There is no doubt that China is the biggest target market for luxury brands. China is the world’s biggest luxury consumer; in 2013 they consumed 47% of all the luxury goods in the world. Hence, many brands release special collections specifically around Chinese New Year.
Louis Vuitton was very quick to react to the news that the Chinese Government was reducing the import duties on 1,500 consumer products on July 1st. LVMH announced that Louis Vuitton will be lowering their retail prices on a range of products by 3-5% in mainland China. In a statement that was issued to Jing Daily, LVMH said they will “lower prices on a wide range of products to support the government’s effort to reduce the cost of luxury goods sold in China”.
This news could have a knock-on effect on Hong Kong as currently, a lot of mainlanders travel to Hong Kong for shopping trips, due to their lower tax. This change in tax could change the way that tourists now decide to spend their money in Hong Kong. Whilst luxury goods are still slightly cheaper in Hong Kong, the difference now is much smaller, for example a Louis Vuitton Néonoé Monogram Canvas handbag is now available for 11,800 Yuan ($1,779 USD), whilst the same bag costs 11,163 yuan ($1,683 USD) in Hong Kong.
With the Yuan's recent depreciation alongside the decreases in tariffs, Hong Kong is slowly losing it's appeal of attracting mainland consumers...