Luxury-goods buyers flood to new hot spot

Updated: 2012-02-03 09:35

By Xu Jingxi (China Daily)

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GUANGZHOU - Along with Beijing and Shanghai, Guangzhou in Guangdong province, is rising to be another hot spot for buyers of luxury goods, despite Hong Kong - offering tariff-free products - being just a two-hour train journey away.

La Perle, a Guangzhou-based shopping mall established in 2004 and specializing in luxuries, enjoyed a double-digit sales increase in 2011, said Wang Yan, a PR officer at the mall.

The number of VIP customers surpassed 6,000, with 80 percent of that number being residents of Guangzhou. To become a La Perle VIP customer, one needs to spend 25,000 yuan ($3,964) in a day or 50,000 yuan over six months. But the high spending threshold hasn't held people back and the number of VIP customers at the mall grew by more than 20 percent in 2011.

What concerns buyers of luxury goods in Guangzhou is not the intimidating prices, but the short supply of coveted items.

As the number of buyers increases, people have to make reservations and wait for at least a year to buy a Hermes Birkin bag at the franchise store of Hermes Group in La Perle.

Although the price of a Hermes Birkin bag ranges from 100,000 yuan to 1 million yuan, the number of people on the waiting list is more than 100 and is increasing daily, said a salesperson.

Meanwhile, fans of Celine Mini bags are always disappointed when staff at the franchised store tell them the bags on the shelf are samples and not for sale. Reservations are a must.

"It's been a new phenomenon in the past two years that the supply of goods has fallen short of demand," said Wang.

The rapid growth in demand among Guangzhou residents in recent years has attracted both international luxury brands and real estate developers. TaiKoo Hui, a shopping mall established by Hong Kong-based Swire Properties Ltd, opened for business in September 2011.

At TaiKoo Hui, more than 70 international brands, including Chanel, Miu Miu, Giorgio Armani and Tiffany & Co, have now opened stores in Guangzhou.

The city's residents are known for being pragmatic in their spending. Most of those who wanted to buy luxuries crowded into Hong Kong during the sales season. Prices there are usually lower than on the Chinese mainland because the products are duty-free. Moreover, the exchange rate between yuan and Hong Kong dollar is 1 yuan per HK$ 1.23 (15 cents).

However, people's ideas are changing, especially luxury-goods buyers. They now also attach great importance to a pleasant shopping experience.

Sara Lu, 25, sales manager of a clothing line, is one of those who prefers to shop in the city's luxury stores. "When shopping in luxury stores in Hong Kong, I felt as though I was buying bargains instead of a luxury item," said Lu. People kept telling her how inexpensive it was and Lu would pile items into her basket because they were "cheap".

"And in the crowded stores, sales people might be unable to offer everyone good service and were too busy to give a thorough introduction about the products," added Lu, who is unwilling to sacrifice the pleasure of appreciating luxury brands simply to save several thousand yuan.

"I should enjoy a luxury shopping experience when I shop for a luxury item," she said.

Besides, the difference in the cost of a luxury item between stores in Hong Kong and Guangzhou is narrowing. Many luxury brands have unified the prices of their items in stores on the mainland and in Hong Kong. The prices of some handbags in the Chanel franchised store in TaiKoo Hui in Guangzhou are even lower than those in Hong Kong.

"The prices in Hong Kong stores can be between 1,000 and 2,000 yuan higher than the prices in our store," said a salesperson at TaiKoo Hui's Chanel store.

"Therefore, in spite of the exchange rate between the yuan and the Hong Kong dollar, people are likely to pay for an item in a Hong Kong store as much as in ours."