China's luxury market shrinks in 2014

Luxury goods consumption in mainland China declined for the first time in 2014 as China's ongoing anti-extravagance campaign hit sales hard.

Chinese mainland's luxury goods consumption reached 115 billion yuan (18.79 billion U.S. dollars) in 2014, down 1 percent year on year, compared with a 2-percent and 7-percent growth in 2013 and 2012, according to a recent report from the international consulting firm Bain & Company.

The government campaign encourages frugality and is cracking down on corruption across the country to put a dent in gifting, which had been one of the major growth engines for the sector, said Bruno Lannes, author of the report.

Luxury watches and men's goods were hit particularly hard, according to Lannes, with their sales declining 13 percent and 10 percent respectively in 2014.

The report also said 70 percent of luxury brands bought by Chinese consumers are now purchased abroad or through "daigou", shopping agents, who stockpile the products before selling them at a profit to buyers back home.