CHINA. Luxury fashion house Louis Vuitton has lowered its prices in mainland China as a result of a shift in government policy, according to Jing Daily, a content partner of The Moodie Davitt Report.
The Chinese government’s policy to reduce import duties on consumer goods officially came into effect on 1 July.
Louis Vuitton told Jing Daily in a statement: “In consideration of the recent cuts on import duties and value-added tax, Louis Vuitton China has decided to mark down prices on a wide range of items to fully support the government’s efforts to reduce the price premium for luxury goods sold in China and overseas. Louis Vuitton China will continue to support the government’s efforts.”The new prices have already been updated on Louis Vuitton’s Chinese e-commerce site and in its boutique stores, according to a report by China’s financial media outlet Caijing. The report estimated that the brand had made price cuts of between CNY300 (US$45) and CNY1,500 (US$226) on various products, making the average price reduction rate between 3-5%.
In a bid to drive domestic consumption in recent years, the Chinese government has been busy rolling out a series of measures to lower import duties on consumer goods, Jing Daily noted. In 2011, luxury items sold overseas were -68% cheaper on average than the same products sold in China. The government’s new policy narrowed this difference to -16% in 2017, according to research conducted by China’s Fortune Character Institute.
The Ministry of Finance announced its latest round of cuts on 31 May this year, which apply to 1,449 categories across luxury, fashion, beauty and other sectors.
“It remains to be seen if other luxury brands will follow Louis Vuitton’s lead and reduce their prices accordingly,” commented Jing Daily. “Since 2015, Chanel has adopted a price ‘harmonization’ strategy, aiming to narrow the gap between domestic and foreign prices to encourage more mainland China purchases.
“The latest government development is also likely to put pressure on China’s daigou – or overseas shopping agents – who traditionally profit from the huge price difference on luxury goods sold in China and overseas.”
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*This article was originally published by the much-respected JING DAILY, a Moodie Davitt Report content partner.