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As spending by the wealthy declines, is China's bling era over?

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As spending by the wealthy declines, is China's bling era over?
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A survey by the magazine Hurun Report, which tracks the doings of wealthy Chinese, found their overall spending fell by 15 percent last year – the third consecutive year of decline.

Spending on gifts in particular was down by a quarter. The drop follows a government crackdown on corruption and gifting.

Chinese are increasing travelling and shopping overseas to get around government consumption taxes on luxury goods which are as high as 40 percent.

Over two-thirds of luxury spending by mainland Chinese was overseas in 2013, a factor that contributed to the United States overtaking China as the world’s fastest growing luxury market, according to a study by consultancy firm Bain & Company released in December.

Hurun Report survey also found many high net worth individuals – one in three – have already left, or are planning to leave China.

This all has big implications for high-end retailers who are seeing sales growth slowing there.

Luxury group Richemont, the maker of high-end IWC watches and Cartier jewellery, announced slower-than-expected sales growth in the third quarter, largely due to weaker Asian demand.

LVMH, the world’s biggest luxury goods group, has also reported sales growth slowed last year as Chinese demand cooled, prompting the company, and brands from rival Kering SA to offer goods with more discreet logos and in expensive materials.

The survey’s results are based on responses from 393 Chinese millionaires, or those with personal wealth of at least 10 million yuan (1.21 million euros). The Hurun Research Institute has conducted the survey for the past 10 years.