The final price of the watch is sixty-seven times the FOB price

“Everybody says that luxury goods are 'extraordinarily expensive'. In fact, there is a lot of roads here.” Li Fei (a pseudonym) is a well-known brand watch retailer in Japan. He, who is familiar with the rules of the industry, disclosed to the China Securities Journal reporter that the price of an imported watch from the entry to the sales has been increased by layers.

According to Li Fei, according to state regulations, watches with import prices of up to 10,000 yuan are not high-end watches and do not pay excise duties, but import duties are around 20%, plus 17% of value-added tax and other expenses in the import process. Than about 40%. "On the basis of cost price, agents will generally increase the price by 40% for retailers. The retailers must ensure that the gross profit is above 60%."

According to Li Fei’s algorithm, a CIF watch with a price of RMB 1,000 will have a CIF price of RMB 1,400. It will be 2,000 yuan in retailers’ hands and the final price will be RMB 3,200. Since the gross profit needs to pay 17% of the value-added tax for domestic sales, the tax paid for this watch is 706 yuan, which is equivalent to 22% of the final selling price. In some shopping malls, in addition to paying the rent for the shop, the sellers must be divided into shopping malls. About 20% to 30% of the gross profit will be returned to the mall. This part of the cost will be passed on to consumers.

Li Fei said: “The brand I represent can only be regarded as a mid-range brand abroad. High-end brands like Rolex, Omega, and Patek Philippe, in addition to paying high excise taxes, have to pay large publicity fees, store rentals, and store employees. , so the final price is at least sixty-seven times higher than the FOB price."

Due to high comprehensive taxes and fees and channels and other reasons, many middle- and low-end products overseas are often transformed into expensive “luxury goods” after entering the mainland market. In Europe, North America, Hong Kong and other places, the same product costs 30% to 70% less than the mainland. As a result, in the various “shopping paradise” of the world, Chinese tourists who are rushing to buy luxury goods like snapping cabbage can be seen everywhere. Before Christmas last year, Beijinger Yu Kai (a pseudonym) traveled to Paris on business, spending just 60,000 yuan on shopping: 2 LV handbags with a total of 20,000 yuan, 1 Burberry bag with 5,000 yuan, and 1 Gucci watch. 7,000 yuan, 1 Swarovski watch 5,000 yuan, 1 Cartier watch 21,000 yuan, 3 Swatch watches a total of 2,000 yuan.

“Overseas luxury goods are already cheaper than domestic ones. The exchange rate of the euro is not high anymore. Foreigners holding short-term visas still have 12% of the tax refund for departure in France. If you buy at home, you can only buy 60,000 dollars. A Cartier watch." Said Kai Kai.

According to statistics, 59% of tourists to Europe will purchase luxury goods, and 53% of Chinese tourists who travel to North America to purchase luxury goods. In 2010, the average number of outbound tourists in China spent nearly US$1,000 on purchasing luxury goods. The McKinsey report predicts that by 2015, China will become the world's largest consumer of luxury goods, accounting for more than 20% of the global luxury market share.

At present, many overseas brands of raw materials, production and processing links in China, but according to the current processing trade policy, these products must be exported, otherwise they can not enjoy preferential export tax rebate policy. This means that these products need to be exported first, and then come back after an “overseas trip”, which inevitably increases costs and costs.

Li Fei said that in the agency's brand, in addition to some of the special features and styles of watches can not do the domestic, most of the low-end styles of watches are Guangzhou's national agents imported parts assembly. However, due to too many intermediate circulation links, watches assembled in China may not be able to reflect the price advantage.

“These parts and components are all manufactured at the domestic factory and then exported and assembled. The general generation underneath the country has the general area, the area under the general generation is the provincial agency, and there are city-level agents, and finally Before going to the counter, the cost of a typical watch is 2.5 fold off the final price, and the 4 to 5 agents have to take a profit of 0.8% to 15% each, and the final price is four to five times the cost. ."

In the face of China's rapidly growing luxury consumer market, some international luxury goods manufacturers have begun to adjust the Chinese market strategy. Many international first-line brands such as Ermenegildo Zegna and Ralph Lauren, who originally relied on agents to open channels, have successively taken back the agency rights in the Chinese market and adopted the direct operating model. In addition, many brands began to “touch the net” and tried online shopping models. Obviously, this will reduce the retail price of some luxury goods. However, people in the industry believe that because the corresponding laws and regulations, logistics and distribution, payment platforms, etc. are still not perfect, domestic consumers want to buy luxury goods with "the same price inside and outside" is still a luxury.

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