Many overseas makers of luxury goods are reluctant to enter the Chinese market, citing high duties and poor distribution.

That was the message yesterday at the four-day Luxury China exhibition.

The show, which runs through tomorrow at the Shanghai New International Expo Center, has 300 exhibitors from more than 20 countries and regions.

Their goods range from stylish sports watches to a diamond necklace priced at 8 million Hong Kong dollars (US$1 million).

Exhibitors agreed that a demand for luxury goods has emerged in China and is set to grow considerably in the next three to five years.

Diamond-jewelry sales on the mainland came to 6.1 billion yuan in 2000, four times as much as in 1990, industry sources said.

Shanghai has seen three premium stores or shopping malls - Lane Crawford, Plaza 66 and CITIC Square - open since 2000.

But five of seven executives questioned said they will wait before making substantial business efforts on the mainland.

"High import tariffs raise our cost and prevent over-seas companies from competing in the domestic market," said Daniele Baldan, commercial director of Italian jewelers Balestra 1882.

"Most other Italian companies are waiting for the Chinese government to change its mind . . . as part of China's promises on its (World Trade Organization) entry," Baldan said.

China bans the importation of gold products and imposes duty ranging from 17 percent to more than 100 percent on clothing, jewelry and other accessories.

Aaron Shum, president of a Hong Kong agent for Italian jewelers and watchmakers, said "finding qualified domestic distributors is not easy."

"Agencies that have both import rights and access to premium department stores or watch chains are preferred. But the number of such domestic partners is very limited," he said.

(eastday.com September 21, 2002)