World / Reporter's Journal

Chinese pursuit of luxury goods in Golden State always amazes

By Chang Jun in San Francisco (China Daily USA) Updated: 2015-12-22 14:59

Living in California, the Golden State, which has one of the highest densities of Chinese people and is known as "the Gateway to Asia", I probably have more opportunities to observe how the world's two biggest economies intertwine and are interdependent in many ways, for example, deep-pocketed Chinese's craving for top American brands and properties.

Frequently hosting friends from China who have children attending US middle schools and colleges, I'm amazed to see how the Chinese middle class and the younger generation consume, well, only the luxury brands.

Chinese pursuit of luxury goods in Golden State always amazes

When I bring Emily Chen, a 17-year-old who attends a boarding school in Monterey to the Union Square shopping malls, it is a jaw-dropping experience. She strolls along the boutiques featuring Chanel, Louis Vuitton and Gucci handbags; Salvatore Ferragamo and Tod's footwear; Yves Saint Laurent and Burberry garments, and finally ends up with a string of shopping bags from Fendi, Alexander McQueen and Bottega Veneta.

"The price is so reasonable compared to that in China," said Chen, whose father runs a company in Shenzhen specializing in electronic equipment and serves as a supplier for Apple. "I consider those are very good buys."

Chen is not alone.

According to the Hurun Report, an annual publication featuring China's richest people, about 29 percent of high net-worth parents in China would choose to send their children abroad for higher education. The US colleges are the top pick among all the international destinations.

Those young Chinese studying in the US prompt the flourishing of "parents tourism" - California's tourism bureau said that the several spikes in visits from China coincide with the back-to-school and graduation seasons of the US schools.

According to Bain and Co, Chinese consumers made up 31 percent of the $273 billion personal luxury goods market globally, and the US is the biggest market outside of Asia.

As Beijing continues its anti-corruption drive, a byproduct of which is sluggish sales of high-end goods in China, makers and sellers of Western luxury brands are trying to cash in on this special segment of Chinese customers. Specifically, they are refining their marketing strategy around the Chinese students and parents to entice them to spend.

According to a recent Reuters report, the Los Angeles Beverly Center mall sends buses to shuffle Chinese families from UCLA and USC to shopping malls at the beginning of the year and at graduation.

For example, the Beverly Center has transferred about 45,000 Chinese students and their families this year, which it says it one of its most successful marketing plans.

Chinese parents are aggressive buyers of US real estate, too. Stella Wu, a media professional in China whose daughter will attend UC-San Diego this fall, bought a single-family residence for $500,000 in the coastal city close to the campus.

"This house will give me and my girl a peace of mind," said Wu. "At least, my daughter doesn't need to put up with a roommate who might live on a different schedule from hers."

A joint analysis by RealtyTrac, an Irvine, California-based research firm, and Ethnic Technologies, a New Jersey-based multicultural marketing company, noted that 46 percent of Mandarin-speaking buyers in a period of 17 months ending in May 2015 paid all cash.

Overall, Chinese buyers are the second-largest non-English speaking group paying cash, behind the Spanish-speaking group. The Chinese total nearly 18 percent of all cash deals in the US.

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