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Why your Apple Watch costs £30 more in the UK than in China

Apple aficionados are happy to pay a little extra for their favourite gadgets, but depending on where you live, there's an additional cost you may not be so happy about. For buyers in the UK, the Apple Watch costs £67 more than it does in America – that's 28% on top of the item's US value. It's no secret that luxury goods are more expensive in some countries than in others, but why is there such a big difference, and can shoppers really save money by travelling abroad to buy?

Raising the price

The biggest culprit that pushes prices up is taxation – Apple claims this is the reason for its wildly different product costs. In the UK, VAT is 20%, while in the US, sales tax is decided by the state and added on top of the stated price; it varies from 1.69% to 9.44%.

Advertising costs push up prices too, and they can fluctuate substantially. Advertising on a billboard in the UK, for example, costs around £800-£1,000 per month, whereas in Times Square, you’d be paying roughly £220,000 for the same period.

Is it better to buy abroad?

If you’re planning a big shopping spree, the savings you'd make can actually cover the price of a flight and hotel abroad. For example, a women's cashmere coat from American clothing company J. Crew costs £1,250 in the UK and $1,250 in the US. Factoring in the exchange rate, a UK customer would save roughly £425 – enough for a return flight to New York.

These shopping holidays are becoming increasingly popular in countries like China, the world's biggest consumer of luxury goods. Taxes, distribution and advertising costs have pushed the price of brands like Chanel and Louis Vuitton up by around 50% in the country, so shoppers are saving their money and buying abroad. 

The exchange rate has a big impact on cost effectiveness. It's a good idea to check your currency's relative strength before you go. The dollar is currently strong, so US buyers will have more purchasing power, but heading there from other countries will be less lucrative. Exchange rate fees can be an extra cost too, so before you go, make sure to compare prices and find the cheapest way to transfer money abroad.

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