I’ve written here before about the possibility that the clampdown in corruption in China (such as it is) might have an impact on luxury goods sales. You can read past blog posts on the matter here and here. Is it happening yet?
Forbes notes that the “back rooms of Beijing restaurants” were “strangely quiet” in the run up to Chinese New Year in February, with some of the usual government banquets actually cancelled outright. At the same time, the anti-corruption campaign has already netted a good number of thieving bureaucrats and the public are increasingly willing to “take to social media to vent their disgust with government misbehaviour.”
So what’s a good indicator to watch if you are following all this? It could be mistresses. The rich and powerful in China have a long history of keeping numerous mistresses and recent years have seen no change to this trend: a recent study from the Renmin University of China showed that some 60% of Chinese officials under investigation for corruption have been keeping a full-time mistress, while The Times reports on one official who was found to be keeping some 47 mistresses – “a feat of romantic devotion that theoretically should be light years beyond his meager civil servants salary.”
The obvious problem for officials on the take is that having a mistress is expensive (love isn’t worth much to unmarried young women in modern China, but luxury goods are) – and so is in itself an indicator of corruption. But there is a new problem – mistresses are harder to keep secret than they once might have been.
As Forbes puts it, “mistresses of local officials or state company bosses cannot resist posting photos of themselves with luxury handbags, a new car or on a spa vacation. In most cases, they get the attention they crave”. Internet onlookers call for their boyfriends’ heads.
All this appears to be having an effect. The Times’ Leo Lewis, writing from Beijing, has visited a swish granite-clad 30-story apartment block “that comes with a bit of a reputation”. It is here that the mistresses of senior Communist officials are said to be “maintained in boutique studio flats”.
It is a localised cluster of the mistress economy supporting a hub of hairdressers, car dealers (“outside the factory floor in Modena it is hard to imagine such a concentration of Maseratis”) and jewellers. It is also in “slow collapse” as the flats are slowly vacated and “sales have evaporated in a new climate of fear.” We’ve been wary of luxury goods shares for some time. I think we still are.