Chinese traveling abroad are offering a welcome fillip to the growth of sales of luxury goods in developed nations, expected to keep pace with the nation's economic development and greater possibilities for overseas travel.

A survey conducted by Goldman Sachs Global Investment Research, an independent market research company, reveals around 20.2 million Chinese people traveled abroad in 2003.

And several industry analysts expect this number to increase dramatically as more and more foreign countries become approved tourist destinations and Chinese people generally enjoy a greater disposable income.

The Economist Intelligence Unit expects the number of Chinese travelers to increase to 49 million by 2008, 60 million by 2010 and 100 million by 2015.

The World Tourist Organization also expects the figure to reach 100 million, but over a longer period of time - by 2020.

In the first 10 months of last year, 23.84 million Chinese traveled abroad, a year-on-year increase of 49.8 percent.

The surge in Chinese traveling overseas is good news for luxury brands, as Chinese people show a high propensity to spend when traveling and as traveling will also enhance their brand awareness, says the survey.

In the short term, Hong Kong is likely to attract most of the spending on luxury goods, by the mainland tourists due to its proximity and attractive pricing. But Europe, particularly France and Italy, is believed to lure a significant number of Chinese shoppers.

The survey report indicates that the Chinese shell out at least twice as much on luxury commodities when touring overseas than they would locally, attributing this phenomenon to three factors:

First, Chinese consumers are generally price conscious, and consumers of luxury goods typically seek the lowest price if this is easily identifiable.

Prices of luxury commodities can be at least 20 to 30 percent higher in the mainland than in Hong Kong or Europe as a result of the high import tariffs and consumption taxes.

Tariffs can be as high as 35 percent on certain jewelry on the mainland market, ranging from 12 percent to 16 percent on watches and 10 percent on leather goods; the consumption tax on non-essential items is 10 percent.

Second, gift-giving is an important aspect of Chinese culture. When traveling, they tend to bring back gifts representative of the countries they have visited, often branded products otherwise inaccessible in China, In addition, in the business world, buying expensive gifts is a common and accepted practice and is seen as a way to show respect.

Last but certainly not least, despite the recent expansion of most luxury brands, the variety of luxury products available in the Chinese mainland is still limited when compared with Hong Kong and Europe.

And some brands do not offer their full range of products on the Chinese mainland.

This is an additional incentive for the Chinese tourists to buy when traveling overseas.

(China Daily January 27, 2004)