Are Corruption and Luxury Related?

China is cracking down on corruption. Finally, someone will be holding those greedy Chinese government officials accountable for their own actions. Gone are the days of bureaucratic bribery. Gone are the ugly, fat, smug, selfish, Chinese men thinking they can do what they want. Hooray!

But could this corruption crackdown be bad for the Chinese economy as officials move their money (and illegitimate children) out of the country and therefore out of the pockets of the Chinese people?

Some officials, like Wang, who spoke to NPR last December about the anti-corruption campaign in China, like *Guardians of the Galaxy *and drink Starbucks mochas. He doesn’t get bonuses anymore for Chinese New Year, and his income has fallen 30%. Businesses are suffering from the austerity measures. For one company, Shanghai Qizhe Shiye Ltd., overall sales of fireworks have dropped 40% and sales to government and government related companies fell 60% since last Chinese New Year. A publisher in Xiamen has also seen his business slow as more and more government related organizations stop ordering publications.

The effects are good, bad, and a little surprising.

China is changing. Not as many people want to be seen with the latest, sparkliest items. The wealth of the high-end Chinese consumer that luxury fashion houses used to enjoy are now seeing their revenues fall. The same goes for high end cars and fancy funerals. Demand for luxury goods is falling, but this is not surprising.

What is surprising is the segment that’s doing better than before: lingerie. It would make sense to see a fall in sales for expensive undergarments given the state of China’s luxury market, but many stores are seeing a surge of consumers purchasing expensive underwear. According to Frost & Sullivan, China’s lingerie sales totaled $20 billion last year and are estimated to grow by 18% this year. This attraction to pretty underthings may be the result of consumers’ growing distaste for flamboyant showcases of wealth, a shift in Chinese consumer tastes, or just “for the effect.”

-- Arlina Cai