Luxury companies have a new mantra—sell to the Chinese, just not in China.
Chinese now represent close to a third of all luxury sales around the world, but about two-thirds of their spending is overseas, according to a new report from HSBC.
The study, called the "Globe-trotting Shopper," said Chinese tourists will be the biggest driver of luxury growth in the coming years. And their spending will increasingly move beyond Hong Kong and Macau and push further into Europe, Australia and the U.S.
Europe is expected to be the big beneficiary in the coming year, as the weak euro makes shopping and traveling on the Continent less expensive. Chinese tourists now account for 40 percent of all luxury sales in France, 35 percent of luxury sales in Italy and 25 percent of luxury sales in the U.K., according to the HSBC report. It said that Chinese tourists devote 80 percent of their spending budget—or about 11,000 euros ($13,000)—to shopping while they're in Paris.
In the U.S., Chinese tourists account for only 10 percent of sales, but that's expected to grow, the report said. It said Chinese tourism in the U.S. is projected to jump fourfold by 2021 and "luxury should benefit a lot from Chinese tourism."
The crackdown on corruption in China as well as the country's slowing economic growth is hurting domestic sales of high-end goods—from watches and handbags to wine and sports cars. Luxury giant LVMH just reported its first decline in annual operating profit since 2009, as sales in China slowed.
Rather than building more stores in China, HSBC said luxury companies have to better cater to Chinese shopping abroad—through improved service, more attentive staff and (at least in France) more shopper-friendly hours.