The end of the road for luxury goods
Despite buying a vast amount of all the luxury goods the world produces, China's war on corruption has begun to spell the sector's demise.
Who'd be a corrupt Chinese official these days? We've written before about our suspicion that the new government's anti-corruption drive would hit luxury-goods sales in China.
It was all very well owning several Audi limos and a collection of $100,000 watches back in the days when overpriced accessories simply made everyone aware that you had made it. But today, big-brand luxury goods send a ratherdifferent message from China's rich to China's poor.
Instead of saying "look at me, I'm rich", they say "look at me I'm a thieving enemy of the people".Not quite the same, is it?
That's something everyone's beginning to notice. "China buys less bling", reads a headline in The Times today above a small story noting that Richemont (the Swiss firm that produces Cartier watches) is seeing sales stalling in Asia they didn't rise in the last quarter of last year for the first time in four years.
The story is picked up by the FT which notes that it isn't just Richemont that isn't seeing the sales it wants. In September, Swiss watch exports as a whole fell for the first time in three years, and in October and November, exports to Greater China in particular were down.
If I were holding shares in luxury goods firms, which (unless one of my investment trust holdings has them) I'm not, I would be reminding myself that, right now, China still buys about a quarter of all the world's luxury goods.
I'd also be noticing just how frightened China's officials are of the new war on corruption (another Times story today is about "a wave of secret property sales as officials scramble to offload incriminating luxury flats"). Then I think I would sell them. Shares in Richemont closed down 5.6% in Zurich yesterday.