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The Star Online: Metro: Sunday Metro

Luxury market cooling down

Posted: 21 Dec 2013 08:00 AM PST

The government's anti-corruption and frugality campaign has been cited as one of the major factors dragging down growth in the country's high-end goods market.

BEIJING: Growth in luxury spending on the Chinese mainland is expected to cool to just 2% in 2013, down from 7% last year and a staggering 30% in 2011, according to Bain and Co's annual "China Luxury Goods Market Study" published on Tuesday.

The growth in China is moderate compared with global expansion of 6%. Total luxury spending of 116 billion yuan (RM63.45bil) in the country represented just 7% of sales worldwide.

The impact of the government crackdown on graft and extravagant spending is starting to have an effect, as is evident in the precarious drop in the sales of luxury watches and men's wear, two categories that featured prominently in gift purchases.

Watches, which make up more than one-fifth of the domestic luxury market, witnessed an 11% decline in 2013. Men's wear also shifted from being a growth category in prior years to slipping 1%.

"An interesting finding is that the higher the price for watches, the higher the decline," said Bruno Lannes, a Bain partner in China and lead author of the study.

Lannes said such momentum is likely to extend into 2014.

Gifting has long been identified as a major reason for luxury purchases in China. This year's research, however, found a significant drop in gifting among first-tier city consumers.

High-end businesses are feeling the pinch as stern government measures cut deeper into revenues.

LVMH, the world's largest luxury group by sales, suffered a 6% cut in net profit in the first half of 2013.

Handbag and accessory maker Gucci's quarterly growth of 0.6% was the slowest in four years.

This is largely attributable to "a consumer environment in China that has become more negative", Jean-Marc Duplaix, chief financial officer of Gucci's parent Kering, said during a conference call in October.

Swiss watch exports to China fell 13.9% year-on-year from January to October, according to the Federation of the Swiss Watch Industry.

Investors are therefore increasingly concerned that China's tightening on customary gifts for favours, which often involved watches, would overshadow related businesses.

Dai Qiming, who recently quit his job as a civil servant at Shanghai's Xintiandi sub-district office, said he saw a sharp decline in receiving gifts by government officials in the first half of 2013.

"Some companies used to give out high-end bags or watches to my supervisors. Nowadays, none of them dare to receive the gifts because they don't want to risk losing their jobs," said Dai.

Despite the slowdown, Chinese remain the largest luxury buyers worldwide, with purchases constituting 29% of the global market, an increase of four percentage points versus last year.

Up to two-thirds of such luxury spending occurred overseas, the study showed, as the quick take-off of outbound tourism nurtured a growing number of price-savvy Chinese customers.

A majority of them are now wising up to the considerable price differences between domestic and overseas markets, which can be up to 40% for certain items, said Qi Xiaozhai, dean of the Shanghai Commercial Economic Research Centre. This has in part squeezed the amount spent domestically, Qi noted.

One bright spot is the prolific growth in women's categories, with women's wear and shoes showing robust growth from 8% to 10%, said Lannes.

"Much of this performance stems from women's increasing sophistication and influence, which has driven men's and women's share of luxury spending in China to equal levels in 2013. This marks a rapid evolution from a starting point of over 90% spending by men in 1995," he said.

Dear Santa, all we want for Christmas is ...

Posted: 21 Dec 2013 08:00 AM PST

TAIPEH: Ho ho ho! It's that time of the year again when children around the world start thinking about writing their letter to Santa Claus and wondering when Rudolph and Santa will land at their home with all their gifts.

If you haven't sent your letter yet, we would remind you that it is always a good idea to write a Christmas wish list that will make Santa and his elves smile – they have been busy with Christmas preparations over the past few weeks – and maybe even lead to some amazing Christmas gifts.

With 2013 coming to a close, it is also a time for us to look back, cheer and reflect on Taiwan's 2013. At the same time, we should look ahead and plan what we wish for Taiwan over the forthcoming 12 months in an open letter to Santa. We are not too greedy, so we only have a few requests!

Dear Santa, we know that you are extremely busy at the North Pole at the moment, making sure all your presents, including ours, are ready and wrapped for Christmas Eve. If you are planning to give away any Made-in-Taiwan foodstuff, however, we need to remind you to be extremely careful with local products due to several ongoing food scandals across the island. The food scares have been going on from the start of this year and while the government said it is doing everything it can to prevent similar cases, we have lost our confidence in Taiwanese food manufacturers. From cooking oil to milk and rice, nothing is safe here any more, so our first wish would be that the government continually updates its inspection techniques and puts more efforts into prevention.

"Caution is the eldest son of wisdom," said Victor Hugo, meaning that we must fight against impulse and whim to give more consideration into our decisions. In the meantime, Santa, please help us make our food safer by bringing more of Hugo's books to our decision makers.

We wish this advice would also apply to leaders from our former diplomatic ally, The Gambia, which cut official diplomatic ties with Taiwan on Nov 14 without prior notice. After 18 years of partnership, Gambian President Yahya Jammeh terminated our relationship for some vague reasons related to his (people's) strategic interest.

Although it is perhaps time to pause and give more considerations to the country's "flexible diplomacy" policy, we also hope that you (Santa) can remind us in the future of this diplomatic fiasco when the next generation of leaders from both countries asks us to endorse their plans for a new "strategic partnership".

As you might already notice, politicians have a very bad memory, in that they only remember what is in their interest, so our third wish this year is that nobody ever forgets the Ma-Wang conflict of September 2013. After prosecutors claimed that Legislative Speaker Wang Jin-pyng used his influence to persuade Justice Minister Tseng Yung-fu in a court case, President Ma Ying-jeou stated that Wang's act of influence-peddling was the most "shameful day" in the history of democracy and rule of law in Taiwan. Yet, if you haven't noticed, everything is back to normal at the Legislative Yuan (Taiwan's parliament) where they recently celebrated Christmas with some nice Christmas carols.

"Back to normal" also summarises the situation at the Democratic Progressive Party (DPP), where they have been crafting a new "China Policy" for the last eight years. The latest promises were made by leaders of the opposition party on Nov 9, when they announced their willingness to enter into political talks with mainland China and said they would finalise their preliminary conclusion in January 2014. The party hopes to convince the public that they can deal with cross-strait relations better than the Chinese Nationalist Party (KMT), but we believe that they might need a little help with drafting their conclusions.

Last but not least, our last wish goes to the family of the Army Corporal Hung Chung-Chiu who suddenly passed away on July 4. Hung was only three days away from completing his military service when he tragically died of organ failure brought on by heatstroke. He was sent to military detention for carrying a camera phone, and subjected to arduous punishment exercises, which led to his death. We wish that you can bring some comfort to his family and hope that you can help prevent this kind of tragedy from happening again. Taiwan's military should seriously consider further reforms to the management of military detention.

To this end, we wish you all a Merry Christmas and thank you for reading and sharing some thoughts with The China Post this year.

Thai opposition to boycott polls

Posted: 21 Dec 2013 08:00 AM PST

BANGKOK: Thailand's main opposition Democrat Party announced it would boycott snap elections in the crisis-gripped kingdom, piling further pressure on the government as protesters prepare to ramp up rallies aimed at suspending democracy.

Party members – who resigned as MPs en masse to join the demonstrations that have rocked Bangkok for weeks – voted yesterday against participating, according to Democrat leader Abhisit Vejjajiva.

"The Democrats think the elections will not solve the country's problems, lead to reform or regain people's faith in political parties," he said in a press conference following the meeting.

He added that the decision would not affect the "legitimacy" of the vote and the party would not "obstruct" polling.

Embattled premier Yingluck Shinawatra, who called the Feb 2 elections in an effort to cool tensions, has insisted the polls will go ahead regardless of the Democrat decision.

But the move throws Democrat backing firmly behind protesters who are calling for democracy to be paused for an unelected "people's council" to be installed to enact reforms before a future vote.

Demonstrators want to rid the country of Yingluck and the influence of her Dubai-based brother Thaksin – an ousted billionaire ex-premier who is despised by a coalition of the southern Thai poor, Bangkok middle classes and elite.

Thailand has seen several bouts of political turmoil since Thaksin was ousted in a military coup in 2006, with rival protests sometimes resulting in bloody unrest.

"I think if the Democrats ran in the election, we might get the most votes and be able to form a government – but then again people will be mobilised to rally against our party," former premier Abhisit added.

The boycott announcement comes a day ahead of a planned major rally by the protesters, who are led by firebrand former Democrat MP Suthep Thaugsuban.

Suthep, who has vowed to rid Thailand of the "Thaksin regime", has dismissed the elections, saying it will install another government allied to the divisive former premier.

He has appealed for army support, in a country which has seen 18 successful or attempted coups since 1932. But the military has indicated it is unlikely to intervene directly this time.

The Democrats previously boycotted elections in 2006, helping to create the political uncertainty which heralded the military intervention that ousted Thaksin.

The latest boycott could lead to a similar situation, with polls "nullified" on technical grounds, said Pavin Chachavalpongpun, a former Thai diplomat and associate professor at the Centre for South-East Asian Studies at Japan's Kyoto University.

But he said the party "might as well die, they would become so irrelevant" if they did not participate.

"Walking away from it, it's just bad on the part of the Democrat Party. Especially if (the) international community is now watching the Thai situation so closely," he said in comments ahead of the meeting.

Yingluck yesterday offered to set up a body to implement reforms, in the latest olive branch to opponents. — AFP


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