Luxury goods pdf

Instead of VAT and consumption tax added, they only include a flat rate for the tariff. According to the regulations by the General Administration of Customs, there are two situations when customs should not impose a duty: 1 goods are limited to private use and 2 it is a reasonable quantity, which is under the value of RMB for residents and RMB for non-residents who enter China.

According to Zhou and Yang , it could have the following effects on Chinese economy: 1 Increase consumption: The number of imports would increase and domestic consumption of luxury goods increase. Therefore, overall sales would go up and more international luxury brands would enter the Chinese markets.

More goods would be sold domestically instead of being purchase abroad which would keep more profit turn-over and employment in China Bernard, Therefore, if the products would become available cheaper in Mainland China, they would also consider to travel in China instead of going abroad. The Chinese tourism industry would benefit from that. If the rates were adjusted, the black market would lose its advantages, and the government could collect the lowered tax rates on all purchased goods.

There are several reasons to reform the rates, and some benefits for the Chinese economy were identified. Also, the definition of luxury good should be review and adjusted to the improved economy of China. Chinese people are richer than ever before, and the positive development has made former luxury goods to daily goods for a lot of the population. But of course, decreasing the tariffs also can have negative effects on the local firms.

To get the best outcome for the Chinese companies, the government can also take the following measures and policies to avoid negative effects. Also, there is a lack of professional executives in luxury management. In conclusion, the Chinese luxury consumption is continuously increasing and developing and is therefore a very promising market. The analysis in this paper shows the advantages of cutting luxury import tariffs on Chinese economy.

But the domestic industry also need to be fostered to compete with the international luxury brands. Since the Chinese luxury industry is still in the initial stage, there is a lot of potential for the future of the luxury market and industry in China.

The magic of luxury goods. David, L. Towards an economic analysis of multinational hotel companies. Dubois, B. Paternault, Observations: Understanding the world of international luxury brands. Eastman, J. Stephen, Relationship between status consumption and materialism: A cross culture comparison of Chinese, Mexican and American students. Francis, P. Jonathan, S. Franck, The marketing of luxury goods: An exploratory study.

Kapferer, J. Managing luxury brands. Brand Manag. Application of this statistic is treating it as a reflection of the living standard of a country.

As this proportion increases, the country is by nature poorer, less developed. Conversely a low Engel coefficient indicates a higher standard of living. This approach has advantage over the commonly used prosperity indicator of gross domestic product because the local price level is law is one of the best-proven empirical laws of economics. The special character of necessity goods causes that people are more likely to buy necessity goods even their prices rises but they are less likely to buy luxury goods when their prices increase except paradoxes.

Additionally necessity goods very often do not have close substitutes and they are produced by monopolies, especially state-owned. According to principles of market economy, the market price of goods depends on quantity demanded and quantity supplied.

Therefore some customers can be excluded from the market. In case of ordinary, basic goods states usually subsidize their production or monopolize the production process. This intervention guarantees low prices and availability of goods to all customers, but often results in lowering the quality of products. Necessities understood as a group of goods are not very often analysed by statistical offices. One of exceptions is Gallup Group.

In economic literature there are many synonyms or expression closely related to luxury goods as premium goods, status goods, discretionary goods, superior goods or Veblen are the most popular and recognizable expression, this is also the term with the broadest meaning.

It is light, luminosity or luminance and traditionally luxury has been associated with was changeable and very often also negative. Before the middle of the 18th century, most commentators believed that working- widely advocated. The main change in understanding of luxury and its social justification took place between the 17th and the 19th centuries [8].

It was started by discussion between David Hume and his contemporaries which illustrated the level of disagreement in economic discourse during that time [9]. Marx, T. Veblen, G. Simmel, W. Sombart, M. Weber, J.

Locke, A. Smith and others. Long history, changeable attitude to luxury from total acceptance to total negation of its justification in economy and subjective character of the concept have influenced the lack of consensus regarding the widely accepted definition of according to person, place or time.

As mentioned above luxury goods are type of normal goods which are characterized by income elasticity of demand higher than 1. It means that customers buy proportionately more of a particular good compared to a percentage change in their income.

In other words: increase in income is accompanied by a proportionally larger increase in quantity demanded. The special example of luxury goods are Veblen goods.

Veblen goods are types of luxury goods for which the quantity demanded increases as the price increases which is an apparent contradiction of the law of demand [11]. Therefore this A higher price may make a product more desirable as it becomes the symbol of higher status and social position, it is also explained by the human behavior called conspicuous consumption and conspicuous leisure [12].

Among luxury goods there are also positional goods, goods which are available to a few. It means that it is the opposition to necessity goods. Possessing luxuries satisfies people rather than simply trying to alleviate a state of discomfort, like in the case of necessities.

However the decision of what is desirable, more than necessary and ordinary is relative and depends on many social conditions, individual preferences, etc. Compared with the traditional buyers, new consumers of luxury goods usually have different characteristics, lifestyles, desires, and purchasing behavior. Therefore, they also have different consumption motives and purchase intentions. Vigneron and Johnson [14] indicate that consumer behavior regarding luxury goods is the result of multiple motivations, namely three types of interpersonal effects on luxury goods consumption: specifically the Veblen effect Conspicuous Perception , Snob effect Uniqueness Perception , and Bandwagon effect Social Value Perception , and two types of personal effects, namely the Hedonism effect Emotional Value Perception , and Perfectionism effect Quality Value Perception [12].

Luxury goods are produced for particular type of consumers, who are from the top of income distribution. While necessities can be possessed by virtually everyone, luxuries are available exclusively to only a few people or at least only on rare occasions. Unlike necessities, individuals buy luxuries not only for their intrinsic quality but also to confirm and show their social and economic status.

Bearden and Etzel [l5] described the necessity-luxury dimension as a continuum ranging from absolute necessity to absolute luxury. They created the six-point Likert scale y for everyone" in order to measure the luxuriousness of many product categories. They defined luxury [l5] as good not needed for ordinary, necessary day-to-day living, so in opposition to necessities. People purchase necessities to satisfy basic, mainly material needs.

In opposition individuals buy luxuries not only for their intrinsic quality but also to signal their wealth and confirm social status.

Value perception of luxury goods depends on their rarity and uniqueness. Luxury goods are produced to satisfy individual needs. Their price is the symbol of status but the most important is extraordinary quality, aesthetics and polysensuality.

Literature often associates the demand for luxury goods with the desire for distinction, where individual valuation of a given good decreases as the number of individuals purchasing it increases.

The quality is extremely important and this excellent quality can be obtained usually by two ways: by using high- quality raw materials and by detailed workmanship which made luxuries more rare and unique. It is impossible to indicate all points in history of economic thought where necessities and luxuries appeared, so the choice is very subjective.

The paper focuses on description of the nature of analyzed economic categories and tries to indicate their theoretical background. It also indicates the main similarities and differences between necessities and luxuries in economics. The main hypothesis of the paper states that in economics the understanding of luxury goods has been changed while the perceiving of necessity goods remains unchanged. As it is shown, in the past the understanding of luxury was changing along with the change in attitude to it.

Classical economics justified the existence of luxury and human desire to getting richer. This need is understood as a necessary factor of progress and development. Nowadays scholars argue over the limits of wealth and reducing income inequalities because the distance between the poorest and the riches increases.

It suggest that distance between the poor and the rich is still huge and economic policy is not able to reduce it. Poverty remain unchanged, the wealth grows, income inequalities increases.

New York: W. Journal of Brand Management, vol. Approaching Religion, vol.