After suffering a severe slowdown in 2012 due to the ‘wait and watch’ attitude of companies that suddenly stopped their purchases of "gifts", the luxury world in China awaited the orientations of the new Chinese government. For several months the press was filled with announcements highlighting the fight against corruption: the dismissal of "Watch Brother" (a minor official in the province of Shanxi) was an example, denounced in an internet campaign for having sported different luxury watches on each of his photos, and the campaign against officials who keep mistresses.
But behind the campaign against corruption (which continues) lies another positive aspect that is much more interesting: the frugality demanded of the entire Chinese political class. No more banquets, bouquets of flowers, alcohol flowing like water, no more luxury hotels. The consequences were immediate: a 10% decline in the demand for First and Business Class airline tickets, a drop of 20% in the frequentation of VIP airport lounges, lower turnover in luxury restaurants in Beijing (-35 %) and Shanghai (-20%), a decline of about 20% in hotel bookings in Zhejiang Province ... Even the Chinese liquor brands Wulangye and Moutai announced results below those expected for 2012: Moutai shares dropped by 19% between November 2012 and February 2013!
This frugality also has positive consequences for certain Chinese brands:
The Chinese government has announced that only Chinese brand cars can be ordered for official use. 412 models were identified, all of them Chinese: goodbye to the official black Audis! These orders will be placed with, among others, First Auto Works (FAW) and see a re-edition of the famous Red Flag limousine (which I mentioned here as far back as 4 September 2010).
During the recent visit of President Xi to Russia, the First Lady, Peng Liyuan, caused a sensation when she descended from the plane wearing a coat and carrying a bag made by ‘Exception’, a Chinese brand (see the March 22nd article in Jing Daily). Although she here conforms to a long tradition of First Ladies wearing their countries’ brands, the personality of Peng Liyuan, also a famous Chinese singer, only reinforces the strength of the message: the high-end Chinese brands will be promoted and defended by the authorities.