Undercover Spending

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Corruption has been long-standing in China, but as the the government cracks down there have been noticeable trends in luxury good consumption. Last year luxury good sales fell 1%. The government has been criticizing officials who that wear designer clothes and flashy jewelry, causing individuals to spend their wealth in areas that aren’t as noticeable. Interestingly, that includes lingerie.

La Perla, an Italian brand, once had struggling sales in china, but last year they saw 42% growth. Common items you might find in these stores include $200 silk boxers and $3000 silk robes. Total lingerie sales in China were $20 billion in 2014 and 18% growth is forecasted for this year. As this trend continues more western brands are entering the luxury lingerie market including Victoria’s Secret, which opened up nine new Chinese stores in January. Not only are Western brands benefiting from this growth, but Chinese companies such as Embry Holdings developed a lingerie line for its high end clientele. It seems that the Chinese just love to spend money on luxury items no matter if it is seen or not. An excuse cited for the purchase of highly priced lingerie is that it improves your silhouette.

While the economy shifts to it’s ‘new normal’, consumer preferences are changing which is a potential explanation for the overall decline in luxury good sales. However the high demand for luxury lingerie can be attributed to the fact that lingerie is generally hidden. The government cannot discourage you from wearing highly priced designer goods if they do not know you have it.

Source: wsj on china’s corruption crackdown a boon for lingerie

2 Responses to Undercover Spending

  1. Do men wear luxury lingerie? — my assumption that this market is dominated by women’s expenditures may be wrong. Similarly, the gender composition of luxury clothing and accessory sales in China may also be different from the female-dominated market in other countries.

    Now if corrupt officials have money to burn — safer to turn into goods than to leave as cash — but hiding it makes sense, we might also find luxury (house) interiors another outlet for money so hot it is burning a hole in your pocket. Can you or others find parallel “hidden” outlets for money?

  2. I once read an article about how bribery item and system has developed over time in China. In the past, it was customary to hand in Hongbao with the money. Later, electronic device such as iPhone and DSLR cameras were popular kickback items. As Xi Jingping’s anti-corruption movement accelerated, commodities were replaced by electronic gift cards or travel tickets for they were already payed in advance by givers and only require code number for receivers. It is interesting to see how anti-corruption movement affect the sale and expansion of lingerie market.