Thursday, February 6, 2014

New York x 2 = Shanghai

To Cadre, with love.

The formula in the title refers to the amount that the average Shanghai luxury shopper spends on his/her most recent purchase ($1,000) versus the average New York shopper ($500), according to this Jing Daily article. Since statistics can be manipulated to drive just about any argument, what is one to make of this result? Are nouveau riche Chinese just out to outspend their American counterparts? Is Hugo Boss the Chinese Levi’s Strauss?
Perhaps not. An obvious mitigating factor is that the luxury duties on the Mainland make a Loro Piana sweater wildly more expensive than the same model in Manhattan. A more interesting fact is the purpose of the purchases – in China, the percentage of consumers buying items as gifts are between 10-20% higher than in the US. The cynic would assert that differential reflects the official corruption and graft still present in China, despite recent crackdowns. In fact, bestowing gifts – whether to curry favor or not – is likely to be a more general trend across Chinese society, particularly these days. And it stands to reason that purchases made as gifts reflect more immediate needs, thereby forcing consumers to pay the higher local prices rather than wait for that trip to Hong Kong, Milan, Paris etc to indulge their indulgent fancies.

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