Why Chinese Shop While Travelling Abroad?

Coming to a City Near You: More Chinese Shoppers

ByJason Chow

European Pressphoto Agency
Chinese shoppers queue up outside a luxury store in Hong Kong.

If you thought the throngs of Chinese tourists in Hong Kong, Paris or London couldn’t get any bigger, think again: The age of the globe-trotting Chinese shopper has just begun, says consulting firm KPMG.

According to a new KPMG study released Tuesday, 71% of China’s middle class made a trip outside of the country – Hong Kong, Macau and Taiwan count as travel abroad – in the 12-month period leading up to August 2012, up from 53% the last time the consulting firm explored the question in 2008.

“The story is about the traveling Chinese and we think it’s just the start of a phenomenon,” said KPMG’s Nick Debnam, the lead author of the report. “This really impacts the way the Chinese buy things.”

The researchers surveyed 1,200 middle-class Chinese consumers between the ages of 20 and 44 years old across 24 cities in China in August. The respondents had a minimum household income of 7,500 yuan ($1,190) per month in top-tier cities such as Beijing and Shanghai, and at least 5,500 yuan in other smaller centers.

“They’re not super-wealthy – nowhere really near it – but they’re moving the market on their own,” said Mr. Debnam, who is based in Hong Kong.

Hong Kong remained the top choice for China’s travelers, with 53% of respondents saying they had visited the Special Administrative Region over the past year. Almost a third of those surveyed said they had visited Europe, while just 11% said they had gone to the U.S.

It’s no secret that Chinese tourists love to shop while abroad, but the extent of their purchases made while traveling often exceeds their domestic purchases for certain categories. Take beauty products: 61% of those surveyed said they had bought cosmetics in Hong Kong, Taiwan or Macau over the 12 months prior to August 2012 — more than the 51% who said they had bought them in China over the same period.

The difference was even more pronounced when it came to luxury watches: 51% said they bought them in Hong Kong, Taiwan or Macau over the same 12-month period, while only 31% said they had bought one within China’s borders during that time.

Why do Chinese consumers prefer to shop for luxury items while traveling? According to Mr. Debnam, it’s largely because those products are cheaper abroad – China imposes a punishing 30% luxury tax on high-end imported goods. What’s more, the fear of fakes deters consumers from luxury shopping at home.

“One brand told us that for every dollar they sell in China, they’ll sell more than $2 outside of [the country] to Chinese consumers,” said Mr.  Debnam. “Brands are realizing it’s a global market. You can’t get fixated on just within the China market.”

He added that Chinese consumers “may see your ads or your store in China, but they’ll be buying your products somewhere else.”

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