China to outgrow Hong Kong in luxury markets: report

The growth of luxury markets in China will outperform Hong Kong in the long term, based on a financial report.

"Although we think that Hong Kong will continue to be an important hub for luxury shopping within Asia, we maintain our view that the penetration of luxury goods within China still has plenty of growth potential and as luxury-conscious consumers in China travel and become more discerning among brand names and products, they will increasingly want to access them locally," Erwan Rambourg, an analyst at HSBC Ltd., said in a report.

Rambourg expected that store growth will be greater in mainland China than in Hong Kong, and thus space contribution to sales will thus be greater in mainland China, reports Yonhap News.

The analyst also said tax cuts on imported luxury goods will eventually come to China, although the likelihood is low in the short term.

 "All in all, any tax decrease would favor consumption locally as part of the incentive of purchasing in Hong Kong or Europe would diminish," the HSBC analyst said.

As Chinese consumers travel more, awareness of imported luxury brands should build and attract new consumers in the mainland, he added.