China luxury buyers prefer to go local

Several prominent luxury brands are experiencing a surge in sales in China as more shoppers opt to buy high-end goods locally. This comes amid the government's move to impose taxes on overseas purchases and a number of luxury labels cutting domestic prices to bring China quotes closer to goods in other countries.

The depreciating yuan and recent spate of terrorist attacks in Europe are also discouraging China consumers from traveling internationally, boosting luxury sales in the country, industry experts say.

China consumers are the world's top buyers of high-end goods and this shift in spending provides a good opportunity for luxury brands in the country but at the same time put their businesses at risk elsewhere. Currently, the global personal luxury goods market is worth $267 billion.

In recent years, the government has taken steps to bring consumption and tax revenue back to China. It has begun cutting import tariffs on personal goods, including cosmetics, footwear and apparel, and raised taxes on both foreign goods purchased online and those brought to China.

As a result, sales of personal luxury items in China increased 4 percent in 2016 and are expected to rise at a faster rate this year.

Switzerland-based jewelry and watches specialist Richemont reported recently that purchases in China and South Korea helped boost its Asia-Pacific sales by 10 percent in 3Q16. The figure is double the company's overall sales growth rate. Its brands include Dunhill and Cartier.

Chanel, which is among the first luxury brands to make prices the same worldwide, said that this strategy improved the brand's consistency, spread out sales between countries and hindered the proliferation gray-market goods.

Pricing disparities, however, still remain. A recent study by US-based consulting firm L2 Inc. revealed that Louis Vuitton bags are quoted 25 percent higher than counterparts in other countries.

A calfskin suede handbag from Richemont's Chloe goes for about 14,000 yuan or $2,670 in China, nearly a third higher than those in the UK, and 9 and 5 percent more expensive than those in Japan and the US.