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Tuesday, February 27, 2024
LONDON, Jul 13 2011 (IPS) - Prime property in the Georgian architectural gem town of Bath? Check. Luxury brand shopping on London’s Bond Street? Check. A seat on the fine art auctions? Check. The wish list of Chinese visitors to the UK is endless, and their aspirations and wealth are reshaping the property, retail and art treasures market here in ways unforeseen a few years ago.
While Chinese buyers are awarded VIP treatment in any sale room around the UK, at home growing voices are heard that high-spending outbound tourism is hurting the country’s economy, impeding growth of domestic consumption and depriving national coffers of some 50 billion dollars of revenues.
“Do not let foreigners earn China’s big money!” called an editorial in the Economic Observer this month. It suggested China should lower its high tariffs on imported luxury goods to reverse the flow of outbound money, and spur domestic consumption. Unlike the United States where consumer spending accounts for around 60 percent of the gross domestic product, private consumption in China last year was only 37 percent of its GDP.
But for Luo Xinmiao who calls herself a “brand addict”, shopping for luxury goods should only happen in their place of origin. “I don’t trust the Burberry and the Gucci in China,” she says. “I doubt even the brand shops in Beijing and Shanghai because I think many of their goods are now made in China. And they are much more expensive than in London.”
Thousands of Chinese shoppers like Luo are flocking to European capitals hunting for their favourite brands. Last year some 57 million Chinese tourists travelled abroad spending a whopping 48 billion dollars in cities from London to Paris and Milan, according to figures from the National Tourism Administration.
While in their first years of travelling to Europe, Chinese tourists were somewhat coy, opting for perfumes in France, watches in Switzerland and shoes in Italy, their shopping habits have now changed. More brand conscious and wealthier than just a few year back, they are now regarded as the big spenders, shopping with confidence and in bulk.
Property may not come as cheap as luxury goods but it is yet another hot item on their list. The increase in the value of the yuan over the past five years has given mainland Chinese consumers more purchasing power, which coupled with the sharp depreciation of the British pound has made investment in UK property a favourite for many.
Mi Wenxia who studies architecture at Bath University says she was given the task of finding a suitable property to park a chunk of the family fortune by her father, and is doing the city rounds with real estate agents.
“There are more Chinese students coming here, and my father thinks it could be a real good investment to buy a place to let,” she told IPS. “It could help pay my tuition fees and I could afford to travel too.”
The combination of good university with great Georgian-era architecture and Roman hot spring baths designated a UNESCO World Heritage Site have placed Bath in the west of England firmly on the map for Chinese property buyers, say experts.
“We have seen more investors from China in the last two years,” says Vicky Collins who runs an estate agency in the city. “There are those who look for student lets but we have had the odd ones that want to buy preserved Georgian houses costing a couple of million pounds and above.”
Mainland Chinese buyers will account for 5 to 10 percent of the residential property sales in London this year, according to the real estate consultancy CBRE. They are also a popular addition to any auction room in the UK, bidding fervently for art treasures and often breaking pre-sale estimates.
But as much as the Chinese shopping frenzy is a welcome relief from the austerity climate here, it is raising brows back home. Economists worry that exporting Chinese real estate speculation abroad may distort overseas property markets and raise the spectre of the “China threat” again.
Calls to lower high import tariffs on luxury goods, once seen as spurring conspicuous consumption and aggravating the income gap, are now being seriously considered by Ministry of Commerce officials in Beijing.
They think the pros of redirecting 50 billion dollars spent by Chinese consumers overseas last year towards the domestic market and boosting consumer-led growth in the country far outweigh the importance of collecting the high import duty tax. Those calls are resisted by finance officials worried about the impact of slashed import duties on the national coffers.
The mouthpiece of the communist party, the People’s Daily, described recently how the Ministry of Finance and the Ministry of Commerce were battling out deciding the future direction of Chinese consumer capital. With the country’s international travel market projected to reach 230 billion dollars by 2020, dealers across the board in Europe are holding their breath.
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