China's luxury products market on decline: study

Demand for China's much talked about luxury product market is declining for the first time in 8 years as Chinese tourists are opting to buy them abroad at cheaper prices and due to fear stoked by the anti-corruption campaign that netted thousands of officials.
Growth of luxury goods on the Chinese mainland was down one per cent to 115 billion yuan (USD 18.7 billion) in 2014, with watches, men's wear, and luggage and bags being hardest hit, the January report of the consultancy firm Bain & Co's 2014 China Luxury Market Study said.
China's luxury market has experienced a negative trend for the first time after eight years of consecutive growth, the study said.

Sales of Swiss luxury giant Richemont dropped four per cent in the third quarter (3Q) of 2014, an epitome of the poor performances of some prestigious names including Montblanc, Rolex, Armani and Ferrari, state-run Xinhua news agency quoted the report.
Hugo Boss shut seven mainland shops in 2014, followed by six shops from Ermenegildo Zegna and four from Burberry.
The amount of polished diamonds imported into China declined for a fourth consecutive month in January as a result of a weak domestic market as well as sluggish global economic recovery, according to the Shanghai Diamond Exchange.

Corruption and bribery were said to have driven unsustainable growth in China's luxury market, where expensive watches, bags and clothes were given in exchange for "favours".

Thousands of officials including top political and military officials were either punished or faced anti-graft probes last year.
A report from Fortune Character, a domestic luxury market research institute said Chinese customers brought a whopping 46 per cent of global luxury goods worth USD 106 billion in 2014, compared with a mere 25 billion dollars rung up domestically.
Among Bain's 1,400 respondents, 70 per cent said competitive pricing, convenient mobile applications and safer payment methods were all cited as determining factors.
Winning the country's growing middle class has become the priority for struggling luxury brands as a McKinsey & Co report predicted that the nouveau riche in second and third tier cities would be the new drivers of the domestic luxury market.

Brands such as Louis Vuitton, Gucci and Coach are all actively shifting their strategies -- ditching flashy logos being the most notable trend -- to woo this newly emerged group, who are believed to have a different understanding of "luxury".
Zhou Ting, president of the Fortune Character Institute said the "consumption drain" following the variation of information and purchase channels has prompted luxury brands to consciously slash prices in China.