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Luxury goods' prices rising in the mainland (2)

By  SHI JING (China Daily)

08:13, January 15, 2013

But Qiu Huiping, a Christian Dior beauty consultant at the Pacific Department Store in Shanghai, said the price of all makeup, skin care products and perfumes will increase by up to 30 percent in January in the mainland market, adding that no specific day for when the policy will go into effect has been confirmed.

Cai Like, a Chanel sales representative at the same department store, said the price of cosmetics and cologne for men will also soon go up.

Chanel China later said the prices of some of its products sold on the Chinese mainland will be raised on Tuesday or Wednesday, saying there will be "a slight increase of up to 10 yuan ($1.60) for only a few products".

"The price adjustment this time is based on regular checks of our products," a Chanel China spokesman said. "It is also a result of rising labor costs, raw materials and operating costs combined with exchange rate fluctuations."

The official explanation of why the prices of luxury products are ever increasing only scratches the surface of the real reasons. One important point to keep in mind is that sellers are trying to take advantage of the buoyant demand for luxury products that exists in the mainland market, said Zhou Ting, head of the Fortune Character Institute, a professional institute that specializes in studying how the rich live.

"Despite there being an ever-increasing craving for luxury products in China, brands are raising their prices anyway in the hope of introducing an imbalance between supply and demand," she said. "For one thing, brands can burnish their images by introducing limited editions of their products. For another, the profit margins of these products will be pushed to a maximum, although profit margins in China are already greater than in any other countries or regions."


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