Luxury sales sag in corruption-plagued Shanxi

A employee puts a handbag on the display shelf in a store in Hangzhou, Zhejiang in May 18, 2013. [Photo/IC]

In Taiyaun, capital of Shanxi, the bustling downtown shopping district, where luxury brands such as Louis Vuitton, Gucci, D&G and Hermes have opened stores, are experiencing dwindling customers in the run-up to the Lunar New Year.

Wealthy coal mine bosses and government officials have long been the patron of these luxury brands in Taiyuan. But with the crackdown going strong, stores are finding it hard to get by.

A sales manager surnamed Liang at one of the shopping malls in downtown Taiyuan said sales of renowned international brands have seen across-the-board decline during the first two months of this year.

Men's products have been hit the worst this year, with sales down 30 percent overall and even halved for some niche products.

Facing slumping sales, retailers have ramped up promotion efforts. But still sales shrink.

Growth of the luxury goods in the Chinese mainland have already weakened, with the market down one percent to 115 billion yuan in 2014, the first decline after eight years of consecutive growth, according to consulting firm Bain & Company.

According to Guo Xinping, a sociology professor at Shanxi University, the anti-corruption drive is a real game changer for the province.

"For a while, career success is measured, to some extent, by what you wear, but then the anti-correction campaign kicked in and effectively curbed official excess," Guo said.

The luxury industry will not crumble in China, Guo said, but its growth will moderate after years of unsustainable growth fueled by corruption and bribery.