According to several media reports, benefiting from the reduction of China's import tariffs, some European luxury brands have begun to cut prices of products sold in China.
For example, the price of goods displayed by Louis Vuitton (hereinafter referred to as LV) China official website has been revised, and the price reduction range is 300 to 1500 yuan. Hermès also announced that based on the national import tax rate adjustment, Hermes China will adjust the retail price of some products from July 1, 2018. On July 6, GUCCI will also adjust the retail prices of all direct retail outlets in mainland China, including new and classic models, with an average reduction of 5% to further narrow the gap between China and the rest of the world.
On July 6, LV, Hermes, and GUCCI Chinese staff confirmed the price adjustment of the product to the daily economic news reporters, The reason for the price adjustment was to respond to the national import tariff reduction policy.
Among them, LV staff said that most of the products are involved in this adjustment, consumers can browse the official website to find the latest price after adjustment, and the official website and offline stores unified adjustment. If the consumer who has previously subscribed to the product can negotiate with the customer service or the clerk to unsubscribe, then re-order the reservation and wait in line.
The reporter noticed on the official website of LV China that the price of MONOGRAM medium shoulder bag decreased from 16,400 yuan to 15,700 yuan; NEONOE bucket bag decreased from 12,300 yuan to 11,800 yuan; NEVERFULL decreased from 10,400 yuan to 9,900 yuan, the decline was on Hundreds of dollars to thousands of yuan.
Among them, LV staff said that most of the products are involved in this adjustment, consumers can browse the official website to find the latest price after adjustment, and the official website and offline stores unified adjustment. If the consumer who has previously subscribed to the product can negotiate with the customer service or the clerk to unsubscribe, then re-order the reservation and wait in line.
The reporter noticed on the official website of LV China that the price of MONOGRAM medium shoulder bag decreased from 16,400 yuan to 15,700 yuan; NEONOE bucket bag decreased from 12,300 yuan to 11,800 yuan; NEVERFULL decreased from 10,400 yuan to 9,900 yuan, the decline was on Hundreds of dollars to thousands of yuan.
Among them, LV staff said that most of the products are involved in this adjustment, consumers can browse the official website to find the latest price after adjustment, and the official website and offline stores unified adjustment. If the consumer who has previously subscribed to the product can negotiate with the customer service or the clerk to unsubscribe, then re-order the reservation and wait in line.
The reporter noticed on the official website of LV China that the price of MONOGRAM medium shoulder bag decreased from 16,400 yuan to 15,700 yuan; NEONOE bucket bag decreased from 12,300 yuan to 11,800 yuan; NEVERFULL decreased from 10,400 yuan to 9,900 yuan, the decline was on Hundreds of dollars to thousands of yuan.
Adjust the price before and after.
Hermes China staff said that in response to the national policy, Hermes brand has also made product price adjustments, including bags, shoes, belts and other commodities, but not all product prices are lowered. Since Hermes currently only has offline physical stores, this price adjustment is carried out in all stores in mainland China.
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The GUCCI official website staff said that they can only determine the price adjustment of the official website. It is not clear whether the offline stores are synchronized.
However, some consumers said to the daily economic news that they did not feel the price adjustment, and would still prefer overseas purchases when purchasing luxury goods.
However, the price difference between luxury goods in the Chinese market and overseas markets still exists. Take LV's NEONOE handbag as an example, the price of this product in Europe is about 8800~10000 yuan, the French local price is 1140 euros, equivalent to about 8900 yuan, the current price of LV China official website is 11,800 yuan, The price before the adjustment was 12,300 yuan.
The staff of a Hermès store said that the price cuts have little effect on the flow of passengers and the choices customers make when purchasing goods, because consumers who buy luxury goods are not sensitive to price.
According to a sample survey conducted by the Ministry of Finance of China, import tariffs only account for 0.5%-7% of the retail price of imported goods. In addition to tariffs, the price of imported luxury goods usually includes import value-added tax and consumption tax (such as cosmetics and high-end watches, etc.)
Luxury goods to reduce the opportunity for domestic and foreign price differences
However, in recent years, the Chinese government has issued a series of consumer stimulus policies, including expanding imports, promoting cross-border trade, and lowering import tariffs, which will help narrow the spread and further promote the return of Chinese consumers.
Daily Economic News The reporter noted that in recent years, the Chinese market has played an increasingly important role in the development of global luxury brands, and the competition of luxury brands in the Chinese market has become increasingly fierce.
According to the research report released by Bain, “China Luxury Market Research 2017”, Chinese luxury goods consumers accounted for 32% of the global market share in 2017, and the growth rate of luxury goods in the Chinese market has surpassed that of overseas markets. The mainland market has increased by 20%.
Many luxury brands are aware of the growing influence of Chinese consumers on the luxury goods market, and have taken corresponding actions – one of them is to adjust the pricing strategy in the Chinese market.
As early as 2015, Chanel announced a global balance pricing strategy, lowered the price of some products in the Chinese market, and raised the price of goods sold in Europe to reduce the price difference. Soon after, Hermès announced a price increase of 4% in Europe, but the price increase does not involve the Chinese market, which is equivalent to reducing the global spread in disguise.
Subsequently, other luxury brands such as Prada, Burberry, etc. also implemented a discount strategy in the Chinese market.
According to media reports, on June 8, GUCCI CEO Marco Bizzarri said that the brand's annual sales target is set at 10 billion euros, which means that GUCCI intends to replace LV as the world's largest luxury brand. And GUCCI's revenue in 2016 has surpassed Hermes, and there is a big "you chase after me" between brands.
In addition, China's millennial generation of consumers are on the rise, the new generation of consumers are highly varied, self-assertion is strong, and brand loyalty is not high, which adds more variables to the competition of luxury goods in the Chinese market.
Bain's report also shows that millennials have become the main source of growth in the luxury goods market. They buy luxury goods more frequently, are familiar with digital technology and applications, have a deeper understanding of luxury goods, and have their own opinions.
Luxury brands with superior performance in the market focus on “innovation” and “ingenuity”, catering to consumers' preference for “individualism” in design details, and bravely breaking traditions and rules. The younger trend of luxury brands is reflected in LV, GUCCI and Prada.
Bain believes that the government further promotes domestic consumption, strengthens control over purchasing, and top luxury brands begin to actively adjust the price difference between domestic and foreign markets, which is the main reason for the rebound of China's luxury goods market.
In this context, the voice of the global price of luxury goods is also increasingly high. Zhou Ting, Dean of the Institute of Wealth Quality, said in an interview with the media that for the luxury goods group, global price integration has become an inevitable trend, especially the rapid development of e-commerce platforms, and the global price integration of luxury goods is imminent.
Zeng Mingyue, a researcher at the Center for Luxury Research at the University of International Business and Economics, also said in an interview with the media that the global price is conducive to combating the breeding of “human flesh trade” such as purchasing, sea scouring and tourism sweeping. In the long run, it is beneficial to luxury brands. Image optimization.