BEIJING • China's luxury goods market is growing steadily again, nearly five years after it was knocked off course by President Xi Jinping's anti-corruption drive.
But the sector looks very different from back in 2012, when conspicuous spending by officials greasing the wheels of contracts was a key driver - spurring the crackdown on graft.
Today, newly affluent consumers unaffected by government curbs are setting the pace. China's rising middle class is so important that it is set to be a main engine for luxury growth globally, Bain & Co said in a recent report on the outlook to 2020.
"The anti-corruption campaign has removed the froth from the market, as spending and consumption is now very largely legitimate," Mr Luca Solca, head of luxury goods research at Exane BNP Paribas, said in an e-mail on Monday.
The composition of China's high-end spending has also changed over the past half a decade.
Giving presents used to be dominated by purchases for males, with luxury watches a particular favourite. The anti-graft push caused such sales to plunge. Now, the emphasis has switched to spending by women on designer handbags and costly perfume.
Swiss watch exports to Hong Kong, a favourite destination for Chinese buyers, fell by 25 per cent last year, and the value of the market has halved in four years, according to the Federation of the Swiss Watch Industry.
China's luxury market "was mainly dominated by the male segment", Professor Serena Rovai of France's La Rochelle Business School wrote in her book, Luxury The Chinese Way.
Now, there is a more prominent female presence, "thanks to the increasing purchasing power of women and the anti-corruption policy regarding often male-driven gift-giving", she wrote.
Companies that have seen strong results in China this year include Burberry Group, which reported "mid-teens percentage growth" in retail sales in the April-to-June quarter, with sales boosted by exposure on the WeChat social media platform.
Kering, the owner of Gucci Group, said mainland revenue from its luxury brands jumped by almost 50 per cent in the first half compared with the first six months of last year. Sales at its Yves Saint Laurent unit were up by nearly 67 per cent.
LVMH Moet Hennessy Louis Vuitton reported continuing robust upward momentum for wines and spirits, thanks in part to sales of Hennessy Cognac for Chinese New Year celebrations.
Results are proving so strong that Mr Erwan Rambourg, global co-head of consumer and retail research at HSBC Holdings, said that his bank's already bullish forecast of 10 per cent growth for China's luxury market this year - versus 7 per cent globally - could be surpassed.
The upturn, which started in the fourth quarter of last year, has been helped by a turnaround in China's exchange rate, along with gains in real estate and equities - all of which have boosted the spending power of the nation's consumers.