there are many unstable factors, the overall growth of the luxury goods industry will remain stable. Therefore, the main driving force of the growth of Chinese luxury goods industry will have any negative signs, which will make a lot of difference.

I was worried.

Many people attribute the reduction of Chinese tourists' consumption to various macroeconomic factors, such as slowing economic growth in China, stimulating domestic consumption by the Chinese government, and exchange rate fluctuations.

Whatever the reason, all of this is worrying.

Pam Danziger, President of marketing company Unity Marketing Inc., said: "luxury brands have gained a lot from Chinese consumers, but this outbreak has already begun."

Policy adjustment stimulates local consumption

Chinese tourists are excellent target customers for the luxury industry, China.

Rapid economic development has given tourists a lot of wealth.

In addition, the consumption boom of Chinese tourists began in the global financial downturn after the financial crisis in 2008, so Chinese consumers soon became the mainstay of the global luxury market.

According to statistics from the UN agency World Tourism Organization, in 2012, Chinese tourists became the world's largest tourist consumption group, reaching 261 billion dollars in 2016.

Above: comparison of total consumption of tourists in various countries in 2016

In such an environment, the luxury market soon began marketing Chinese consumers.

During the Chinese new year, various activities became commonplace. Even Las Vegas casinos built huge pig statues on the doorway during the new year's Eve to celebrate the arrival of the pig year.

But in recent years, the Chinese government has been encouraging consumers to engage in local consumers, and has launched a number of policies, including reducing taxes on imported products, cracking down on purchasing agents and so on.

According to Bain consulting, China's sales volume reached 6 billion US dollars in 2016.

These efforts have gradually begun to take effect, and garment brand Capri said their business in China is still growing, but sales in Japan and South Korea have been hit by the decline in the number of Chinese tourists.

Jessica Yang, a 35 year old lawyer living in Beijing, said: "most of my luxuries were purchased at airports when traveling overseas.

But if the domestic price is not much higher than that of other places, I will choose to shop in local stores.

Exchange rate fluctuation and brand gravity shift

In addition, Chinese consumers are also very sensitive to exchange rate movements, preferring to go shopping in countries and regions that are relatively low in the RMB exchange rate, which also makes sales of many overseas tourist destinations unstable.

Tiffany is especially affected by this impact.

When they released their financial data for the first quarter, management clearly indicated that the decline of Chinese tourists' consumption was an important reason why they failed to meet analysts' expectations.

On the other hand, many brands are starting to shift their focus from Chinese tourists to China's local market, especially many luxury brands in North America believe that they are less exposed to the Chinese market than their European counterparts.

Therefore, they began to exert themselves to enter the Chinese market and reduce their investment in attracting Chinese tourists.

Coach, Kate Spade and Michael Kors all think that the Chinese mainland is the key to their future growth.

At the same time, many brands that have been working in mainland China for many years have received returns.

In response to an analyst's question last month, L'OREAL's CEO Jean-Paul Agon said: "our growth in China has not slowed down."

China has now become the second largest market in the L'OREAL group besides the United States.

(see the report: L'OREAL group sees the ten latest trends in cosmetic consumption (China becomes the world's largest market for the three largest brands). LVMH group's performance in China's stores is also excellent, and has become an important driving force for their 2018 fiscal year growth of 7.5% over the same period last year.

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