Chinese Distributors Adapt to Fast-Changing Market

HONG KONG — China’s slowing economy and austerity measures have been affecting luxury retailers, but it’s also hurting another group that’s not getting as much attention: distributors. Distributors face a unique problem in China, where consumers do the bulk of their luxury shopping outside the country. According to Bain & Co., 70 percent of luxury brands bought by Chinese are purchased abroad or through daigou agencies, overseas personal shoppers who buy and send luxury goods to customers in China. The appeal of shopping overseas is pretty obvious after looking at the numbers. Prices of imported apparel, accessories or other Western branded goods are typically 30 percent to double the price of what they cost in their home markets due to import fees as well as markups. The daigou market has grown to an estimated 55 billion to 75 billion yuan, or $8.78 billion to $11.97 billion, in 2014. To give some context of how big this is, that constitutes nearly 50 percent of store sales in China. This propensity to shop overseas has made the market particularly difficult for distributors looking to operate in the China market. “You cannot afford to be opening stores in China and selling product in China and promoting a

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