Chinese tourists have taken over cities like Paris and Milan, purchasing large amounts of luxury goods. WSJ’s wealth editor Wei Gu gives a few tips for foreign companies. Stay out of China, and do not expect to make money on food and hotels.
Only three percent of the Chinese have a passport, so what cities like Milan and Paris are seeing is only the top of the relatively better-off Chinese tourists, Wei Gu explains. Two reasons have the Chinese to shop for their luxury brands abroad. First, it is cheaper, because of the unfavorable tax for foreign luxury products in China. And second, the snobbish element: they do not want to be seen with a Louis Vuitton bag their maid can also buy in China. They prefer products that are not available in China, so it is an important strategic decision for foreign brands to stay out of China.
And while Chinese tourist splash out a lot of money for luxury good, they save on food and hotels. They travel in groups, prefer to stay in budget hotels and do not want to spend too much on (Chinese) food. At least, not yet.
Getting money out of the pockets of Chinese is not easy. But apart from luxury goods, education is high on the agenda. The China Weekly Hangout discussed February 7 whether that is a smart investment, is education a goldmine or a black hole. Present are Paul Fox and Andrew Hupert, moderated by Fons Tuinstra.
- Local is hot for China’s fashion brands – Wei Gu (chinaspeakersbureau.info)
- US green cards losing their attraction – Wei Gu (chinaspeakersbureau.info)
- A squeezed middle class needs more love – Wei Gu/Shaun Rein (chinaherald.net)
- Africa, the new target for affluent Chinese – Wei Gu (chinaspeakersbureau.info)
- Now also China’s middle class invests abroad – Wei Gu (chinaspeakersbureau.info)