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| Ashley Dudarenok |
Looking back at the demand from our clients at the China Speakers Bureau over the past few years, we see a distinct development into the future, into the year of the ape. |
| +Shaun Rein |
Chinese corporates and wealthy consumers are taking gift-giving down a notch this Lunar New Year, opting for iPhones instead of Birkin bags or Louis Vuitton wallets.
The annual holiday, which falls on February 19-20 this year, is a time of gift exchange between family, colleagues and business contacts.
"The iPhone 6 has replaced luxury items as a key gift this Chinese New Year," Shaun Rein, founder and managing director of the China Market Research Group told CNBC.
"Corporates, for example, used to buy luxury products to give their high performing employees, now they are giving iPhones because they more reasonably priced and still considered premium enough," he said.
Choosing to gift iPhones over a designer handbag fits in the vein of the government's corruption crackdown, Rein noted.
"When you gift a Berkin bag—it's too high profile everyone knows its super expensive and in this anti-graft campaign brings about questions of ill-gotten gains and corruption," he said...
China's luxury sector has been reeling from Beijing's crackdown on conspicuous spending, the economic slowdown and changing consumer preferences.
"The anti-corruption drive is more serious than most analysts realize," said Rein.
It impacts the luxury sector on three fronts: Government officials can no longer get away with using public funds to buy luxury items; businessman are buying fewer luxury gifts for government officials; and corporations are opting for less flashy products to reward their employees.More at CNBC.
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| +Wei Gu |
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| Sara Hsu |
Christmas decorations have experienced year-on-year increases, as restaurants and shopping malls decorate to promote their Christmas discounts. Clothes, toys and shoes are among the most common gifts. As in the U.S., Christmas shopping online is also increasingly popular. High-end shoppers purchase goods that average 1,379 RMB ($221) in price, according to Horizon Research Consultancy Group. Apples, an important Christmas symbol in China, have sold for high prices because of growing demand. However, some observers find that spending on restaurants has declined, despite attempts to promote specials such as “Christmas dinner.”
Exports of Chinese made gifts and decorations also rises over the Christmas period. China is the world’s largest exporter of Christmas supplies, shipping to almost 200 countries and regions. Exports of Christmas goodsincreased about 30 percent year on year in the first eleven months of 2014, up from a 12.3 percent increase the year before, and a 13.6 percent decline in 2012. Most of these exports were shipped to the United States and the European Union, and profit margins between production in China and sales in Western nations are high. For example, a set of Christmas lights costs $2.80 to produce in China, but can be sold for $20 overseas.
Not all goods have witnessed mounting demand over the holidays. China’s anti-corruption campaign has suppressed demand for luxury goods since November 2012, when the campaign was announced. Luxury goods, which were frequently purchased by or for government officials, have been less popular. Bain and Company has reported that sales of luxury goods in China fell by 1 percent in 2014.
Consumption is viewed as an important means for bolstering growth. China’s leadership cut interest rates at the end of November in an attempt to promote consumer spending. Additional lending restrictions will be lifted, according to banking officials informed of the central bank’s intention to ease monetary policy. These policies promise to buoy economic activity in the face of China’s current economic slowdown. Increased consumption resulting from these policies will encourage spending during China’s long “spending season.”
The next major holiday in “spending season” will be Chinese New Year, starting in February 2015. In 2014, retail sales for that period amounted to 610.7 billion RMB ($100.8 billion), according to the Ministry of Commerce, and have been rising in the past several years. Tourism and entertainment sector are expected to perform well.
China’s leadership hopes to instill higher levels of consumption as a permanent feature in the economy. Christmas spending lays out an important example of the consumer mentality, purchasing goods to enhance the standard of living and quality of life. Touch wood that China’s “spending season” will extend to the rest of the year.More in the Diplomat.
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| Kaiser Kuo |
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| Year of the Snake 2013 (Photo credit: kenjonbro) |
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| Zhang Lijia |
It is the oldest, grandest and most colourful festival in China with a history of more than four thousand years. It is called chunjie in Chinese – spring festival. It started when people worshipped their ancestors in the end of the year with sacrifice, bathed themselves and cleaned up the house. The celebration was also to welcome the coming of the spring. It follows the Chinese lunar calendar, which means it varies from one year to another, usually from Mid Jan to the end of Feb.
It is the big occasion for the family to get together. Every year, when millions of migrant workers return to their home village for the Spring Festival, they form a tidal wave.
2013 will be the Year of Snake, to be precise black water snake. According to the traditional wisdom, there may be danger and uncertainly. So it is time to watch out your pocket, avoiding spending too much and reckless actions. If you are thinking to start-up a company or get married, consider it carefully. If you exercise caution, in the end, things will work out just fine.More at Zhang Lijia's weblog.
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| Paul French |
Paul French, Chief China Market Strategist at research firm Mintel, said China's current leadership transition meant 2013 was a particularly crucial moment for gift-givers.
"You're a company and you need permits for something and you might be dealing with a new guy. So [it is] time to make nice," he said, pointing to luxury watch brands Patek Philippe and Vacheron Constantin as the gifts of the moment.
Mr French said the government's frugality drive was likely to trigger an initial "over-interpretation" among spendthrift officials before business as usual resumed.
"It's like when they tell the banks to ease up on lending: the bank managers all just stop lending and then it all sort of fizzles out." "You get this big over-interpretation of it and everyone very publicly tries to show [they are following the rules] and then it all creeps back again. I don't know if that is what is going to happen this time.
Maybe they are going to be more serious about it," he added.More in The Telegraph.
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| Chinese New Year fireworks (Photo credit: bluepoppy6) |
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| Local man setting off a firework in downtown Shanghai, during Chinese New Year. (Photo credit: Wikipedia) |
