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People's Daily Online>>China Business

What lures Chinese to spend on luxury goods overseas?

(People's Daily)

15:26, February 28, 2012

Edited and translated by People's Daily Online

Data show that Chinese people spent 7.2 billion U.S. dollars on luxury goods overseas during the Spring Festival of 2012, which is more than four times the money spent on luxury goods in the domestic market. Some believe that this phenomenon is caused by high tariff rates. But is it really true?

Import tariffs on most goods in China are less than 10 percent, which is already at a low level. Therefore, lowering tariffs may not bring price reduction.

Michael Ouyang, Chief of World Luxury Association China office, said that luxury goods are not the same as popular consumer goods. As long as Chinese people keep their passion towards overseas luxury goods, prices of luxury goods in the domestic market may not decline even if tariffs are lowered, or even canceled.

Currently, import tariffs on a majority of goods in China are less than 10 percent, which is already at a low level. The value-added tax on luxury goods is 17 percent, the same level as home-made goods. It is impossible to cut the value-added tax on imported goods alone.

A survey made by China’s University of International Business and Economics (UIBE) in 2011 indicated that there was no obvious correlation between taxation and prices of luxury goods.

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Leave your comment3 comments

  1. Name

michaelc at 2012-03-13112.115.6.*
Luxury always has been unfairly maligned, being associated with corruption or improper or irresponsible use of wealth - however luxury is also associated with high quality merchanidise - setting standards for exemplary craftsmanship. For example - Mercedes Benz is well known as a luxury car because of its price - but the car earned its price tag for producing vehicles that last a lifetime - as opposed to disposable luxuries, such as fashion.Luxury furniture is high quality furniture that will allegedly last a lifetime, as opposed to a few years. To lambaste those to acquire wealth through talent is unfair and oppressive. To impose one"s ideals on how the wealthy should spend their money is akin to a bandit with no responsibility for the pressures and responsibilities of managing an enterprise. Entrepreneurs create jobs, innovate, and energize society.China"s luxury expenditures is more a sign of the entrepreneurial spirit in China - so I see China"s consumption of luxury goods as a predominantly positive indication that the controlled free market economy is generally working quite well and China is the new land of incredibly opportunity, for those brave and talented enough to explore these uncharted waters.
wende at 2012-02-2971.255.84.*
A lot of the filthy rich people in China are using the possession of luxurious items to "SHOW OFF". Chinese govt should think of a way to use these money by dedicating projects in the names of these rich people. Something like "Jian Guo High School" to acknowledge it is donated by Wang Jianguo and therefore these show-offs can be put to good use
elee at 2012-02-28183.39.44.*
If "things" are becoming poisonous, wealthier Chinese will be spending on overseas and luxurious goods for sure as if "certain sectors" are sabotaging China"s made products and goods. QUALITY matters most now!

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