| PARIS/HONG KONG
PARIS/HONG KONG Aug 11 The Chinese tourists who
have become a common sight in the world's major cities fear
their wings will be clipped if Tuesday's shock yuan devaluation
develops into a deeper dent in their spending power.
More than 100 million Chinese travel abroad every year,
buying more luxury goods than any other nation. Shopping for the
perfumes and designer clothes that can cost them twice as much
at home is a major travel incentive.
"I'd planned to go to Seoul this month with my friends and
then Thailand alone in October. But I'm afraid the yuan will
devalue more," Xuechang Huang, a 48-year-old housewife from
Guangzhou, told Reuters. "So I think I won't go to Seoul for
shopping, but just to Thailand for sightseeing."
Huang Ruifen, a shop owner from Guangxi on a shopping trip
to Hong Kong, was equally decisive. "I'll stop buying luxuries
until the yuan is up again," she said.
China devalued its currency by 2 percent after a run of poor
economic data - a move some economists think could herald a
longer-term slide in the exchange rate. The
downward move was the biggest since a massive devaluation in
1994, and appeared to reverse a previous strong yuan policy.
Investors were quick to bet companies like Louis Vuitton
holding company LVMH, Gucci owner Kering and
L'Oreal could suffer. The stocks were among the
biggest fallers on the Paris stock market, dropping between 1.5
and 4 percent. The companies declined to comment.
SHOP ABROAD TO SELL AT HOME
Chinese tourists have been spending record amounts on luxury
goods this year, VAT-refund company Global Blue said in a report
published in April. For European destinations, the weak euro has
been a big draw.
Analysts reckon Chinese luxury spending accounts for as much
as 45 percent of the global market - up from effectively zero a
decade ago. Chinese account for well over a third of total
European luxury spending.
Despite the market reaction, the potential currency effects
are mixed for the industry.
Global Blue says as much as 40 percent of Chinese tourist
purchases abroad are destined to be sold for a profit back home
on the grey market, so a weaker yuan may just displace some
sales back into China.
Luxury sector margins are also generally higher in Asia,
although the currency translation effects for European-based
companies could cancel out some of that benefit.
"Overall it's likely to be negative in my view," said Nomura
luxury goods analyst Christopher Walker, "(but) it's
increasingly hard to monitor ... All the luxury companies are
trying to manage their pricing and manage the gaps. This just
throws another question mark into the pricing mix which makes it
just difficult to manage a luxury business at this point."
Either way, the sums involved are huge and have been growing
The World Tourism Organization says China was the biggest
"outbound" tourism spending country in 2014, with $165 billion
laid out, up 28 percent from 2013. As recently as 1995, the
Chinese spend was just $3.7 billion.
HOUSING, TUITION FEES
The price of a Gucci handbag was not the only thing on
Chinese minds after Tuesday's devaluation, according to a straw
poll of Chinese tourists around the world.
Hong Kong realtors fretted over the impact on the market
there, while students interviewed in Beijing and Sydney feared
for the cost of their foreign schooling fees.
But for now, there was plenty of determination among them to
enjoy their purchasing power while it lasts.
"You can buy more in Australia. For example, to buy Ugg
boots it's 1,000 yuan in China, it's 200 yuan in Australia,"
said Kou Meng Nan, 20, a college student from Beijing on a
12-day shopping trip to Sydney.
It was business as usual, too, at Galeries Lafayette in
central Paris, where visitors from China poured off buses and
into the grand department store. Before Tuesday's dip, the yuan
had strengthened 15 percent against the euro since the beginning
"That should make sure that this devaluation doesn't have
any significant consequences," said Catherine Oden, China
director for Atout France, France's official tourism promotion
arm. "It's the end of the season anyway for the Chinese."
For some, of course, it's just not about the price.
"It's really bad news for me," said Tommy Liu, 27, standing
outside a Chanel store in Hong Kong waiting for his girlfriend.
"No matter if the currency is up or down, I'll buy anything
for her to make her happy."
(Reporting by Kira Wang, Danying Sun, Fathin Ungku, Yimou Lee,
Wiki Su, Emma Yang, Donny Kwok, Ritsuko Shimizu, Charlotte
Greenfield, Martinne Geller, Dominique Rodriguez, Steven Jewkes,
Tomasso Mazzanti, Sabina Suzzi and Ingrid Melander; Writing by
Andrew Callus; Editing by Ian Geoghegan)