China lux­ury sales to get boost

The Pak Banker - - Front Page -

BEI­JING

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.

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