When the euro started to drop against the renminbi (RMB) due to the European debt crisis, Chinese fans of luxury goods were quite excited. They called travel agents and joined shopping tours to Europe.
Rough statistics from local Chinese travel agencies show the number of participants of Europe tours have increased at least 30% this summer from a year ago.
However, the recent price increases of luxury goods in Europe may just cool the spending of Chinese tourists.
In late June, Chanel hiked prices by about 30% in all the stores in France, offsetting the 12% depreciation of the euro against RMB. In July, Dior and Gucci followed suit, raising prices by around 5%. It is unclear if Louis Vuitton, which already had the prices adjusted in early 2010, will join them.
While prices of luxury goods in China also have gone up, the increases are much less. For example, Chanel lifted price tags in its China stores by only 15%.
According to experts, the difference in price of luxury goods in China and Europe is diminishing, which may keep Chinese consumers shopping at home. We wonder whether the smaller price gap is enough to offset the prestige associated with buying, say, a Chanel bag from Place de Vendome?
photo courtesy of gucci, chanel