SHANGHAI (Reuters) – The lifting of travel restrictions in China this month is expected to boost demand in the global luxury retail market.
Shares of global luxury brands soared last week after Beijing announced it would ease travel restrictions from 8 January, effectively causing Chinese tourists to flock again to global shopping hubs from Paris to Tokyo. is now possible.
However, analysts and luxury brands say Chinese travelers aren’t likely to return to pre-pandemic levels anytime soon as airlines have yet to fully reopen and local prices have fallen. I am warning you. Equally important, big luxury brands are investing more in the shopping experience in China.
A Shanghai shopper named Mao Zedong has visited boutiques around the world for years, but now believes he receives the best service in China.
“When I went to Paris, I couldn’t have a Parisian salesman look after my bag, but now I can,” she said.
Before the pandemic closed borders in early 2020, Chinese shoppers bought 70% of their luxury goods abroad.
Amid travel restrictions caused by the pandemic, domestic luxury goods sales soared, doubling to 471 billion yuan ($68.25 billion) from 2019 to 2021, according to Bain & Company. % in 2019.
“It won’t go back to 70%,” said Jonathan Yang, principal at consulting firm Roland Berger in Shanghai. “It’s natural for us to shop when we travel, so I’m sure some of the luxury spending is still occurring in other countries, but it’s going to be like 50-50 .”
A number of luxury companies such as LVMH’s (LVMH.PA) Louis Vuitton and Coach Parent Tapestry (TPR.N) have expanded their operations in China over the past three years to reach consumers who cannot go abroad. opened a new flagship store and held a large-scale fashion show.
This allowed local staff to build relationships with Chinese VIP customers who previously preferred to shop abroad.
According to a survey conducted by Hong Kong-based consultancy Oliver Wyman, 70% of Chinese luxury consumers use sales assistants to facilitate their purchases, and 40% sell at least once a week. We are in contact with the staff.
Oliver Wyman’s Kenneth Chow says that half of Chinese consumers who bought luxury goods in 2021 made it for the first time.
“It will be interesting to see how new luxury consumers perceive the differences between domestic and international luxury shopping.
Restrictions on international travel and local policies to encourage spending have also driven many consumers to China’s duty-free island, Hainan, as a luxury shopping destination.
In 2021, Hainan accounted for 13% of China’s domestic luxury spending, up from 6% before the pandemic. Tax regulations will continue to be relaxed. By 2025, luxury brands will be able to operate their own duty-free shops rather than relying on partnerships with local players such as China Duty Free Group (601888.SS).
According to Roland Berger’s Yan, Hainan Island’s popularity is expected to continue, with only 13% of Chinese citizens holding passports, making duty-free domestic destinations very attractive.
Moves by Hainan and Beijing in 2018 and 2019 to cut import tariffs on luxury goods have, as a result, dampened some of the appeal of shopping abroad for some price-sensitive shoppers. and handbags are now about 10-20% more expensive in China. It used to be 50-60%.
If a traveler claims a 12% VAT refund, a medium-sized Neverfull bag from Louis Vuitton costs 14,400 yuan ($2,090), just 18% more expensive in Shanghai than in Paris.
Luca Sorca, senior research analyst at Bernstein, said brands will continue their efforts to close cross-border price gaps, but efforts will be further complicated by the currency’s depreciation against the dollar.
“It will take some time for the Chinese to return to Europe, where prices are lower,” he said, predicting a widespread return to long-distance travel in 2024.
Since the announcement that quarantine will be lifted, international travel searches and bookings have favored short-haul international destinations, with Hong Kong, South Korea and Japan topping travel agency searches.
But for many, the wide availability of luxury goods abroad combined with savings means that shopping holidays are definitely back on the agenda. This is good news for Parisian retailers.
Lucy Lu, 31, who works in fashion in Shanghai, is already planning her trip.
“My friend wanted a Bvlgari ring that was 20% cheaper in Dubai, and another friend gave me a list of makeup items. It’s easier to get it at
Reported by Casey Hall.Edited by Sam Holmes
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