– There are two types of luxury in this world – that which endlessly proclaims itself luxury but is really just upper mass market factory-produced fashion for secretaries with an inflated price tag, and then truly hand-crafted items produced by experts. Talking to real luxury producers recently, I was struck by how solid their market appears to be compared to the faux luxury of the glitzy malls. A Sino-German manufacturer I know in Hangzhou makes handcrafted hi-fi speakers. I’m not going to plug them by name, but believe me, listening to their equipment you’d believe yourself in St Paul’s Cathedral listening to a Baroque choir. They report that their sales are holding up and may even improve as people spend on their in-home experience rather than going out. Their biggest problem is finding skilled craftsmen – the growth of mass production lines in the last 25 years has all but killed apprenticeship schemes, meaning skills are in drastically short supply now.
– Many analysts are looking to the luxury market to see how deep any spending recession might go, expecting this to be one of the first sectors to get hit. Although jewelry is suffering, clothing, accessories and watches seem to be holding up relatively well. The problem with using luxury as a bellwether indicator is that Chinese are becoming "arbitragers" – taking advantage of price differentials between travel purchasing (in Hong Kong or elsewhere) and shopping at home. With high luxury taxes and a lack of deals they’re frequently arbitraging their way into luxury stores overseas rather than at home, causing a kink in the estimates of real demand in China.
– The arrest of Huang Guangyu, chairman and founder of the Gome chain and China’s richest man, marked the fall of yet another "poster boy" for Chinese entrepreneurship. Those with longer memories will recall former poster boys such as Shenyang orchid grower Yang Bin (also once China’s richest man) who soared high only to be cut down swiftly. It’s no surprise that the press has reached for the Classics when describing Huang’s downfall – there is more than a whiff of the Coliseum about these things. We got ancient Rome as Huang was "fed to the lions;" ancient Greece as writers pondered how "the Sword of Damocles hangs over China’s mega-rich;" and finally the Old Testament as journalists asked whether over-achievers could ever escape the "original sin" of having actually gotten rich first. Whether Huang’s reputation will rise from the dead remains to be seen.
– The export slow down has meant factory closures. Simultaneously many firms, notably Wal-Mart, are upping their environmental requirements on suppliers. A recent trip round some factories indicates owners are taking two very different tacks. The first is the "battle for survival" approach – doing whatever it takes to survive, including more unreported subcontracting and more lowering of product specs to save money (sometimes with the buyer’s consent). The second tack is the "clean slate" approach, mostly witnessed in factories that have relocated inland. They’re adding environmentally friendly features to their new premises in the hope that they will benefit from buyers giving more orders to the green and socially responsible rather than just the cheapest, as Wal-Mart’s announcement suggests.
– In January, analysts argue about the accuracy of China’s official GDP number for the last year and pontificate on the prospects for the new year. Optimists say 8-9% for 2009; pessimists 5.5-6%. One analyst has forecast 8.94%. I recall Marcus Noland, North Korea specialist at the Institute of International Economics, once cautioning, "never trust any data from North Korea that comes with a decimal point attached." Beijing’s statistics aren’t as vague as Pyongyang’s – but going to two decimal points on China’s GDP number is plain daft.