The Impact Of Tariffs On Overseas Purchase Of Chinese Consumers Case Study

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Register to read the introduction… However, tariffs account for a very small proportion of the retail price of luxury products. Therefore, reducing import duties has little effect on the price of luxury products. One example of this is a handbag of Louis Vuitton. LV is a famous brand from France, which might be the most well-known fashion luxury brand among Chinese, and there are many Chinese consumers who queue up outside of LV shops for shopping in Paris, because the price gap is huge between China and France. An LV handbag with outer surface of leather in Mainland China is 33500 RMB, however, in France, the same bag's retail price is 3250 EUR, which equals to 22170 RMB, and foreign consumers have 12% to 13% tax refund at the same time, so it means the price of this handbag in Mainland China is nearly twice as much as the one in France. However, the tariffs data from The Ministry of Commerce of the People's Republic of China shows that import duty of handbag with outer surface of leather is 10%, so it demonstrates that tariffs is not the main reason which result in the high retail price of the luxury products. Therefore reducing import duty does not have much impact on the high price of in …show more content…
However, cutting down tariffs does not have much impact on the huge price gap of luxury products between the Chinese market and overseas market because the pricing strategies of international luxury companies decide everything. Actually, the retail price of luxury products is the highest in the Chinese market because China is one of the world's largest markets with high buying power, and Chinese customers tend to use luxury products to demonstrate their wealth and social class. Consequently, high price strategy is always an approach for luxury brands to maintain their high-end status in China. Furthermore, the luxury products that Chinese consumers can buy in overseas market are more various. Therefore, cutting down tariffs of luxury products still cannot make up for the huge gap of the price between the Chinese market and overseas markets, and Chinese consumers will continue to insist on purchasing luxury goods abroad because of much lower price and more various

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