A new report published by the HSBC group titled "The Bling Dynasty" explores the growing dominance of Chinese tourists in several key Asian luxury markets
Tourists from mainland China enjoy added cachet from foreign-bought items
A new report published by the HSBC group titled "The Bling Dynasty" explores the growing dominance of Chinese tourists in several key Asian luxury markets.
According to HSBC's report, Chinese citizens will make 88 million trips out of the country this year, a figure set to grow to 155 million by 2020. The study explored figures for Hong Kong, South Korea, Taiwan, Singapore and Macau.
There's still plenty of variation between the markets: Chinese shoppers account for 15 percent of sales in Taiwan, but up to 75 percent in Macau. Nonetheless the trend is growing, widespread and strong.
Many Chinese travel to avoid paying high surcharges (a mixture of import duties, VAT, and consumption tax which can hit nearly 60 percent of the cost of some items) on foreign luxury goods purchased domestically. According to HSBC's China Luxury Tax Report, the country raised US $187.9 billion via these so-called 'luxury taxes' in 2010.
Consumers in the country also enjoy added cachet from foreign-bought items, which are seen to be less likely to suffer from China's endemic problems with counterfeit goods.
The China-based Global Times recently published an article titled "Keep China's big spenders at home", bemoaning policy makers' inability to keep more of the estimated $85 billion spent overseas by Chinese tourists in 2012 inside the country.
While Chinese spending abroad continues to accelerate, "changing the luxury retail landscape of certain cities," according to the HSBC report, analysts Bain Capital note that growth at home is slowing. Domestic growth in luxury "fell 30 percent in 2011 to just 7 percent in 2012," according to the Global Times, while in the same period, foreign spending by Chinese citizens grew 30 percent.
The long-term effects remain to be seen as luxury players invest heavily both in China, and in the markets most favored by Chinese tourists. For now the Chinese are traveling for their luxury purchases, and the trend doesn't look set to change.