Chinese consumers are perhaps more eager than anyone else around the world to latch onto global wealth trends. China is the country with the world’s largest number luxury buyers, accounting for some 29% of the global market. The country’s one million millionaires and more than 120 billionaires are part of a vibrant culture of flashy gift-giving and visible spending, where Scottish tweed suits, pricey handbags, fine French red wines, Chanel perfumes, and Swiss watches swap hands like mahjong tiles.
But China’s love affair with conspicuous consumption may be cooling. China’s consumers are no longer buying gaudy handbags and flashy watches at the same pace that they once did.
China’s richest spent 15% less overall in 2013 than they did in 2012, according to a recent study of Chinese millionaires by the Hurun Report, and 25% less on gifts.
That’s all meant an overall slowdown in spending on international brands, hurting a number of global luxury companies. Expensive spirits did not fare well last year, with companies like Remy Martin seeing sales of high-end cognac plummet at the end of 2013. Watches, which make up over one-fifth of the total Chinese luxury market, saw an 11% decline in 2013, and men’s brands like Cartier and Montblanc experienced decreases in popularity as well.
Why are China’s superrich suddenly reticent of buying into pomp and panache? President Xi Jinping, who took power in late 2012, is driving a vast anticorruption campaign from Beijing.
But the crackdown hasn’t entirely discouraged spending, and the Chinese are figuring out new ways to spend. Chinese consumers are now purchasing more luxury goods abroad, traveling to New York and Paris to buy handbags and pens, buying more than 60% of their luxury goods outside of the country. (In 2012, they were already far and away the world’s largest international tourism spenders, dishing out a total of $102 billion.) And they’re buying fewer flashy goods at home. Women, who are not as often in the discerning public eye, are buying goods at accelerating rates, with cosmetics and women’s apparel sales up 10% in 2013.
Read more at Time.com