Buying luxury items is a brand-new success story(2)

Packing up

Tianjin's Exotic Cargo Market is a lot more subdued today than it was two decades ago. When China Daily reporters visited shortly before Spring Festival, a traditional shopping season, there were few customers.

Zhang Li is among the few still selling "foreign garbage" at the market, which now has more traders pushing home appliances and other electrical equipment.

"In the 1990s, a secondhand shirt cost between 30 and 40 yuan. The price is about the same now, but the price of other commodities has doubled or even tripled," she said.

"Fewer customers are coming here, and a lot of traders have packed up and left. It's hard to make a fortune here now," she added.

Industry experts put the decline of the market down to the progress that has been made by Chinese clothes designers and the rise in people's incomes.

"At first, the production capacity of Chinese firms just couldn't meet demand," explained Niu Haipeng, associate professor of marketing at Renmin University of China. "Customers chose to buy secondhand foreign goods either because there was no equivalent on the domestic market or the quality was different.

"Later, when people found that Chinese manufacturers were capable of offering products with the same quality and at lower prices, they had more options," he said.

Analysis shows that the Chinese appetite for exotic goods never waned, it just changed.

Italian brand Gucci now has about 50 franchises on the Chinese mainland, while Louis Vuitton has 40 and Hermes has 30, said Zhou at the University of International Business and Economics.

Many high-end brands are also branching out into second- and third-tier cities.

Meanwhile, Chinese tourists spent a record $7.2 billion on luxury goods overseas in January, mostly during the Spring Festival holiday, according to a report by the World Luxury Association, a nonprofit organization specializing in market research.

"When people bought foreign goods in the 1980s and 1990s, part of the reason was the exotic taste, but mainly they were buying products for their utility," Niu said. "Twenty years on, however, the main force driving Chinese buyers of high-end brands is the status they represent. It's more about psychological needs."