Beijing's anti-corruption drive hits China's luxury market
The slow growth of high-end items is in stark contrast to general sales, which climbed 13pc
The Communist Party's crackdown on corruption has hit luxury sales on the mainland, with consumption of luxury goods now lagging far behind retail sales growth.
According to global consultancy Bain & Co, the luxury market on the mainland stands at 116 billion yuan (HK$147 million) this year, up just 2 per cent from a year ago.
The party's efforts to curb wastage of public money and weed out corruption has had a large impact on "gifting luxury", Bain says, adding that watches and menswear have taken the biggest hit.
Most brands are conservative about expansion and focusing on store renovation
The growth of luxury sales on the mainland is in stark contrast to buoyant retail sales, which rose 13 per cent in the January-November period year on year.
Sales of watches dropped 11 per cent this year, the consultancy said. "Gifting luxury" accounted for up to 30 per cent of total sales on the mainland in past years when the market grew at a rapid clip, but it represented only a small portion this year, according to Bain.
The drop in luxury spending for gift purposes has stopped global brands from aggressively expanding in the world's most populated market.
"New store openings noticeably slowed down in 2013," Bain said in a report. "Most brands are conservative about future expansion and focusing more on store renovation, relocation and operational improvement."