Why Is Luxury So Expensive In China?

China's luxury consumption accounts for 25% of the global market, surpassing the United States as the second largest luxury consumer in the world.

A number of agencies reported that China will become the world's largest luxury market by the end of 2015.

But at the same time, the amount of luxury goods purchased by Chinese consumers is several times higher than that in China, tens of billions per year.

Bensonsung, who works in overseas luxury group, said that the price of high-end brands in China is very strong, but the price at abroad is much more favorable.

Perennial Bensonsung in the US says these high-end brands will sell two to three times a year in London, Milan, Paris, New York and other cities, and the price is low to a shocking 1~2 discount.

Generally, the big cards sold in the domestic market will give employees a 1~2 discount at the end of each year, and will not take the restriction.

Others are less fortunate.

Shao Ligang, general manager of nine consulting and management, explained that in China, luxury goods, as imported high-end consumer goods, generally need to pay 6.5% to 18% depending on the commodity category.

CIF price: 400$* 6.4RMB= 2560RMB

Import duty: 2560RMB * 15%= 384RMB

Value added tax: (2560RMB+384RMB) x 17%=500RMB (integer)

Consumption tax: [(2560RMB+384RMB) x (1-30%)] * 30%=1261RMB (integer)

That is to say, when the price of commodity CIF is 2560 yuan, the total amount of tax to be paid for import is 2145 yuan, which has reached 80% of the CIF price of goods.

The CIF, which costs $400, will last at least 4705 yuan in China.

Shao Ligang pointed out that the price of domestic luxury goods is far higher than the price level outside China: the average is 72% higher than that of France, 51% higher than that of the United States, and 45% higher than that of Hongkong.

High taxes really do.

In contrast, the United States does not have VAT, the import tax rate is very low, and many goods are also tax-free. Although the VAT is higher than that in China, the import tax is low.

In addition, European and American countries also have tax refund policies.

Bensonsung believes that there may be three reasons for the high price of luxury goods in China: first, the sales are good, the supply of goods is in short supply, there is no surplus and no discount sales promotion; two, it involves the early investment and recovery of the enterprises, most of which are domestic products in Europe and North America, and the cost has long been flatten out. Although the big brands are entering the Chinese market soon, they can not reduce the price in the process of recycling, and the three is the high taxes and rents.

Ironically, luxury goods in China, apart from the gift giving army, are not the main force in purchasing luxury goods.

Data show that the mainstream consumer groups of Chinese luxury goods are too young to concentrate, ranging from 25 to 45 years old, on average, 15 years younger than European luxury consumers, 25 years younger than the US.

The average level of luxury consumption in the world is 4% of personal wealth, but some consumers in China use 40% or even larger proportion to buy luxury goods.

The main reason for the high consumption of luxury goods is the difference in consumption concept.

If the concept of "money worship", "showing off wealth" and "comparing with others" has not changed, the regulation of tax rates may not be effective.