22
May
2013

For every ‘problem’ there is a solution

I am in no doubt that many senior managers working for luxury brands around the globe, know little about the nuances of Chinese culture, and the potential affect these can have on business and personal lives. Often what they might regard as a minor blip can be a big deal here, and sometimes, something that in the west would be seen as a major problem, is resolved quite simply.

Since coming into office, the new leadership in China has cracked down on the inappropriate use of public funds and abuse of positions of office. The gift giving restrictions were the first to hit the headlines, which caused sharp intakes of breath from many in the luxury sector as they waited for the fall out. The challenge in this case was and still is that gift giving has been predominantly between government and state owned enterprises or to them from others.

In recent weeks, we have seen other sectors affected. Commercial developers have been affected, as new rules have been implemented to prevent local governments or state owned companies from building offices that are far to big for their needs. A specific office space policy now exists to stop offices the size of palaces, or huge high-rise blocks being constructed.

Most recently its been luxury cars that have taken the hit, and in fact sales of many of the top brands have been cut as a result. Firstly, official government registration plates are not supposed to appear on luxury cars, a practice that was quite common in the past, and then restrictions in terms of the types and values of cars officials can be driven around in

So on the face of it, the luxury sector has been hit in a big way since September, and to the outside observer things are going from bad to worse. However, the reality here is not the reality elsewhere in the world, and there is always a way around a challenge like this. From an insiders perspective, we expect a downturn for a while, but things will pick up again as ‘solutions’ are found around the problem, and life goes on. Sales of luxury gifts, cars and even office space will pick up and the current ‘blip’ in this huge market will be forgotten, and we will all wonder what the fuss was about.

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