European Luxury Market: An Open-Air Museum For Chinese Tourists

A few years ago, the world's second largest.

The chairman and CEO John Rupert of Richemont, the Swiss company, once said: if you are not careful, Europe will soon become an open-air museum for Chinese tourists.

Now, this is basically the case.

In May this year, the world's second largest luxury goods company, Richemont, chairman and CEO Johann John, analyzed the intricate relationship between European luxury goods companies and China, and Rupert was a native of South Africa and spoke in a pleasant way to speak CEO.

He said to investors at a conference call: "a few years ago, I once said:" a little careless, the whole of Europe will soon become an open-air museum for Chinese tourists.

Now, this is basically the case, "

In 2012, Marrakech, Morocco (Marrakech) hosted the world's top international.

At the FT Business of Luxury summit, all the leaders attending the summit should be able to recognize the importance of Chinese tourists to the luxury industry.

The consensus between analysts and luxury industry executives is that Asian consumers accounted for half of European luxury sales last year.

According to Thomas Mesmin, an analyst at Cheuvreux, a consultancy, about 1/3 of mainland Chinese consumers will choose to shop locally when traveling abroad, and at least 75% of mainland tourists will choose to shop in Europe. Thomas,

Hongkong and Macao are also popular destinations for tourists.

In 2011, Chinese tourists contributed.

Half of sales.

According to Global Blue, a professional service provider tracking luxury shopping trips, Chinese consumers spent 11 thousand euros on shopping trips to Europe, Singapore and Hongkong last year.

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The attraction of these tourist attractions is that the price of their luxury goods is 1/3 lower than that of the mainland of China. The main reason is that China has to impose import duties.

Affected by the economic crisis in the euro area, executives of various industries are struggling to cope with the sluggish consumption demand. Chinese consumers are scramble for the Mont Blanc Starwalker pens priced at 400 euros, and the LV Lockit handbag priced at 2000 euros, thanks to what they have given them, so that the entire luxury industry has a record sales of nearly 200 billion euros last year.

However, in 2012, international luxury buyers attacked everywhere, but posed a great challenge to Rupert and his competitors, Bernard Arnault, Louis Bernard and Francoi Henry PPR Fran of Paris.

They should raise their prices in Europe to encourage more Chinese buyers to stay in their own homes, or to take such risks and make the already fragile European consumer demand worse.

So when Chinese consumers are more willing to shop in Milan, Paris or London, how can European luxury companies put the cart before the horse and spend a lot of money on opening stores in China? How can they attract tourists from China, Brazil, Russia and Africa to European stores?

The first quarter sales of several major luxury goods companies in the world in 2012 confirmed that the consumption trend of the global rich is changing the trend of the luxury goods industry.

In 2011, sales of the global luxury goods industry achieved an average growth rate of 14%, making all previous pessimistic predictions unfounded. Sales data of Louis Weeden and British fashion retailing Burberry (Burberry) showed that the first quarter of the Chinese market saw a slight slowdown in the sale of luxury goods.

Executives blame it on more and more Chinese tourists shopping in Europe and the United States (far less than Europe).

Data show that: in the first three months of 2012, although the recession made European locals' luxury demand fail, the overall sales of luxury goods in Europe were still eye-catching, exceeding market expectations.

Jean-Jacques Guiony, chief financial officer of Louis Weeden, said that in the first quarter of this year, the exchange rate of the euro against the Renminbi made the difference between the mainland and Europe luxury goods up to 47%, causing Chinese tourists to go shopping abroad in a big way. "Guiony"

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Alan Fischer (CLSA Aaron) and Gao Songyan (Mariana Kou), an Asia Pacific brokerage firm, estimated that sales growth in the luxury sector will drop to about 10% this year as China's domestic consumption slows.

Nevertheless, Fisher and Gao Song Yan still believe that "the slowdown in China's economy will not have a significant impact on the sale of high-end luxury goods, because the rich in China will still maintain their luxury expenditure accounts for 23% to 25% of the total expenditure."

Due to the fact that Chinese tourists are still the main force in purchasing luxury goods, Fisher and Gao Song Yan predict that the sales of the world's most famous luxury goods companies (most European brands such as Louis Weeden, Prada and Prada) will increase by 15% this year.

European luxury goods prices are usually 1/3 cheaper than those in China, analysts said. Chinese consumers rush to Europe to shop, but the resulting sales and profits will be lost because of the increase in European luxury companies.

The price of luxury goods in China is much higher than that in Europe, mainly due to the import tariffs imposed by the Chinese government.

In Europe, the value added tax on luxury goods is about 17%, whereas in Shanghai, they have to pay 17% VAT, 11% import tax and 20% consumption tax.

Geny, chief financial officer of Louis Weeden, told investors that faced with such a situation, "flexibility" is crucial, which is understood by analysts as a company's intention to raise the retail price of products in the European market.

J Maiman rgen Kolb, another analyst and colleague at Sheng Fu securities, said: the negative impact of the top line growth brought by Chinese consumers to European Shopping (top-line growth, also known as profit growth, that is, the growth of revenue generated by the marketing effect) and profitability, is rather limited, and it is easy to get compensation from other aspects.