Why Do Chinese Consumers Gradually Shift From Overseas To Domestic Consumption?

According to the world clothing shoes and hats net, after two years of continuous decline, mainland China

The market finally showed signs of recovery in 2016. Sales grew by about 4% over the same period, and more and more Chinese consumers gradually shifted from overseas to domestic consumption.

Previously, due to high tariffs, unstable exchange rates and extravagance,

In different markets, the prices of the same goods in China are much higher than that in foreign stores. Chinese consumers are increasingly keen on overseas travel and shopping.

In view of this situation, some luxury brands have begun to narrow the price gap between China and the international market. Recently, the L2 Digital Research Institute of New York digital marketing research conducted a survey on the current situation of luxury goods in China and abroad. Below are several luxury brands in China and the United States.

An overview of the price gap (the object of investigation is 29 luxury brands, with the price of the official website of each brand, orange as "pure luxury", green for "light luxury"):

45%, the price difference of luxury brands is less than or equal to 15% (e.g. Chanel).

13%, the price difference of luxury brands is 15%~25% (such as: Saint Laurent Paris).

14%, the price difference of luxury brands is 26%~35% (e.g. Dunhill).

14%, the price difference of luxury brands is 36%~45% (e.g. Alexander Wang).

14%, the price difference of luxury brands is above 46%~100% (such as: Michael Kors).

As you can see from the above picture, only 45% of the luxury brands in China and the US market are below 15%, and these brands are classic luxury brands: France Chanel (Chanel) and so on. This shows that the more high-end brands tend to adopt the strategy of "coordinated pricing" to reduce the price gap between the markets.

At the same time, the price difference of light luxury goods represented by American brand Michael Kors is the biggest: the price in China is higher than the US price at least 46%.

Brand will "coordinate pricing" as a strategy to curb the gray market of luxury goods in China.

In 2015, the gray market accounted for 38% of China's luxury market.

In a sense, the sale of low priced luxury goods purchased from overseas on Taobao has indeed promoted global sales of luxury goods, but many brands believe that these unregulated grey markets do more harm.

Purchasing as a third party seller has produced a large number of counterfeit goods. The spread of counterfeit goods also makes it difficult for luxury brands to control customer service or brand image.

The Chinese government is also cracking down on purchasing behavior, including measures to improve the enforcement of Chinese customs to prevent potential sellers from evading import duties.

In the past year, the State Administration of Taxation has also made a number of amendments to the relevant tax regulations to encourage consumers to shop at home and allow more duty-free shops to enter the mainland.

In addition to the pricing strategy, other reasons for the revival of the luxury market in mainland China include the growth of the middle class in China, the slowing down of the anti-corruption movement, the fluctuation of exchange rate and the reduction in the number of Chinese tourists to Europe.

Although luxury brand sales are still not as good as expected, it is hard for the market to return to a 35% increase in the peak period of 2011, but luxury brands predict that middle class consumer groups will contribute to stable sales growth. They are more smart and rational, and are more sensitive to the spread of top luxury brands around the world.

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