A Chinese blogger has spurred a nationwide anti-corruption and anti-extravagance campaign after compiling and publishing photos of government officials wearing expensive watches that they could not reasonably afford. China’s new railway minister, Sheng Guangzu, was photographed wearing watches worth a combined 400,000 yuan ($64,544). The average salary for a government minister is roughly 65,000 yuan ($10,747). The discrepancy between the two statistics appears to be a recurring theme across the board for government officials, prompting backlash from Chinese president Xi Jinping.
President Xi launched a campaign “targeting the lavish buying habits of government officials.” Judging by the profits and losses reported in China by several luxury goods manufacturers, the campaign appears to have been a success.
Richemont, the Swiss luxury watch manufacturing company, experienced a flat-line in revenue from sales in China and Hong Kong, which account for more that 25 percent of company sales, during the third quarter of this fiscal year. The value of Richemont shares fell by 7.9 percent during the same time period.
The Prada Group experienced a drop in net income of over 28 percent for the fiscal year of 2014, with sales in China down 7 percent. To provide substance to the correlation between China’s anti-extravagance campaign—or perhaps China’s overall slowing economic growth– and Prada’s sales: this it the first time Prada reported a drop in profits since it was listed on the Hong Kong Stock Exchange in June 2011.
According to an HSBC Global Research report, Chinese buyers account for 25 percent of global luxury spending. Furthermore, the Australian Financial Review reported that as much as 60 percent of expensive watches in China are gifted to government officials.