The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Beginning next year, fintech players like Alibaba affiliate Ant Group will be required under new regulations to fund at least 30 percent of the loans they make with banks — a decision that could temper spending by China’s younger shoppers, The Wall Street Journal reports.
In recent years, online loans have helped drive consumption among a demographic keen to own the latest luxury goods but unable to afford them. A 2019 HSBC survey revealed that the debt-to-income ratio of post-’90s Chinese reached a whopping 1,850 percent; for comparison, Canada’s ratio for millennials is estimated at 216 percent.
From the highest echelons of government to netizens on social media, debt and overspending have become hot topics. At the same time, there have been shifts among shoppers keen to embrace more frugal, minimalist lifestyles, as a small but growing movement against heavy spending coincides with calls for sustainability and conscious consumption.
Last week, Ant Group said that as part of its self-regulation efforts, its credit payment company Huabei and short-term consumer loan provider Jiebei would lend responsibly and refuse loans to young or low-income borrowers beyond what is needed to cover basic living expenses. But given Beijing’s interests in sustaining China’s economic momentum, the extent that regulations will dent consumption in the long-term remain uncertain.
With consumers tightening their belts in China, the battle between global fast fashion brands and local high street giants has intensified.
Investors are bracing for a steep slowdown in luxury sales when luxury companies report their first quarter results, reflecting lacklustre Chinese demand.
The French beauty giant’s two latest deals are part of a wider M&A push by global players to capture a larger slice of the China market, targeting buzzy high-end brands that offer products with distinctive Chinese elements.
Post-Covid spend by US tourists in Europe has surged past 2019 levels. Chinese travellers, by contrast, have largely favoured domestic and regional destinations like Hong Kong, Singapore and Japan.