Chinese shoppers on their Lunar New Year holiday were less lavish than Hong Kong jewelers expected, curbed spending on beauty brands and spent less at South Korean stores. They may keep that pace in the coming Year of the Dragon, analysts say.
Holiday sales in China grew 16 percent to 470 billion yuan (US$75 billion), according to data from the Ministry of Commerce, the slowest pace since the 2009 financial crisis and 3 percentage points below last year’s increase. China is finding it is not immune to global economic forces and the slowdown is hitting Chinese consumers.
This may mean trouble for the growing number of foreign companies rushing into China, especially luxury brands, said Jason Yuan, an analyst at UOB Kay Hian in Shanghai.
“This year is going to be tough, probably the toughest year for many foreign luxury brands since they entered into China,” he said.
“Sales of jewelry and valuable watches during Chinese New Year were quite disappointing,” said Caroline Mak, chairperson of the Hong Kong Retail Management Association.
“Sales growth of over 30 percent last year is unsustainable against a worsening macro-economic backdrop,” she said.
Some member jewelers reported customers buying smaller diamonds than they used to, she said.
Hong Kong jeweler Chow Sang Sang Holdings International Ltd, whose sales grew as much as 28 percent in the first three days of the holiday, expects quarterly sales growth to slow to 10 percent in the second quarter from 15 percent in the first.