Anti Corruption Leads To A Decline In Luxury Sales, And Chinese Market Is Still A Big Cake.

According to market observation, even in the context of economic slowdown and anti-corruption, China's retail industry should have a good performance in the coming year. But in other major Asian economies, such as Japan, in a recession environment, Retailer I'm afraid not.

China's anti-corruption measures have dealt a blow to global luxury sales in the past 18 months, and domestic economic slowdown has triggered concerns about consumer spending. China's GDP growth in the third quarter is the slowest in five years, and perhaps China will lose 7.5% of its annual growth target.

However, lower economic growth does not necessarily mean reducing retail consumption, said Julian Evans-Pritchard, a Chinese economist at Capital Economics in Singapore. "Most of the slowdown is due to slower investment rather than slower consumption."

As China's economy has shifted to the service sector, that is, labor-intensive, the growth of revenue is hindered. Layoffs and increased employment opportunities were not realized. By the end of September 2014, the figure was 10 million 700 thousand, which is already better than expected.

"Many people misunderstand that slowing economic growth means fewer jobs and unemployment, but the reality is that the service sector is picking up," Evans-Pritchard said. The decline in the price of foreign oil further helps consumers to have more disposable income for families, he added. "I think this is quite positive for most retail sales," he said.

Luxury sales are another story. Market watchers say the market outlook is still difficult.

Aaron Fischer, an analyst at CLSA in Hongkong, said he is still cautious about luxury goods, not just because of anti-corruption measures, but also because customers have become more knowledgeable and brand oriented. Analysts forecast a 10% increase in luxury consumption over the same period last year. This is not too bad, but some brands saw an increase of 100% over the same period last year from the sharp decline three years ago.

　　 Luxury goods The industry has become more complex. Three years ago, "strength brand" won, he said. Now customers are looking for more unique products. "In other markets, brand loyalty is not at the same level, making it difficult to retain customers," he said.

The main trend of luxury brands is products at a reasonable price, Fischer explained, noting that in a recent conference call, Prada talked about handbags at different price levels. "We prefer a wider price range. One of our favorite companies is Zhou Dafu, a jeweller in Hongkong who provides a wide range of products. The income level in China is still quite low. Many people can't spend 3000 euros [at the current rate of $3650 on a handbag.

China's consumer power is Hongkong's favorite. Hongkong has always been the main shopping destination for Chinese tourists. CLSA said, "very optimistic" the demand of Chinese tourists. We expect that in 2020, China's outbound departure will grow at a compound annual growth rate of 11%, reaching 200 million. Hongkong is facing more competition. The mainland of China is going abroad to go further and its market share is faster than expected. The strength of the dollar pegged to the Japanese yen and won won't help either because it encourages consumers in Hongkong and China to go to Japan or Korea to spend.

However, although China's consumer spending is holding up, textile and clothing The outlook for manufacturers is not very optimistic. Chinese manufacturers have been struggling to compete with rising labor and material costs, but losing market share and moving factories to cheaper Southeast Asian factories. To adapt to this, Chinese manufacturers have been trying to improve the value chain and improve efficiency, but the results are limited.

"If the Chinese government continues to raise wages by 15% to 20% a year, China will not be competitive in five years. To go upstream, you need fewer workers, but in other countries the population does not shrink. This is a game of waiting and watching. We can't afford to increase costs, "said Roger Lee, chief executive of TAL Apparel Group.

TAL produces 30 million shirts a year, and the number of employees in China is about 8000, but it has been expanding in less expensive Vietnam.

As for Japan, retailers may be relieved. The second sales tax increase has been postponed to 2017, but in a recession environment, they still expressed caution about consumer spending habits. On the positive side, tourists are heading to Japan for shopping madness. This trend is likely to continue, especially if the yen remains weak.

Matsuya 's Ginza store fashion director Miyako Sekimoto expects foreign tourists to contribute 12% to 20% per cent of Tokyo's department stores. According to preliminary data from Japan's National Tourism Administration, foreign visitors to Japan rose 28.2% to 12 million 180 thousand in 1-11 months. South Korea, mainland China and Taiwan are the main force of tourists every month.

Sekimoto said tourism consumption in Matsuya can compensate for the consumption of weak Japanese consumers. Eventually, sales of specialty stores increased by about 10% at the end of this year, she said.