CAN CHINA’S GOVERNMENT ‘REPATRIATE’ ITS CITIZENS’ LUXURY SPENDING?
From duty-free shops to customs crackdowns, the Chinese government has been on a mission over the past year to encourage its luxury shoppers to keep their shopping sprees at home, despite the high prices that are encouraging them to shop abroad.
As high tariffs on imported goods have continued to drive more Chinese consumers than ever to shop abroad, China’s domestic luxury market shrank by 2 percent last year, according to Bain & Company. Overall global spending, however, increased by 10 percent as 78 percent of luxury purchases by Chinese consumers took place outside of mainland China.
Recently, the Chinese government has been aiming to regain a piece of that growth by undertaking several key efforts to “repatriate” consumers’ luxury spending. These efforts include a mix of initiatives to make buying at home more attractive, as well as crack down on sellers who try to dodge tariffs with gray-market imports.
On one side, China has been making more efforts to encourage shoppers to want to make domestic purchases through the development of duty-free shops. In February this year, the Ministry of Finance announced that it had opened 19 new inbound duty-free shops in the country’s airports. This was not long after Hainan—which holds the world’s biggest duty-free mall—announced in January that it will lift the cap on tourists’ duty-free spending.
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