Life of Guangzhou - Luxury Brands Vie for SZ Market

With spending on luxury goods dwindling in U.S. and European markets amid the economic downturn, luxury brands have been looking further afield, to growing markets such as China.

Due to its proximity to the shopping paradise of Hong Kong, Shenzhen for a long time couldn’t rival other mainland cities such as Shanghai and Beijing for the attention of luxury goods retailers. In the past year, however, a growing number of luxury brands have re-examined the market and opened flagship stores in the city.

French luxury goods company Hermes recently announced that it will open eight more stores in China before the end of this year, four of which in Shenzhen and Hong Kong, yesterday’s Guangzhou Daily reported.

“The strong buying power of Shenzhen residents and their Westernized consumption habits are creating a huge market that has attracted more and more luxury brands to vie for a share,” said Zhang Fang, marketing manager of China Resources (Shenzhen) Co. Ltd., the operator of The MixC, an upscale shopping mall that houses the largest number of luxury brands in Shenzhen.

Thanks to its convenient location in the Pearl River Delta region, Shenzhen receives shoppers from other cities in the region on the lookout for luxury goods, said Zhang.

“There is another advantage for luxury goods sellers in Shenzhen: They can provide shoppers with receipts acceptable on the mainland,” said Zhang. In most cases, receipts from Hong Kong cannot be reimbursed on the mainland.

As a result, many luxury brands have opened stores in Shenzhen. Gucci opened a three-story specialty store and Louis Vuitton unveiled its fourth China flagship store in The MixC this year.

Sales of luxury goods in the China market are expected to rise to US.6 billion this year from US.6 billion a year earlier, according to a report by U.S. consulting firm Bain & Co. Meanwhile, demand for luxury goods from U.S., Japan and European markets may drop to 153 billion euros this year from 167 billion euros last year.

[More Guangdong and Pan PRD News]