The rich seek luxury - away from home

Wealthy Chinese look outside the mainland for high-end brands

As prices of luxury items remain prohibitive in China, wealthy consumers are going on sprees abroad.

Wang Zhikuan, a 45-year-old from Jilin province, is one of them. At Paris' Galeries Lafayette, an upper crust department store known in China as the "land of luxury goods", He is showing a shop assistant his laptop where he saved a photo of a Chanel bag that his friend wants him to buy.

"The price is good here," said Wang, who works for a media company in Beijing. "My friend made it clear about what she wants because it is an exclusive product that she can't find in China."

This is one of several trips he'll take to Europe, specifically Paris, this year for both work and leisure. Each time, he spends tens of thousands of yuan on shopping.

In what is close to sounding like a broken record, Wang and other wealthy Chinese tourists, flaunting bags adorned with oversized logos from high-end brands such as Prada, Hermes and Louis Vuitton, are scouring the global havens for shopping such as Hong Kong, London, New York City and Paris, for the latest and hottest luxury goods.

During one recent afternoon in Paris, bystanders at Galeries Lafayette looked on apparently in shock at the number of Chinese tourists running from one luxury store to the next.

This is quickly becoming a common occurrence for wealthy Chinese shoppers, especially during Chinese New Year early in the year or National Day in October. Both holidays last for at least a week in China, turning shopping sprees into multi-day affairs.

But as the number of outbound Chinese shoppers increases, more are forgoing the domestic market for their purchases of luxury items.

A recent Bain report said a weaker euro coupled with an increasing number of Chinese tourists traveling abroad have pushed Chinese shoppers to make 60 percent of their total luxury purchases outside the Chinese mainland.

According to an annual KPMG report on Jan 22, overseas travel among Chinese rose 71 percent in 2012, compared to a 53 percent increase in 2008. Seventy-two percent of them said they bought luxury items during their overseas trips, with cosmetics, watches and bags the most popular.

Zhou Mi, a Chinese-speaking assistant for Chloe, a French fashion brand, said 80 percent of her customers are Chinese, who, like the wind, arrive fast and leave fast with a handful of bags.

"Most of them don't really have a budget," she said. "They have no problem with buying three to four pieces at a time."

Sales to Chinese tourists shopping overseas have grown 31 percent, according to the KPMG report, which accounts for nearly a quarter of luxury purchases around the world.

One of the main reasons is the high price of luxury goods on the Chinese mainland - many sell for prices 30 percent higher on the mainland than in Europe because of high tariffs on imported luxury goods. For example, a Hermes Birkin bag can be bought at a 25 percent discount if it's purchased overseas.

The rise of individual tourism among wealthy Chinese is another key trend. Nick Debnam, KPMG's Asia Pacific chairman in consumer markets, said global brands need to pay attention to China's luxury consumers now more than ever.

"What we are now seeing is that the brands which are well positioned in China are receiving a boost in overseas markets from the emergence of a surging new class of traveling and well-off Chinese consumers," he said.

Besides avoiding the high prices for luxury items in China, many affluent Chinese, said analysts, are attracted to the experience of a shopping spree. According to a report by CLSA, a Hong Kong-based brokerage, there is a wider selection in the luxury item's country of origin. There also may be limited editions overseas for special occasions such as Valentine's Day or Christmas. Hermes in China, for example, does not have a central buyer, so its product offerings vary from store to store.