China'S Economic Growth Slows And Global Luxury Market Begins To Cool

In the past two years,

Luxury goods such as Dior perfume have always been the highlight of retail industry.

The global luxury market is cooling down due to the European debt crisis and slowing economic growth in China.

Last Wednesday, British luxury

Burberry group, which led the luxury sector down, reported a 11% increase in first quarter sales to $63 thousand and 400, less than the 13% growth forecast.

Although the company's performance was not disastrous, it still failed to persuade nervously investors.

An executive at Burberry said that huge opportunities for development can still be seen in China.

Some analysts and investors worry that this marks the turning point in the high-end market.

On the same day when Burberry announced its results, Cartire, Compagnie Financiere Richemont, said its demand for high-end watches from China is weakening.

Cartire is a famous high-end watch and jewelry brand, and China is the main driving force of its watches in recent years.

Cartire chief executive Bernard Fornas said on Wednesday, "we have achieved extraordinary success last year, and mainland demand is slowing down."

On the same day, he showed the latest concept watch, called ID Two, which uses less energy.

Like Burberry, Fornas is not worried about the long-term prospects of Chinese consumers.

He said, "if you talk with the people there, you will find that they are waiting for the arrival of the new leader, and the Chinese economy will be inflows into new funds, and interest rates will be lowered."

But this still takes time to prove.

After the great recession of the past few years, the United States

Demand and stock market rise simultaneously, for those rich people, extravagance and waste are not unworkable, and the rise of the stock market makes rich people more confident in spending.

However, the rise of the stock market has failed to maintain the appetite for luxury goods. Luxury sales have generally slowed down in the past few months.

SpendingPulse, a data research firm of MasterCard consulting, reported in May that luxury sales excluding jewellery increased 1.8% in April, down from the 6.7% year-on-year growth rate in the first quarter and the 13% year-on-year growth rate in the fourth quarter.

Although sales of luxury goods have rebounded in recent years, Michael McNamara, vice president of SpendingPulse, believes that this year's luxury market will not repeat the glory of 2011.

SpendingPulse mainly tracks pactions in credit cards, cash and checks.

High end jewelers are particularly vulnerable.

Tiffany (TIF) reported less than expected profit in the first quarter of May. The company also lowered its sales and profit targets for the full fiscal year.

The company attributed this to the layoffs in Wall Street and the weakening demand in Asia, and Asia is the most important market for luxury goods worldwide.

David Schick, executive director of Stifel Nicolaus, a financial services firm, said demand in the global luxury market will weaken as Asian and European economic growth slows, and confidence in high-income consumers will be affected.

China's economic slowdown has already put pressure on Hongkong's retail industry. Mainland consumers have been queuing up to buy luxury goods in Hongkong.

Hongkong's sales grew 8.8% in May to 4 billion 600 million US dollars, the slowest month since September 2009.

Diamonds are long-lasting, but the life cycle of diamond demand is hard to predict.