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Buy Local Luxury, Please

China's Xinhua news urging citizens to shop at home.
China’s consumers have taken a lot of criticism from the official Xinhua news agency saying that luxury consumers are hurting the local economy by not shopping at home. Chinese tourists have been avoiding steep luxury tariffs by flocking to Europe, The United States, and Asia in search of bargain prices.

To put things in perspective, Chinese people bought 25% of the world’s luxury goods in 2012. They spent a total of 306 billion Yuan ($49 billion), CCTV said, adding that of that money, 60% was spent abroad.

Xinhua went on to say explain that if people have money to spend on luxury goods, they should do it at home, where the money would drive the economy, help ensure local jobs, and provide support for logistics and commercial companies.

The finger pointing ironically started at the end of Chinese New Year, as hundreds of thousands of Chinese tourists returned with shopping bags filled with loot from their overseas shopping extravaganzas.

Many Chinese tourists plan their trips with shopping specifically in mind, causing their purchases overseas to surpass those at home.
Xinhua’s criticism of Chinese tourists spurred a large reaction on Chinese social media sites, where many said they would stand by their decision to shop overseas if steep tariffs and lack of supply remained to be an issue.

“Things are just too expensive here, so of course people are being swept overseas,” said one user of Sina Corp.’s Twitter-like Weibo micro blogging service.

Our Thoughts

China is now estimated to be the world’s largest luxury market, roughly accounting for a quarter of the global luxury spend according to a Bain & Company report.

The fact that Chinese consumers are willing to travel overseas to get their hands on less expensive goods is a true testament to a dramatic shift in behavior. In years past, authentic goods didn’t matter. The plethora of available knockoffs exists throughout China, but with a shifting behavior, and particularly higher incomes, it has caused consumers to want ‘the real deal’.

One of Louis Vuitton’s popular handbags, the Speedy 30 bag, costs around 6,100 Yuan ($964) in Beijing or Shanghai, while in Europe it costs around about $619. With price differences like this it will be unlikely that travel shoppers will change their behavior anytime soon.

Another large reason consumers shop overseas has to do with supply and demand. Many simply cannot find the luxury brand location at home, or cannot find the size/style options they want. This further drives them to shop outside of China.

By Joshua Roberts 
  Creative Director


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