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Go back to the enewsletter After a bank devalua

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first_imgGo back to the e-newsletter >After a bank devaluation on Tuesday 12 August 2015, the world of luxury retail took a hit as China’s currency dropped to its lowest since August 2011. The impact of this devaluation has extended to the luxury industry and Chinese consumers may alter the way they spend on luxury brands in the coming future.Luxury brand companies such as BMW, Swatch Group and LVMH saw their shares decline as much as 5%. Prices of luxury goods may increase overseas to compensate for the decrease in China; likely making imported goods more expensive within China.LVMH’s leather goods sales in China, Macau and Hong Kong have declined 10% in the first half of 2015. This followed the government’s suppression of  corruption in the sales of high-end goods. Around 40% of luxury goods sold in China have been purchased in Europe and resold illegally in China, avoiding the taxes usually placed on such items.The impact of the Yuan devaluation on Hong Kong’s luxury market is yet to be seen, as devoted luxury shoppers respond to an increased price fluctuation of 2-4%.Currency fluctuations are not the major factor influencing the decline in luxury retail. Chinese shoppers are still travelling internationally for their luxury brand needs, seeking better prices and service in Europe. Luxury retailers in China may prevail with a focus on other aspects of luxury shopping, such as in-store experiences for customers.Asia Pacific hosts four of the world’s top 10 luxury good markets in Japan, China, South Korea and Hong Kong. Ms. Roberts of Euromonitor, a market intelligence firm, however, says that “The region should not be regarded as a safe haven for growth over the next five years and many luxury brands are now realising this and turning their attention to other markets.”This raises the question: what could this mean for outbound travellers from China? Perhaps more importantly, what could this mean for Australian’s travelling to China in the future?Go back to the e-newsletter >last_img read more