The Chinese Rediscover Luxury

To ring in the Chinese New Year, Cathy Zhang is opening her wallet. A white-collar worker from eastern China’s Jiangsu province, the 33-year-old traveled to Hong Kong before the holiday. On a recent weekday afternoon, she navigated the crowds, looking for her favorite European luxury brands. Zhang spent HK$3,400 ($438) on a Gucci belt she plans to give her husband as a New Year’s gift. And she’s treating herself to a HK$10,500 Louis Vuitton handbag. “I give myself something special at the yearend,” she says.

As the Year of the Rooster begins on Jan. 28, the world’s luxury retailers are hoping Zhang and others are in the mood to celebrate. The slowing Chinese economy and President Xi Jinping’s anticorruption campaign depressed demand for bling in 2015-16, with total luxury consumption by Chinese falling about 4 percent worldwide in 2016, according to Bain. “Last year, the market—oh, my God,” says Alain Lam, executive director at Hong Kong-based Oriental Watch, which sells European timepieces that can command prices above HK$200,000. Net income at Oriental Watch fell HK$13.8 million in the 12 months ended in September.