With China's economy expected to weaken to 8.5 per cent this year, global luxury goods and branded items will most likely take also a beating as Chinese shoppers most definitely will trim on big-ticket item purchases in a bid to maintain and preserve wealth inside their hands and pockets.
The recently concluded Lunar New Year holiday did not provide much enough reason for a shopping binge of the country's supposedlygrowing middle class and a more affluent Chinese society, as data from the Ministry of Commerce on Monday showed that sales related to the entry of the year of the dragon on the mainland jumped to only 16 per cent to $75 billion. The latest figures, three percentage points below last year's increase, registered as the country's slowest holiday-related sales since the 2009 financial crisis.
"Sales of jewelry and valuable watches during Chinese New Year were quite disappointing," Caroline Mak, chairman of the Hong Kong Retail Management Association, said in Bloomberg News. In 2007, according to a Global Luxury Survey by Time magazine, the Chinese' top five preferred luxury watch brands in the country are Rolex, Omega, Cartier, Vacheron Constantin and Breitling.
"Sales growth of over 30 per cent last year is unsustainable against a worsening macro-economic backdrop," Mak said.
The Chinese Lunar holiday is one of the busiest shopping seasons, similar to the United States' Thanksgiving or the Philippines' long Christmas season. It is during this time when the biggest selling periods in China occurs.
But because China is already feeling the effects of the global fiscal crisis, it is but natural for its citizens to adopt a cautionary shopping and spending attitude on luxury goods and brand items.
"This may mean trouble for the growing number of foreign companies rushing into China, especially luxury brands," analyst Jason Yuan said.
"This year is going to be tough, probably the toughest year for many foreign luxury brands since they entered into China," he said.
Chinese buyers, who buy global luxury brand items more to imply their status symbol, cover a significant proportion of allluxury brand item buyers worldwide. In 2010, China ranked as the world's second largest consumer market for luxury goods and brand items, next to Japan. In a paper by the Chinese Academy of Social Sciences released in 2010, China's appetite for luxury goods and brand items pushed the market to grow to $9.4 billion by end of 2009, accounting to a 27.5 per cent share of the world's luxury goods market and showing a jump of 25 per cent over 2008.
Jewelers also reported dismal sales over the recently concluded Lunar New Year holiday season. Compared last year when consumers bought everything that their eyes first laid on, this year was the exact opposite as buyers chose to look around and just window shop.
There were some who still bought diamond jewelries, but opted for smaller diamonds definitely because of its cheaper price.
An assistant at a Hong Kong cosmetics store best summed the shopping mentality of Chinese nationals these days, "People are browsing. They don't buy instantly."