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The gift of Chinese
tourists
BEIJING - Chinese
traveling abroad are offering a welcome boost to
the growth of sales of luxury goods in developed
nations, and future growth is expected, in
accordance with China's rapid economic development
and Chinese citizens' greater opportunities to
travel overseas.
A survey conducted by
Goldman Sachs Global Investment Research, an
independent market research company, revealed that
around 20.2 million Chinese people traveled abroad
in 2003. Several industry analysts expect this
number to increase dramatically as more and more
foreign countries become approved tourist
destinations and Chinese people come to enjoy
greater disposable income.
The Economist
Intelligence Unit expects the number of outbound
Chinese travelers will increase to 49 million by
2008, 60 million by 2010 and 100 million by 2015.
The World Tourist Organization expects the figure
to reach 100 million by 2020. In the first 10
months of 2004, 23.84 million Chinese traveled
abroad, a year-on-year increase of 49.8%.
The surge in Chinese traveling overseas is
good news for luxury brands, since Chinese people
show a high propensity to spend when on holiday,
and travel will also enhance their brand
awareness, says the survey. In the short term,
Hong Kong is likely to attract most of the
spending on luxury goods by mainland tourists due
to its proximity and attractive pricing. But
Europe, particularly France and Italy, is believed
to lure a significant number of Chinese shoppers.
The survey report indicates that Chinese
shell out at least twice as much on luxury
commodities when touring overseas than they would
locally, and attributes this phenomenon to three
factors.
First, Chinese consumers are
generally price conscious, and consumers of luxury
goods typically seek the lowest price if this is
easily identifiable. Prices of luxury commodities
can be at least 20-30% higher in the mainland than
in Hong Kong or Europe as a result of high import
tariffs and consumption taxes. Tariffs can be as
high as 35% on certain jewelry on the mainland
market, ranging from 12% to 16% on watches and 10%
on leather goods; the consumption tax on
non-essential items is 10%.
Second,
gift-giving is an important aspect of Chinese
culture. When traveling, they tend to bring back
gifts representative of the countries they have
visited, often branded products otherwise
inaccessible in China. In addition, in the
business world, buying expensive gifts is a common
and accepted practice and is seen as a way to show
respect.
Last but certainly not the least,
despite the recent expansion of most luxury
brands, the variety of luxury products available
in the Chinese mainland is still limited when
compared with Hong Kong and Europe. Many brands do
not offer their full range of products on the
Chinese mainland, which is an additional incentive
for Chinese tourists to buy when traveling
overseas.
(Asia
Pulse/XIC) |
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