The luxury sector in the West is worried about the Chinese. The steady flow Chinese tourist to Europe, Japan and other western destinations is drying up and fears are, it will die down to a trickle.
The luxury sector’s concerns are real. Chinese consumers, Bain & Co. says, generated a third of global luxury sales in 2017 — and mostly outside China’s border.
It started with the Chinese government clamping down on corruption, then on the gray market, including the counterfeit products markets. As the Chinese economy slowed, it reduced taxes on imported goods.
And more trouble is brewing. Just recently, during a meeting of the “Two Sessions,” it was suggested that China needs to regulate young people’s luxury consumption and restore a culture of frugality to rein in hedonism and consumerism among the Millennial and Gen-Z generations. The “Two Sessions” is a group of China’s social, economic and political elite that meets annually in early March to discuss urgent problems the country faces and their potential solutions, the online publication Jing reported.
China’s newly wealthy and new upper middle class is eager to show off its wealth. Also, since 2012, the Chinese are the most important spenders in international tourism, the World Tourism Organization, a United Nations agency, reported..
Place Vendome jewelers, luxury retailers such as LVMH, Capri (Michael Kors), but also cosmetic giants such as L’Oreal, are all noticing the effects. Less travel also means that cruise operators loose business, as do casinos, both in the USA – Las Vegas – as well as in Macau .
Meanwhile, the Chinese operations of these same luxury companies continue to flourish, while at a slower pace, in China.