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Foreign media said that to understand how important Chinese consumers have been to the global luxury goods industry in the past 15 years, one only needs to look at China's two years of vigorously cracking down on corruption and the devastating effects of luxury consumption on luxury sales.

According to a report on the British "Financial Times" website on June 6, the president of a well-known Swiss watch company said that before the anti-corruption campaign, 8 out of every 100 watches of his company were sold to China. Today, only 65 out of every 100 watches are bought by the Chinese.

In 2000, Chinese consumers accounted for less than 2% of global luxury goods consumption. At that time, there were 1.4 million luxury goods consumers in the world market and their spending was about 1300 billion pounds.

According to Bain & Company's latest global luxury goods market tracking, by the end of this year, there will be more than 3.5 million luxury goods consumers worldwide, and Chinese will account for more than 30%, and their consumption amount will reach 2300 billion pounds.

According to the report, after Xi Jinping launched a campaign to clean up rampant corruption in the Communist Party and the government in the past two years, this amazing growth has fallen sharply. For more than a decade, some top brands of luxury goods have been favored by businessmen, who used them to pay bribes to Communist Party officials who hold important positions in economic activities.

In addition to reducing overall purchases, the anti-corruption campaign has also changed the way Chinese people buy luxury goods. Stefano Connery, general manager of the luxury menswear brand Connery, said: "Since the start of this sport, Chinese buyers have become more and more focused on buying for themselves rather than buying for others."

He also said: "They have become more demanding and want to know more about what they want to buy and why they spend their money on it."

Due to exchange rate changes, high domestic consumption taxes on luxury goods and greater international liquidity, Chinese people have begun to choose to buy luxury goods abroad rather than in the retail stores that bloom all over China.

According to reports, this has become a big problem for suppliers of products such as French brandy, Swiss watches and Italian handbags, who have been aggressively expanding their stores in China in recent years.

People in the luxury goods industry say that several major global luxury brands have closed their stores in some more remote locations in China, and this trend is expected to continue.

"Financial Times" weekend edition columnist Sir Deng Yongqiang said: "Western luxury retail in China is rapidly declining, and I expect more luxury stores will have to close. The next two to three years will be more painful."

Deng Yongqiang pointed out that about 60% of China's luxury goods consumption is now carried out abroad, as technology-savvy consumers increasingly compare commodity prices online, this consumption outflow will accelerate.

According to the report, due to very high luxury goods consumption tax, increased costs of doing business in mainland China, and aggressive pricing strategies, buying luxury goods in the mainland may be much more expensive than buying the same products in Hong Kong, Japan or Europe.

In 2000, most Chinese couldn't even get a passport, let alone a visa, but now countries are eager to attract the generous Chinese. At the same time, global travel has become easier and cheaper than before.

Analysts pointed out that under the influence of foreign tastes, the Chinese have changed the habit of showing off their wealth in a high-profile way many years ago, but increasingly emphasized low-profile and quality.

According to the report, the rapid changes in China clearly show that the days when global luxury brands used to easily profit in this country for a long time are basically gone.

Analysts say that to succeed in this increasingly frugal environment, big brands need to focus on quality and strive to attract more discerning Chinese consumers. Well-known brands must also understand that most of their sales will take place outside of this country, so eye-catching flagship stores in places like Beijing and Shanghai will basically exist as expensive marketing tools.

The article is reproduced from Reference News Network

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