Spending patterns of the super-rich have changed a lot, tells business analyst Shaun Rein at CNN, Now they focus on both art and exclusive travel. Sales of luxury goods are dropping, and many blame Xi Jinping´s anti-corruption drive, but the rich just make different choices, says Rein.
Chinese luxury spending growth has actually declined in the past twelve months with growth expected to drop 2% in 2015, according to an estimate by my companyChina Market Research Group.
Prada announced a 44% profit drop in the second quarter of 2015 due to slowing China sales, and French luxury group Kering, which owns Gucci, Alexander McQueen and Stella McCartney, saw sales drop 10% in the first quarter in Asia-Pacific.
Sales of Louis Vuitton have also been struggling
Many analysts point to President Xi Jinping‘s corruption crackdown for the profitability decline. Are they right?…
Corruption has played a part but the sales drop is not due solely to the corruption crackdown — the drop is a product of changing Chinese consumer tastes as people shift from buying tangible items to experiences.
Brands need to adjust to this new reality.
For example, my firm interviewed several dozen wealthy Chinese worth $12 million each this past year.
Respondents said they no longer gain status by buying expensive handbags.
Rather, they gain status by buying a third or a fourth home overseas in places like California or Sydney or by going on a once-in-a-lifetime, exotic trip — like wine tasting in France.
Sharing these experiences with friends on social media site WeChat is the new status symbol in China, not buying the latest Louis Vuitton luxury bag.
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