Back in the UK this week with Chinese visitors
On the plane over I read a report on the Q1 spending figures for Chinese tourists.
Q1 sales are + 67% over last year. These were largely down to European shopping sprees over the New Year period and a weak euro which made made luxury goods considerably cheaper than they would be at home.
There are a number of interesting factors around these numbers.
In recent years, much of this spending would have been done in Hong Kong but its well documented social issues do genuinely appear to have impacted on Chinese travel.
Price disparity is also a consideration. As a result, some of the major fashion brands including Burberry, Chanel and Patek Phillipe are cutting prices by 20% across Asian. Given that watches and jewellery were up 67% in March and leather goods 50%, this clearly makes sense.
However, what is really interesting here is the context.
We have read for a number of years now about the Chinese passion for luxury brands. In a society where face is very important, brands have become a tangible expression of success. I have seen first hand how young consumers will stop at nothing to buy the latest fashion brand – even if it is well beyond their means.
What is different here is that the data suggests that Chinese are becoming more savvy. Why should they have to pay 20% more for a luxury watch in Shanghai or Hong Kong that they would in Paris or Milan?
International brand owners have benefited hugely from the hunger for brands which shows no sign of being satisfied. However, these companies might now need to work a little harder and be a bit more smarter with their pricing. The Chinese consumer can no longer be taken for granted.