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 company China 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 strugglingMany 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.
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.
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