China’s luxury-goods market is growing steadily again, nearly five years after it was knocked off course by President Xi Jinping’s anti-corruption drive.
But the sector looks very different from back in 2012, when conspicuous spending by officials greasing the wheels of contracts was a key driver — spurring the crackdown on graft. Today, newly affluent consumers unaffected by government curbs are setting the pace. China’s rising middle class is so important that it’s set to be a main engine for luxury growth globally, Bain & Co. said in a recent report on the outlook to 2020.
“The anti-corruption campaign has removed the froth from the market, as spending and consumption is now very largely legitimate,” Luca Solca, head of luxury goods research at Exane BNP Paribas, said in a Sept. 25 email.
The composition of China’s high-end spending has also changed over the past half decade. Gift-giving used to be dominated by purchases for males, with luxury watches a particular favorite. The anti-graft push caused such sales to plunge. Now, the emphasis has switched to spending by women on designer handbags and costly perfume.
Swiss watch exports to Hong Kong, a favorite destination for Chinese buyers, fell 25 percent last year, and the value of the market has halved in four years, according to the Federation of the Swiss Watch Industry.
China’s luxury market “was mainly dominated by the male segment,” Serena Rovai, a professor at France’s La Rochelle Business School, wrote in her book “Luxury the Chinese Way.” Now, there’s a more prominent female presence, “thanks to the increasing purchasing power of women and the anti-corruption policy regarding often male-driven gift-giving,” she wrote.
Companies that have seen strong results in China this year include:
- Burberry Group Plc reported…