Roundtrip for the Luxury Brand: Chinese Tourists Seeking Luxury Brand Discounts at Outlets in the United States

The Sacramento Bee published an article on Sunday, August 25, 2013, authored by Richard Chang, titled, “Big Spenders from China Have Outlet Malls Elated.”  The article discusses the financial impact of Chinese tourists (400 million and growing in the middle class!) seeking discounted luxury brand goods at outlet malls in the United States—specifically in California.  An outlet mall is a group of stores located, sometimes, in the same structure or in a group of structures, with each store, usually, selling one brand’s merchandise.  The brands are often luxury brands and some popular outlet stores in the United States are Polo, Nike, Adidas, Brooks Brothers, Coach, Levis and Calvin Klein.  The prices are usually discounted.  Sometimes the outlet stores carry overstock or merchandise that has failed to sell in “regular” stores and sometimes the brands, supposedly, manufacture goods specifically for the outlet stores, which may be of lesser quality than that sold in “regular” stores.  The article states:

The average Chinese visitor spends $3,000 on luxury goods, according to an analysis by TaxFree Shopping, a company that processes tax refunds for foreign travelers. That kind of spending has caught the attention of American retailers and mall operators.

"The Chinese want designer brands, and they want a bargain. That's why they come to Premium Outlets for our upscale stores," Eggan said.  . . .

Simon Property Group, owner of 11 outlet malls up and down California, has aggressively courted Chinese consumers since 2005. Eggan often travels to China, meeting both officials and tour operators. She was one of 80 business leaders who accompanied Gov. Jerry Brown on a weeklong trade mission to the Asian giant in April.

With the liberalization of their country's economy in the 1990s, the Chinese have grown accustomed to seeing Western styles and luxury brands. However, high tariffs make foreign imports extremely expensive, even though many of them are made in China.

In some cases, Chinese tourists say, the discounts on merchandise in the United States cover the cost of their trip.

Notably, the article also states that, “Cora Ip, a recent UC Davis graduate, said her parents – who live in Sacramento – spend hundreds of dollars buying gifts for relatives back home in Hong Kong.  "When you buy things here, there is quality control," said Ip . . ..”  Cheaper prices and quality control--very nice!  (Although, as alluded to before, there are “the dirty secrets of outlet shopping,” including the inconsistent quality between goods sold in a “regular” store and at an outlet—confused consumers?  Post sale confusion?).