With luxury producers reportedly considering to raise their prices in Europe, an industry analyst told the Global Times Wednesday that they should not be too concerned about losing their Chinese customers who are infatuated by the European origin of these status symbols.
Luxury producers, such as Prada and LV, may increase their prices in Europe to narrow the price difference with China, because the gap, estimated to be 40 percent higher on the Chinese mainland thanks to the tariffs, has negatively affected their sales volume in China, the Wall Street Journal reported Tuesday.
So the luxury producers might be forced to hike their prices in Europe in order to help their businesses in China, the report said.
Large numbers of rich Chinese consumers choose to buy luxuries abroad, especially in the European countries, hence transferring the purchasing power to Europe, and "the luxury producers would have to increase the prices in Europe to cope with this practice," Fan Jie, a consultant with Beijing-based consultancy Adfaith Consulting, told the Global Times.
"The luxury producers do not need to worry about the retreat of these shoppers from the European market after the price hikes, because most (affluent) Chinese buyers are not price sensitive when purchasing luxuries, and instead wish the goods to be more expensive to distinguish themselves from others," Fan said.
The luxury producers set the prices in different countries according to the local purchasing power, and the stronger the purchasing power, the higher the prices are, he noted.
"The (rich) Chinese people love to buy luxury products, making China the second largest luxury buyer in the world after Japan, "Fan said.
Data released by the World Luxury Association in February indicated that Chinese luxury shopping in foreign countries reached a record high of $7.2 billion in February, increasing by 28.57 percent over last year.
Sun Haibiao, deputy commissioner of the General Administration of Customs, said during the 11th National People's Congress in March that the luxury prices in China would still be high, even without any luxury taxes.
News we recommend:
Luxury brands continue to cash in on China market
Rare earth regulation justified
Growth to bounce back in H2
Lamborghini sees 20-30% rise in supercar sales
Ad campaigns are competing hard in London
Major lenders broaden horizons and flex financial muscles
US takes trade remedy actions against China
Chinese prefer foreign brands
Mascot maker feels pinch of rising labor costs