Luxury Prices Such As LV Have Been Rising: The Most Expensive Reason For Chinese Market Analysis

Experts point out that

In addition to the comprehensive tariff rates such as tariff, value-added tax, consumption tax, etc., the reasons for the "rise in prices of entry" are the high price strategies adopted by the asymmetric information, the enthusiasm of domestic consumers and the comprehensive cost of opening stores in China, which also exacerbate the price differences between the domestic and foreign brands.

However, under the premise of the gradual pparency of global consumption information, domestic smart businessmen began to introduce low priced luxury goods through different ways to attract price sensitive white-collar workers. Oteri J, luxury licensing business has become a new form of industry development in recent years.

"It is less than half a year since the last price increase, and LV has increased its price in Europe."

Elyn, a state-owned white-collar worker, originally wanted to take advantage of her friends' trip to Europe to buy a LV bag, but found that many styles had been raised. "Take Speedy 30 as an example, the price two months ago was 500 euros, now it has risen to 540 euros, equivalent to RMB 4320 yuan."

Reporters learned from a well-known shopping website, in addition to the Speedy series, ALMA, TYILI, JUDY series of women's bags have varying degrees of price adjustment, of which the price of JUDY large-sized handbags rose from 1770 euros to 1910 euros, equivalent to 15280 yuan, the price adjustment of this range of about 10%.

Subsequently, the reporter called LV China customer service personnel, the source said, the brand in China since June 2011 has not been adjusted, since then, LV in Europe and the United States many times the price adjustment has nothing to do with the Chinese market.

In addition to LV, Prada spokesman also pointed out: "if the euro continues to be weak, in order to reduce the spread, we may consider raising the price of products in Europe up to 10%, of course, will not raise prices in the mainland of China."

In addition, purchasing agents pointed out that YSL, CELINE, CHANEL and so on will rise to varying degrees in Europe.

Domestic and foreign luxury goods price difference of more than 30%

Though many

There was no adjustment in the European price, but the reporter noted that the price gap between domestic and foreign goods is still more than 30%. In the case of LV, the price of Speedy30 in Europe is 4320 yuan. The price of Shanghai Hang Lung store is 6100 yuan, which is 41.2% higher than that of Europe. Another European Judy large handbag is priced at 15280 yuan, while the price of China's official website shows 21200 yuan, which is 38.7% higher than that of Europe.

"In June of this year, a friend went to France. I asked her to help me bring a Longchamp classic folding bag, which cost only more than 600 yuan, which is nearly half cheaper than the 1100 yuan counter price here."

Miss white collar usually seldom buys high grade luxury goods, but occasionally buys one, she will never buy it in the mainland counter, "the income of her colleagues around is not high. Almost all purchases luxury goods through friends or online purchasing. Cosmetics are also the same. The price of the mainland counters is a little expensive."

Miss Yip told reporters that she had seen a SWAROVSKI watch, the mainland price of nearly 6600 yuan, the price of Hongkong only 5450 Yuan Hong Kong dollars, equivalent to 4390 yuan, the European price of 490 yuan, equivalent to 3920 yuan, is six to thirty percent off here.

"If the price gap between domestic luxury goods and the European and American market is 10%, at most 20%, I may consider buying it in a special counter."

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(cause analysis)

Brands want to introduce consumption and increase profits

According to the global luxury market research report released by Bain in October 2012, China

1/4 of the world's luxury goods were purchased, of which 40% of the total consumption of luxury goods was consumed by tourists. According to the financial times, 1/3 of luxury goods in Europe were purchased by Chinese tourists in 2011.

The crazy blood of Chinese consumers in the European and American markets has become a shot in the arm of the economic cold winter. It also makes the brand in China have to encounter consumption outflow and decline in performance.

The Burberry group's earnings report showed that sales in the Asia Pacific region fell to 16% in the first quarter of this year from 67% in the same period last year, while China's sales growth also dropped from 30% to 15%.

Prada also showed a decline in sales in the Chinese market in the latest earnings report; Hugo Boss also showed that revenue from Asia in the second quarter of this year increased by only 4% over the same period last year.

Why do luxury goods begin to raise prices in Europe to reduce the price differential? Zhou Ting, President of the Institute of wealth quality, told reporters: "behind this move is the brand's price strategy, which is in nominal terms the European price increase caused by exchange rate reasons, in fact, more to ensure that China's sales are profitable, and the brand has the highest profit in the Chinese market, which helps to keep purchasing power in China."

Ouyang Kun, a luxury watchdog, points out that luxury goods will be priced according to different countries' tax rates, operating costs and consumer's ability to make the final price index. It is not global pricing, and regional pricing. The price adjustment of brands based on the consumption power of their locality is the most important factor in the high price of luxury goods in China. "The profit margin of luxury goods in China, that is, brand pricing and annual price increase, is 45%, which is only 30% in the North American market and 20% in Europe."

Reporters then consulted some people in the industry. Despite the reservations about the highest rate of profit retention, the gross profit margin of luxury goods in the mainland is relatively high, and the intention of luxury goods to guide consumption reflux is obvious.

Mei Xinyu, a researcher at the international trade and Economic Cooperation Research Institute of the Ministry of Commerce, said in an interview: "now the number of outbound tourism in China is increasing. This year, we have maintained a two digit growth. With the increase in the proportion of overseas purchases, the performance of luxury goods is worrying in China."

Over the years, taxes, excise taxes and value-added tax have become the best reason for luxury goods to enter the market.

It is reported that China's luxury goods import tariffs are about 10% to 35%, value-added tax 17%, watches and so on.

The reporter calculated an account, a luxury price of 400 yuan to 2560 yuan, which was calculated on the basis of 15% tariff. The import tariff was 384 yuan, the value added tax (2560+384) was 17%, about 500 yuan, and the consumption tax (2560+384) x (1-30%) x 30% was about 1261 yuan. The price of the commodity in China was at least 4705 yuan, which was more than two thousand yuan more than the CIF price.

It has been reported that the tax in Chinese products is higher than that in any developed country: 4.17 times the United States, 3.76 times that of Japan, and 2.33 times the 15 countries of the European Union.

Luxun, a luxury expert at the school of management at Fudan University, has different opinions on this. He pointedly pointed out: "consumption tax is not all commodities. Besides most products such as cigarettes, alcohol and jewelry, most fashion products do not levy such a tax. After China's accession to the WTO, the average tariff rate is only 11%. The difference between domestic and international luxury goods is caused by taxation, which is open to question."

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In the Provisional Regulations on the consumption tax of People's Republic of China, which was implemented in January 1, 2009, we see that there is a certain consumption tax on cigarettes, cosmetics, cars, yachts, watches, etc., of which the consumption tax on cosmetics is 30%, and the consumption tax on high-end watches is 20%.

Despite the fact that white collar products in Europe and the US are not collecting taxes, their prices are still 30% to 40% higher than those in Europe and the United States.

In addition, in the "classification list of entry items in People's Republic of China", the reporter inquired that the duty rate of the bags of non rare animal skins was 10%, which was the same as those of musical instruments, stamps, sporting goods and other categories.

Ouyang Kun, a luxury watchdog, pointed out: "although the comprehensive taxation of cosmetics, jewelry, automobiles and other commodities in China is indeed high, the tax on bags and suitcases is not as high as expected."

He gave two examples for comparison, taking Lancome perfume as an example, collecting 30% import goods consumption tax, 17% value-added tax and 10% tariff in China, with a comprehensive tax rate of 57%, but in the United States only 8.25% of the consumption tax is collected, and the Inland Revenue is indeed higher.

However, he further added that the tax on Coach handbags in the mainland of China was 17% VAT plus 10% tariff, no consumption tax, a combined tax rate of 27%, and 3% of the French import duty plus 19.6% of VAT, the consolidated tax rate was nearly 22.6%.

In India, Coach handbags have to pay 35% import tax, 12.5% VAT plus 24%.

The combined tax rate is as high as 66.5%, but in India, the Coach package is only 1/3 in the mainland of China, 1/2 in the United States. Most other luxury goods in the country are much cheaper than those in Europe and the United States. There is no inevitable link between the comprehensive tax rate and the retail price for luxury brands.

Agent mode increases sales cost

Insiders pointed out that another main reason for the high price of luxury goods in China is the agent mode. "Luxury goods enter the mainland of China because of the unfamiliarity with the market, the uncertain future and the lack of understanding of the policies, most of them take the mode of agent opening, which not only brings management problems, but also pushes up the retail price of the brand through the first and two level agents."

Hu Liwei, executive vice president of Shanghai Milan City ole company, told reporters, "take the new outlets of Yangpu outlets as an example, the form of the buyer system adopted will reduce the intermediate dealer cost between 20% and 30%."

Hu Liwei said that the main reason for the low price of the stores is the direct ordering of buyers. There are at least ten years of cooperation between the buyers and the European brands. They are invited to take part in the order, and they take the latest money through the cash buyout and sell them through their own stores. "The dealer has high loss, marketing expenses and so on. The prepayment is about 20% of the total price, but the goods purchased by the buyer will not be returned to the brand dealers, the cash payment will be more risky, but the price will be lower."

A luxury industry source revealed that the price of the brand to the distributor is generally around five to forty percent off of the retail price. The cost of the opening of the dealer, the rental and logistics of the store will be passed on to the consumer. After the distributor has taken the advantage of the channel, he will even be able to grasp the right to speak.

It is worth noting that in recent years, with the continuous expansion of the brand and the increasing popularity of the market, many luxury brands have begun to recover their agency rights. Hugo Boss, Burberry and other brands have announced that they have been converted into direct businesses. Coach, Gucci and Prada have also been converted into direct businesses. However, brand pricing has not fallen down, except for the cost of opening stores themselves.

The more recessive reason for the cost and the logistics cost is that the domestic consumer's purchasing enthusiasm has helped the brand rise in price.

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Showing off wealth leads to a big market for luxury goods.

Bain 2011 luxury products in China

According to the study, in 2010, the total consumption of luxury goods by Chinese consumers was about 212 billion yuan, and the consumption of luxury goods in Greater China, including Hong Kong and Macao, ranked among the top three in the world, amounting to 159 billion 500 million yuan, ranking only in the United States and Japan.

"China is the largest demand market for luxury goods in the world. Although the brand is increasing at an annual rate of about 10%, the purchasing power is not affected. The price increase has become a normal choice. The more expensive the price is, the more people seem to buy it."

Ouyang Kun, a luxury watchdog, points out that luxury goods do not adopt cost pricing, but value pricing, which keeps the market in a state of semi starvation.

Not only that, the real estate developers' "thirst for luxury" also makes the popularity of luxury goods high, commercial real estate expert Yang Yongshi told reporters that some commercial real estate developers in order to introduce high-end brands, at the expense of rent free only in the way of sharing the risk, it is to meet the luxury brand of all kinds of harsh decoration requirements, to give some big names to subsidize.

"China's income distribution gap has widened in recent years. High income groups often show their taste, while those with low incomes are spending money to buy luxury goods to show off their wealth. In the face of such a consumer group, the brand naturally formulating a high price strategy, and then some people buy it."

Mei Xin Yu analysis pointed out.

In addition, a luxury goods industry privately revealed that gifts in China's luxury consumption are also important aspects.

Differential pricing caused by early information asymmetry

Insiders pointed out that in the early stage of entering the Chinese mainland market, the brand took advantage of information asymmetry and deliberately positioned itself to occupy the blank of the high-end market.

A survey released by the Ministry of Commerce last year showed that 20 brands of high-end consumer goods, such as watches, bags, clothing, wine and electronic products, were at a premium of 45% or 20 higher than that in Hongkong, which is 51% higher than that in the United States and 72% higher than that in France.

"Take Zegna as an example. In Italy, an ordinary suit is only five yuan or six thousand yuan, but it is twenty thousand in the Chinese mainland. These brands actually know China well."

Poly net CEO Niu Li has publicly said that even if the tariffs on luxury goods are reduced, luxury goods that create high-end brand image can not take the initiative to reduce their value.

In fact, not only luxury goods, catering, clothing, cars and other foreign civilian brands enter the Chinese market, but they have become a popular high-end brand. Starbucks's mid American coffee sells for 12 yuan in the United States, and sells for 21 yuan after entering China. Nike's high-end basketball shoes, which were recently fined, were priced at only 800 yuan in the United States, but surged to 1299 yuan after entering China, and the difference was nearly 50%.

Insiders pointed out that the psychological advantages of foreign brands are also the reasons for their high value. "Ten years ago, when foreign brands had just entered the Chinese market, there were not many Chinese consumers living abroad. Many foreign second-line brands are making use of such asymmetric information to locate high-end products in the emerging market and earn profits."

Mr. Zhu, a luxury brand marketing department, told reporters that "in fact, these brands are not sold in China, nor are they products, nor are they cost-effective. They are selling a lifestyle and lifestyle to Chinese consumers."

In recent years, with the pparency of consumer information, the price deviation caused by asymmetric information is being well known to more domestic consumers. Purchasing, Oteri J, luxury e-business and other commercial formats for price sensitive white-collar workers emerge as the times require.

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(trend analysis)

The price of the buying system is low.

"Unlike foreign markets, most of the luxury goods consumers in China are ordinary white-collar workers. Even if they are frugal, they still need to buy a luxury package. For this price sensitive consumer, there is a big market for the new formats such as orlies."

Hu Liwei said.

Last Thursday afternoon, the reporter went to Yangpu's new green Milan City outlets. There are only a few brand stores in the shop. Most shops are buyers' collection stores. The owner of a buyer shop told reporters: "most of the goods in the shop are just under the European buyer's shop style, and they can play five to thirty percent off of the market price."

Reporters at the store saw that the original price of a HUGO BOSS leisure T-shirt, 501109HD0293, was 2900 yuan, the price of the discount was 1450 yuan, and the original price of another casual suit, 501109HD0248, was 5900 yuan, with a discount price of 2950 yuan.

In addition, a BV female bag with a price of 35000 yuan is priced at 28000 yuan after the sale.

The reporter observed that all the Coach packages in outlets were below 3000 yuan.

Hu Liwei said frankly, in order to ensure that there are no fake goods in the buyer's shop, the brand will examine the customs declaration form and the power of attorney for each product. If the store has adulterated behavior, it will take a "false one pay ten" punishment measure.

Otris will also introduce luxury care shops, buy goods in the future or give one to two free care.

"Oteri J and the suburbs of downtown are different, not so many business areas are displayed according to different brands, they can only take the form of a collection store to increase Ping efficiency."

Hu Liwei said that in the next few years, 1 buyers' main stores and 4 outlets outlets will be opened in Shanghai.

Luxury touches attract young consumers

Another obvious industry trend in the second half of this year is that luxury big players are beginning to lower their prices and keep a low profile.

In fact, for the electricity supplier marriage, luxury goods have always been cautious. The main business channel is difficult to guarantee the purchase experience to reduce the brand image, but it seems that under the situation of economic downturn, brands are willing to test the water channel.

In early October, Salvatore Ferragamo, the top luxury brand in Italy, officially announced the official authorization of Xiu Xiu net. After its website was set up an official sales platform, a week later, European and American brands such as DVF and ReaValentino were also authorized in the commodity network. The products covered four categories: clothing, shoes, bags, accessories and so on.

According to a press survey, most luxury electric providers in China are getting goods through foreign discount stores or agents. The authorized proportion is not high enough to guarantee the popularity of the products or even the genuine products, but the price has a larger advantage than the physical retail stores.

In a luxury electric business website, the reporter saw that the price of a Burberry women's coat with a price of 13000 yuan was 6129 yuan, while the other one of Gucci's women's boots was also discounted from 15850 original price to 12679 yuan, which is less than 20 percent off.

AI consulting predicts that as of the first half of 2012, China's luxury online shopping market is as high as 13 billion 500 million yuan. In 2015, the scale of online shopping for luxury goods in China reached 37 billion 240 million yuan.

The huge scale of the market has led to the emergence of luxury electric business.

Zhou Ting, President of the Institute of wealth and quality, pointed out to reporters that most luxury websites in China are currently playing the role of channel providers. They compete for prices rather than services, resulting in low user loyalty and frequent mire of websites. In the future, online trading, offline experience and service retention are the development directions of luxury business.