Overseas Purchasing Restrictions On Chinese Luxury Consumption Return

Editor's note, according to /2018, is the 40th anniversary of China's reform and opening up.

In the past 40 years, the fast moving enterprises have also achieved new achievements in the following aspects: the wine enterprises are pursuing the capital market, the innovation of food and beverage is constantly changing, the new retail business teams are changing, the luxury goods flow back is obvious, and the education industry policy is improving.

Consumption, the economic engine that people are looking forward to is gaining momentum.

2018 this year, the commercial market converged on the wisdom of the 40th anniversary accumulation of reform and opening up. New and old enterprises are facing a new test.

This topic will cut through the most profound changes and the most typical events, restore the development trend of every subdivision field in 2018, summarize the pain points and rules of each enterprise, and hope to provide a new direction and path for the fast moving enterprises to fight for 2019.

As the Chinese government lowered import tariffs in 2018, and the implementation of the new electricity business law, coupled with the luxury brands' initiative to lower domestic retail prices, the space for Chinese purchasing (especially the "meat purchasing") was further squeezed, and Chinese consumers' luxury consumption showed signs of backflow.

At the same time, under the backdrop of the purchase of 1/3 luxury goods for Chinese consumers in the world, more and more Chinese enterprises are beginning to wish to participate more in the luxury market.

Shandong Ruyi, Fosun international and Anta are among the activists.

The luxury brands of nuggets in China are also increasingly over reliance on the market. The Wall Street journal wrote that "investors of luxury goods have little choice but to try to get used to this state."

The Bain consultation report pointed out that the global luxury retail channel grew by 4% in 2018.

Luxury electric business has gradually become the trend of the times. Earlier, the group of luxury goods that had been cautious and prudent by electric providers launched a more in-depth cooperation with Alibaba, Jingdong and Tencent.

Purchasing space compression

In the past 2018, it was even more difficult for the buyers. The introduction of the two new rules reduced their profit margins, but this seemed to be good for luxury brands.

In July 2018, the Chinese government lowered import tariffs, and the new tariff reduction plan announced by the Customs Tariff Commission of the State Council was formally implemented, covering the commodities and apparel industries.

Among them, clothing, shoes and hats products related tariffs average tax rate from 15.9% to 7.1%.

The e-commerce law of People's Republic of China, which was passed in August 2018 and is about to be implemented in 2019, has brought individual purchase and retail business into the category of "e-business operators". In the past, the situation of not paying taxes on purchasing agents will be changed, and the increased taxes will make the purchasing goods lose the price advantage.

For a long time, the luxury of luxury goods in China is more commonly recognized by consumers.

However, the introduction of tariff reduction has caused many luxury brands to follow up.

At present, LV has lowered the price of NEVERFULL, NEONOE and other brand products in China's official website and offline stores. The price range ranges from tens to hundreds of yuan.

In addition, nearly 10 brands such as Gucci, Hermes and PRADA have also lowered their retail prices to respond.

"Strengthening the supervision of the state and the implementation of the" electricity business law "is not a deliberate attempt to crack down on purchasing agents, but rather regulate the purchase of goods and let them operate under legal and compliance.

The regulation of purchasing is in fact conducive to the development of the luxury market.

Zhou Ting, chief strategy officer of the customer group.

Wu, who is engaged in purchasing in Guangzhou, told reporters that "before the new year, Japan and South Korea will not fly again. In January, the customs will investigate the Spring Festival in February and logistical outages.

During this period, purchasing agents are watching each other and keep up with the latest news.

Nowadays, the advertisements for friends circle are all goods that we sent to our stores in December 2018. They are mainly winter skin care products, lip gloss and facial cleanser that are bursting with money. They don't store goods in the thermal cup, but they are not likely to store up goods in the name brand bags. They are purchased according to the customers' orders.

After a series of adjustments in 2018, Chinese consumers turned to domestic purchases. "This is a clear trend, and we find it all the same in the past few months."

Tiffany CEO AlessandroBogliolo pointed out after its recent earnings report.

He said, "the Chinese government has shown that they want to increase local consumption. We are also following the steps of Chinese consumers. When they spend more time in China, we adjust our stock and avoid losing consumers.

The demand in mainland China is indeed very, very strong.

Frequent acquisition by Chinese capital

From 2017 to 2018, "acquisition" is still a key word throughout the whole year of luxury industry.

In 2018, Shandong Ruyi group hit the fashion headlines because of its acquisition of Swiss luxury brand Bally. The apparel and fabric industry started a global brand acquisition of $4 billion during the period 2016~2018, including the acquisition of Maje and Sandro parent company SMCP.

Not only in Shandong, but also in the Chinese capital, including Fosun international, which bought the French luxury brand Lanvin and Austria's top underwear brand Wolford in 2018. Guo Guangchang, the chairman of the board, also revealed in the e-commerce program that she wanted to buy Prada, Moncler and Versace, which was recently acquired by American fashion group Michael Kors. The Shanghai fashion group bought the French luxury brand Carven. Not long ago, Anta based Chinese consortium also sold the high-end outdoor brand of the parent company.

"It has historical accumulation and popularity, but its performance is not satisfactory or declining at present. This type of brand is Chinese enterprises interested in acquiring.

But the acquisition of Chinese capital is not for the revival of the brand, but for the international mainstream market.

Beijing Business Circulation Research Institute president Lai Yang told reporters.

At the same time, the confidence of Chinese capital in luxury brands comes from consumers in the local market.

According to Bain consultancy data, it is estimated that by 2025, Chinese consumers will contribute nearly half of the global luxury sector sales.

"However, after Chinese enterprises enter the international market, they are not without risks.

Because China's manufacturing abroad often leaves behind a low-end image and has no experience of overseas acquisitions and high-end brand operations.

Harry, who worked in fashion and luxury consulting, pointed out.

In addition, after this round of acquisitions, the low end luxury brand market has shown a trend of collectivization and saturation, which means that competition is intensifying.

"According to the scale, after the acquisition of Kate Spade and Stuart Weitzman, the COACH parent company is now the first light luxury group, the second is Michael Kors, and the third is the Ruyi group of Shandong, which has acquired Maje and Sandro parent SMCP."

Excellent international brand Cci Capital Ltd CEO Yang Dayun said.

Electricity supplier cooperation trend

Before that, luxury brands who emphasized the importance of entity experience and sluggish digital change began to contact more digitally and electricity providers in the past 2018.

In a report, McKinsey said that 80% of the sales of luxury goods were digitally affected. Online sales of personal luxury items (including clothing, footwear, accessories, jewelry and glasses) accounted for 8% of the global luxury market, totaling 20 billion euros, 5 times that of 2009.

By 2025, this amount will more than three times, to 74 billion euros, when the world's 1/5 luxury goods sales will come online.

It is understood that in 2018, a total of 35 luxury brands opened shop in Tmall, and incorporated into Tmall luxury luxury platform Luxury Pavilion.

Unlike Tmall's Luxury Pavillion, Jingdong's luxury channel has an independent App, named TOPLIFE, and its main brand is Kai Yun group's brand.

In 2018, it was not satisfied with only entering Tmall. The group launched a more in-depth cooperation with Alibaba. Its luxury electric business YNAP and Alibaba set up a joint venture, that is to say, the Net-A-Porter and Mr Porter app in China will be operated by a joint venture company.

Similarly, Jingdong also invested nearly $400 million in the luxury business website Farfetch earlier, and Liu Qiangdong joined the Farfetch board.

In July 2018, Jingdong and the luxury discount business Temple library reached a strategic cooperation. It invested $175 million with the L Catterton Asia to the Temple Bank.

Tencent also does not want to lag behind in the battlefield of luxury electric business, but it still relies more on WeChat.

Reporter noted that in 2017, only a few brands such as Dior tried WeChat small program to promote.

By 2018, nearly 50 brands were promoted by using small programs and friends circle, and more than half of the brands could jump to sell through links.

However, China's high-income groups are not very happy about this.

A report from Fortune shows that only 21.8% of high-income consumers who use WeChat understand and buy.

The survey also pointed out that nearly 62% of respondents hope that luxury goods in China can provide better after-sales service, complete online sales channels and sales staff who can establish emotional connections.

But China's luxury electric business environment is still quite unique.

According to Bain statistics, in the global market, the three largest online luxury consumption channels include platform electricity providers, retailers' official website and brand official website.

In China, online channels are almost monopolized by WeChat small programs, Tmall Luxury Pavillion, Jingdong Toplife and temple library.

In addition, although the luxury electric business is developing rapidly here, the penetration rate is still very low, only 9%.

In the United States, this figure has reached 16%.