China luxury sales to get boost
Luxury companies are betting that Chinese shoppers who are buying fewer gold bars and lavish gifts for their business dealings will loosen the purse strings after a once-a-decade government change in Beijing.
The leadership transition beginning Nov. 8 will clear uncertainty on political appointees and economic policy, encourage business gifting and boost luxury sales next year, said Kent Wong, managing director at the world's largest jeweler, Chow Tai Fook Jewellery Group Ltd. After a year of slower consumer spending, any increase would be a windfall for Greater China's 27-billion euro ($35 billion) luxury market.
It is the world's second largest, according to Bain & Co., and benefits from purchases of ostentatious presents for business associates and bureaucrats. More-generous gifting would also aid next year's sales at companies, including Chow Tai Fook, Cartier watch seller Hengdeli Holdings Ltd. and LVMH Moet Hennessy Louis Vuitton SA. (MC)
"We expect industry sales to grow more than 10 percent in the second half of next year, driven by pent-up demand for luxury," said Wong.
"When new government officials take office, they will lay out policies and strategies that would clear investment uncertainties and pave the way for corporate gifting to pick up."
A rebound won't be immediate. China's economy expanded at its slowest pace in three years in the third quarter and consumers are still slow to spend.