* Over two-thirds of Chinese luxury shopping done outside
* China drives 29 percent of global luxury market
* U.S., European brands look to profit from China's overseas
By Adam Jourdan and Phil Wahba
SHANGHAI/NEW YORK, Dec 16 Fang Ying's December
wish list of Louis Vuitton handbags and Chanel perfume is not
only for Christmas. Fang, 33, a secretary working in Shanghai,
writes one every month for friends and family travelling abroad.
Fang is not alone. Over two-thirds of luxury spending by
mainland Chinese was made overseas in 2013, an increase from
2012, according to the China Luxury Market Study from
consultancy firm Bain & Company released on Monday.
Chinese shoppers often wait for trips abroad, plan shopping
sprees to Hong Kong or get friends or specialist "daigou"
agencies to bring back luxury items from overseas because they
are often cheaper due to China's high import taxes.
"Sometimes I'll go to a China store and look online for
details about things I've liked, or try something on for size
I've seen online. But when it comes to actually buying it I'll
always get a friend to bring it back from abroad," said Fang.
China is the number one luxury spender worldwide, making up
29 percent of total global luxury spend this year, according to
the Bain report. So Chinese consumers - wherever they may be -
are a key battleground for firms from LVMH Moet Hennessy Louis
Vuitton SA and Gucci owner Kering Holland NV
to trenchcoat maker Burberry Group PLC, cosmetics giant
L'Oreal SA and Cartier watchmaker Compagnie Financiere
"The store fronts are in Shanghai and Wuhan, but the cash
registers are in Los Angeles, New York and London," said Sage
Brennan, CEO of China Luxury Advisors, which helps brands in the
Americas and Europe attract Chinese shoppers.
Chinese luxury spending slowed at home in the wake of a
crackdown on corruption and shows of wealth, prompting warnings
of a sales slowdown from liquor maker Pernod Ricard SA
and Volkswagen-owned Bentley Motors and Lamborghini.
Luxury brand store openings dropped significantly in 2013,
according to Bain, which estimated China's luxury market will
grow two percent this year versus seven percent a year earlier.
On London's Bond Street and Fifth Avenue in New York, luxury
stores have been getting ready to welcome Chinese shoppers,
boosting China know-how ahead of peak seasons such as the
week-long Lunar New Year beginning Jan. 31, 2014.
London's Harrods department store is planning a themed
display for the festival, with special products and menus
designed for the occasion, it said.
Chinese visitors spent 300 million pounds ($488.34 million)
in Britain in 2012, while the British government has relaxed
visa rules to attract more people from the world's
"Having a strategy for Chinese visitors makes a massive
difference. Chinese spending in the UK was up 132 percent in the
first half of 2013," said Jeremy Gordon, London-based director
of China Business Services, which helps UK firms target Chinese
"That's obviously going to have a massive impact on your
bottom line at a time when overall retail sales are not growing
at anything like that rate."
On Fifth Avenue, jeweller Tiffany & Co said it
employs Mandarin-speaking staff. Tiffany has seen strong growth
in the China market as the allure of diamonds grows, and said
last month that sales at its flagship New York store were driven
by Chinese and European tourists.
Around 1.5 million Chinese travellers visited the United
States in 2012, a more than five-fold increase from 2005,
according to the U.S. Department of Commerce.
Saks Fifth Avenue, the department store unit of Hudson's Bay
Co, has a Lunar New Year strategy to focus on beauty
products, while the flagship store of Macy's Inc has a
visitor centre with Chinese-language material.
Barneys, meanwhile, is launching its first Lunar New
Year-themed marketing campaign in 2014. The department store has
increased adverts in Chinese magazines and is testing campaigns
around Chinese payment system Union Pay, it said.
Luxury firms are also going online to woo Chinese shoppers.
Tiffany has a Chinese engagement ring app while Chanel offers an
online make-up "classroom". Italian fashion house Fendi has held
talks on China's Twitter-like Weibo, while Prada SpA
and Christian Dior SA have Chinese videos online.
"Chinese consumers interact a lot more than their Western
peers online, even in the luxury sector. They will often check
on social media before they make their final decision," said
Arnold Ma, London-based CEO of digital marketing agency Qumin,
which helps brands target the China market.
Qumin is helping London's famous Bond Street target Chinese
travellers in Britain during the coming Lunar New Year.
Luxury leather goods firm Coach Inc has a
U.S.-focused campaign in Mandarin using popular Chinese social
media app WeChat. The app, developed by Tencent Holdings Ltd
, has 272 million users worldwide.
Coach tailors some of its U.S. products for Chinese
shoppers, a spokeswoman said. Chinese are the fast-growing
segment of the firm's North American tourist sales, which make
up a fifth of total sales in the region.
"This trend is going to continue because the Chinese are a
lot more integrated in the global economy and really informed,
especially about price," said Bruno Lannes, Shanghai-based
partner with Bain and lead author of the luxury market report.
"At the end of the day it comes to the same thing: shoppers
will either travel or go online to buy abroad."