Luxury spending moves to smaller cities – Shaun Rein

Spending on luxury products moves in China to the third-tier cities, notes business analyst Shaun Rein in an interview with AFP. Unlike the rich from Shanghai and Beijing, inhabitants of third-tier cities can travel less internationally.

AFP:

Chinese shoppers are expected to spend US$15.6 billion on luxury products this year, up 20 percent from last year, said Shaun Rein, managing director of China Market Research Group in Shanghai.

But only 40 percent of the purchases are made in China.

Many shoppers in Beijing and Shanghai prefer to travel to Hong Kong or Europe for their top labels to avoid a mainland sales tax of up to 17 percent, consumption tax of as much as 56 percent as well as hefty import duties.

Rein said consumers in second and third-tier cities tended to travel abroad less often and so made their purchases in China.

“Purchasing power is moving from first-tier to second-tier cities,” he told AFP, adding that the Chinese luxury market was expected to grow a further 20 percent in 2012.

“People don’t know where to put their money so things are really going very high-end right now,” he added, referring to government restrictions in some cities on car and property purchases, which are aimed at curbing chronic traffic congestion and inflation.

More at AFP

More links for Shaun Rein and China’s economy at Storify.

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