Rich Chinese still hungry for luxury goods

SHANGHAI • About half of Chinese consumers say they’re planning to spend more on luxury purchases this year in a recent survey as concerns mount that the slowing and trade war-battered economy may dent demand in the key market for premium goods.

Weeks after brands from Apple Inc to Richemont said that lower than expected Chinese demand is hurting earnings, a new survey of 1,385 affluent consumers by research firm CSG and public relations agency Ruder Finn showed that 46% of respondents in China and 32% in Hong Kong said they planned to spend more on luxury purchases this year compared to 2018.

While the results for China is in line with survey findings from a couple years ago, CSG’s ED Simon Tye said the trend showed a softening.

“Over the last few years, we saw Chinese confidence going up and up,” he said. “For the first time in a long time, we are not seeing major growth sentiment in China.”

The global luxury industry has become increasingly reliant on China’s wealthy to drive growth and a perceived pull back in spending has been a consistent drag on luxury shares in recent months.

The survey results signal some relief for makers of premium goods counting on China, which accounts for a third of the US$1 trillion (RM4.1 trillion) luxury market worldwide.

Earlier this month, Apple cut its quarterly revenue outlook blaming slower than expected growth in China, setting off declines in the shares of luxury stocks from LVMH Moet Hennessy Louis Vuitton to Burberry Group plc. “Affluent consumers are still optimistic, however the energy is a little bit duller this year,” Tye said.

The average Chinese shopper in the survey, conducted between Nov 30 and Dec 11, spent more than US$35,000 on luxury goods last year, according to the report released yesterday.

In 2016, when the survey’s results were last announced publicly, 42% of Chinese shoppers said they would spend more on premium goods.

Companies, from jeweller Tiffany & Co to bespoke menswear brand Ermenegildo Zegna are shifting to boost domestic sales in China.

Brands are also focusing on how to incorporate Chinese elements to gain attention locally: Burberry recently launched a Chinese New Year (CNY) capsule collection and has a limited edition line sold only over WeChat, for example.

The necessity of paying attention to local sensibilities was brought home after Dolce & Gabbana (D&G) faced a boycott last November for a marketing campaign and incendiary comments by co-founder Stefano Gabbana’s that were criticised by some Chinese consumers as racist. D&G items are still blocked on Chinese e-commerce platforms, two months after an apology from the designers. — Bloomberg