Why Chinese Customers Are the Most Income Producing Clients

If you ask almost any fashion or luxury shops in New York, Paris or Rome who their top customers are, the answer likely won't be Americans, Frenchmen or Italians. You may be surprised, but the most part of purchases are made by Chinese tourists.

Chinese buyers are one of the most significant sources of income of many of international fashion and luxury brands. Nowadays, they make up almost 1/3 of all global spending on luxury and fashion products, and during the past years they've made most of these purchases outside of China.

One of the reasons they want to get a pair of brand shoes or a Versace dress on vacation is that they are much more expensive at their home.  Shopping in America and Europe is so cheap that many Chinese call them as "the world’s largest in-season outlets".

A recent research made by Exane BNP Paribas showed that prices for luxury goods in China 21% more than the global average prices. In US they are 14% less than in China.

This inequality in the prices is caused mostly by Chinese taxes and duties, currency exchange rates and distribution expenses of the brands in China.

Today, many stores in Europe count on Chinese and foreign consumers. As it was noted by several research companies, foreign purchases make up to 70% of luxury sales in Italy and France, and more than 50% in the UK and Switzerland.

This can also be attributed with the growth of daigou business. This Chinese term means making purchases abroad, especially in Europe and the US, on behalf of customers in China.

However, last year the increase in buying of luxuries grew more in China than abroad. The Chinese authorities has been cracking down on daigou and working on promotion of local spending. Moreover, terror attacks have also had a negative impact on tourism.

All these measure may foster local purchases in long-term perspective, but in the meantime, the best deals still require a plane ticket.

SMC Fashion