As the luxury goods sector slows globally, one of its key markets, Singapore, has been affected by the slow return of Chinese tourists.
Although high-spending Chinese tourists are returning to some markets, including cities such as Paris and Milan, “the recovery in tourist spending on personal luxury items has been uneven overall, with “The impact of the pandemic remains evident in some major luxury shopping destinations,” said Fleur Roberts, head of luxury at Euromonitor International.
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Total international luxury shopping for personal luxury goods remains at 74% of its 2019 peak, despite a post-pandemic boom for some brands. A full recovery is expected to take until 2025, with much of the decline thought to be due to the absence of Chinese tourists. “We expect spending growth to be slower than expected in some major destinations, such as Singapore, which have traditionally relied on Chinese tourism spending,” Roberts said.
Despite this cautious outlook, Singapore’s luxury retail sales rose 11% on a current basis in 2023 to a total of S$12.4 billion ($9.1 billion), according to Euromonitor. However, a record money laundering case involving a Chinese suspect in the city could reduce demand for luxury goods in the short term as the wealthy avoid attracting unwanted attention. There is sex.
Singaporean authorities have begun sentencing 10 Chinese nationals in a money laundering case totaling S$3 billion (approximately $2.2 billion). In August 2023, local police raided multiple locations in the county to arrest suspects suspected of laundering proceeds from overseas criminal activities. The money laundering is related to funds obtained from illegal gambling organizations in China, and three out of 10 have so far been sentenced to prison, fines and asset confiscation. Some members of the group are already wanted by Chinese authorities.
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Su Wenqiang, the first Chinese national to plead guilty in a money laundering case, will forfeit assets worth S$5.9 million, or more than $4.3 million, to the state, including pink items, as part of his plea deal. Agreed. A Delvaux bag worth S$4,100 ($3,010), a green Moynat bag worth S$5,780 ($4,250), a white Prada bag worth S$1,305 ($960), a Tiffany bag worth S$6,200 ($4,550) 38 luxury items including a bracelet, a pair of Dior earrings valued at S$540 ($400), a Graff diamond ring worth S$9,450 ($6,940), handbags, jewelery and watches for a total value of S$396,000 ($290,880) dollar) equivalent.
The incident shocked the country, which is known for its safe and stable governance and attracts foreign investment through tax incentives and exemptions. It also raised questions about the effectiveness of Singapore’s existing measures to detect and combat money laundering activities, and whether additional measures are needed.
The revelation of such luxury purchases in the money laundering case has focused attention on luxury spending in the city-state and raised concerns that underregulation of luxury goods could be exploited for money laundering. Concerns arose. Singapore is tentatively scheduled to undergo an anti-money laundering assessment by the intergovernmental organization Financial Action Task Force in 2025.
The case could have a long-lasting impact on luxury shopping in the city state if new regulations on the purchase of high-value luxury properties are deemed necessary. Second Minister for Home Affairs Josephine Teo told Parliament that Singapore’s anti-money laundering requirements comply with international standards set by the FATF.
“Many of the suspects had purchased high-value assets such as luxury cars, bags, alcohol and jewelry. These were some of the assets that were seized or for which restraining orders were issued,” Teo said. said. “Unlike jewelry and precious metals, it is currently unregulated.”
The FATF Recommendations are a set of international standards, and the FATF suggests that countries should introduce measures adapted to their specific circumstances. Mr Teo said: “We will consider whether Singapore needs to extend its anti-money laundering requirements beyond the FATF recommendations to new types of assets.” Careful evaluation is required to avoid causing undue inconvenience to legitimate businesses and customers. ”
Prosecutors in the case said money laundering was a serious crime and needed to send a strong message to protect the country’s reputation as a financial hub.
Singapore is home to over 300,000 people with a net worth of over $1 million. This number is expected to rise to more than 400,000 by 2030, according to Euromonitor International.
Still, observers believe the impact on luxury spending from the money laundering case is likely to be only a temporary halt, rather than a halt to overall spending.
“In the short term, the fallout from the ongoing sentencing and money laundering cases will likely be due to the impact of spending habits on luxury goods, as well as the habit of flaunting wealth through luxury brands and other notable lifestyle trends and habits as wealthy individuals. “This is unlikely to be the only long-term impact on luxury spending in Singapore, provided it avoids attracting unwanted attention,” Roberts said.
And most brands have felt little impact from the incident, with macroeconomic factors being a bigger concern. “We didn’t feel any direct impact from this incident, because they like ultra-luxury watches, which is not a focus of our business. The overall watch market is slowing down. Dealers who only deal in ultra-luxury models will probably feel the impact,” said Nick Lim, director of luxury watch specialist Chuan Watch Collection Pte Ltd.
“The people who have been accused are not representative of the watch buying and selling community as a whole. Those who have illegal money have difficulty even spending it in stores like ours. Many stores don’t accept payment, only bank transfers, and the seller probably didn’t do a reasonable amount of due diligence,” Lim said.
As Singapore awaits the return of big-spending Chinese tourists, domestic spending could underpin the sector’s recovery, as has been the case elsewhere in the past few years. Singaporeans are becoming more willing to spend as the world firmly settles into the post-pandemic era, according to Mintel’s Global Consumer Survey.
“As of July 2020, 71% of Singaporean consumers said they would save or invest the money left over after paying bills and buying essentials.Four years later, in March 2024, This percentage has dropped to 60%,” said Huiki Ong, senior consumer lifestyle analyst for Asia Pacific at Mintel.
“Purse strings may be loosening, but Singaporeans are still picky about where they spend their money. If brands can prove their worth, consumers will be more likely to spend their money. Singaporean Consumers 73% of respondents said they believe it is worth paying more for a quality product,” Mr Ong said.
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