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Domestic sales on the up

If the figures from the State Commerce Department are correct, sales of luxury goods over Chinese New Year were 14.7% higher than those of 2012, consumers spending a total of 539 Billion RMB. Items such as gold, silver and jewellery really boomed last New Year, and fortunately this year’s coincidence with Valentines Day meant that the sales across the sector grew by 38.1%.

As an example, a senior executive working in a mall in Wuhan was quoted as saying that the big luxury brands achieved sales growth, and that across jewellery, watches and fashion and accessories it was approximately 10%. In his words “Among all the luxury consumers, there were a great many of young white-collar workers who spent their annual bonus on luxury goods as a reward for a year’s hard work.”

Many leave the country in search of authentic luxury

Chinese tourists spent US $7.2 Billion during the new year of 2012, accounting for 62% of sales in Europe during that period. In 2013, 4 Million Chinese travelled overseas; Hong Kong, Macau and Taiwan, as well as Thailand, Korea and Europe were hot destinations. Korea expected 63,000 Chinese visitors over the New Year period.

Data from Hong Kong the Christmas and Chinese New Year period has seen good sales growth, 9.5% in November for example. Watch and Jewellery sales increased by 13.7%, attributed mostly to mainland Chinese consumers.

Welcoming the Chinese luxury tourist

In the past 12 months, we have seen retailers, and even cities catch on to the idea of making their location more welcoming to the Chinese visitor, introducing bi-lingual signage, New Year emblems and accepting Chinese debit cards.


  • Universal Studios in LA held a Chinese Art and Culture Celebration with a theme of “Glamorous Beijing: World City”
  • Even a second tier city like Boston, adopted a welcoming Chinese face over the holiday


  • Tourist flocked to the out of town luxury outlet malls across the UK, and in In London, retailers displayed bi-lingual POS materials, hung Chinese New Year decorations and adopted the union pay card.

Travel to shop and not to spot

In the past, consumers have travelled purely to find a bargain, but in the last 12 months their attitude has changed and their reasons now include, a better choice of products, higher quality service and known authenticity. Saying you made a purchase overseas is now acceptable, the lower price is not a stigma.

Chinese consumers principally travel to shop and not to spend time sightseeing, if they do stop to look at a historic or beautiful location, it will be long enough for a photo or two and not much longer. Shopping is far more important.

According to Erwan Rambourg, who is responsible for consumption and trade research at HSBC, ‘most of luxury consumption by Chinese has taken place abroad because if someone can say that the LV bag was bought in Paris rather than China, they feel much better’.

Luxury advertising is restricted

Earlier this month, the State Administration of Radio, Film and Television (SARFT) issued a directive to all TV and radio stations banning adverts that actively encouraged consumers to buy products as gifts. Part of the new leaderships objective of reducing “waste”, it will affect those selling high-end alcohol and some watches.

Although these adverts do not use the words ‘ideal gift’, they do indicate that those with high-end lifestyles appreciate and use them. Observers point to the ban on outdoor advertising of luxury items initiated in 2011, and that although it was applied, it would appear to have any real affect on consumption during what was a bumper year for brands. Some alcohol brands such as the famous Chinese spirit Moutai that sells for about $300 a bottle, have suffered greatly as a result of the new gift giving and ‘restraint’ policies.

The 2012 tipping point

2012 will be remembered as a year of change within the Chinese luxury sector as it reached a tipping point. The year in which the leadership changed and brought in new policies, the year when Chinese consumers really started to travel overseas en-masse to buy luxury goods, and the year when consumers attitudes and knowledge changed in a big way. The general expectation is that after the March party congress, the market will settle down and equilibrium will be restored. The reality remains to be seen.


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