Beijing’s pressure on the entertainment industry could pressure luxury demand

Beijing has started to put pressure on entertainment and public media industries to eliminate the negative impact of “unpatriotic”, “unethical” and ostentatious wealthy public personalities on society.

In the context of the “Common Prosperity”, the crackdown on entertainment and public media industries obliges public personalities to be more prudent about what they wear and lifestyle.

However, imitating celebrities’ outfits has been the largest motivation for young consumers to buy luxury goods in recent years.

The Publicity Department of the CCP has issued a “notice on carrying out comprehensive management in the field of culture and entertainment” following a series of celebrity scandals involving tax evasion, sexual assault and unpatriotic behaviour over the past year.

The regulators have defined several measures including a ban on broadcasting idolraising programmes to eliminate the negative impact of unpatriotic, unethical and ostentatious wealthy public personalities on society.

Some idol-raising programmes have urged viewers to join fan groups and spend money on products made by sponsors, and have created unpatriotic, unethical and ostentatious idols.

The NRTA (The National Radio and Television Administration) has defined that political and moral conduct should be included as criteria in the selection of actors for television shows and films.

In the context of “Common Prosperity”, the tightened regulation of entertainment and public media industries will oblige public personalities (high-level government officials, stars, influencers…) to be more careful about what whey wear and what they do.

We believe that luxury handbags, jewellery and fancy cars will fade from public eyes for a while. Some stars and online celebrities who have made their fortunes by promoting luxury goods will be more prudent and will respond to the authorities’ call to give back more of their profit to society.

However, KOL (Key Opinion Leader) marketing has been the main driver of the luxury industry for the last three years, especially to acquire new younger consumers. Generation Z and millennials accounted for nearly half of the luxury industry in 2020 and continue to be the main driver of new customer acquisition.

In addition, the two stars involved in the tax evasion and sexual assault scandals mentioned above were both former ambassadors of luxury brands (Yifan WU was the Chinese ambassador for Louis Vuitton, Bulgari, Burberry and Porsche).

We believe the social atmosphere in China will considerably affect the marketing campaigns of luxury brands in the following seasons. Luxury handbags costing more than €10k would never fit with President Xi’s common prosperity goal, collecting luxury brands will be judged as ostentatious wealth.

Will Chinese consumers’ desire for luxury goods never waver in this context?

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