New Year gift giving boosts luxury and artwork sales

(Ecns.cn) – With the Year of the Dragon arriving, a "gold rush" has swept through China during the Lunar New Year holiday, with demand for precious metals and jewelry surging, according to China Daily. For high-end retailers such as Maotai, Louis Vuitton, Gucci and Cartier, Chinese New Year is always one of the busiest retail periods.

According to statistics released by the China Gift Industry Research Institute, the annual demand for gifts for private purposes is worth about 505.5 billion yuan (US$80 billion), while that for collective purposes reaches 262.9 billion yuan (US$41.6 billion), adding up to a whopping 768.4 billion yuan (US$121.7 billion), according to China Economic Weekly.

Gift giving, second nature to the Chinese

An old saying goes that if you want to become a government official, then learn from Zeng Guofan. Zeng was an eminent Chinese official, military general and devout Confucian scholar of the late Qing Dynasty (1644-1911). If you want to engage in trade, however, then learn from Hu Xueyan, a well-known Chinese businessman active in the 1870s and 1880s.

Hu Xueyan is reputed to have gained much experience in winning support from government officials by giving them gifts, particularly when he assisted Zuo Zongtang in the establishment of the Fuzhou Ship-Building Bureau.

In 1881, Hu planned to borrow 3 million taels of silver from foreign businessmen, but he needed approval from the Qing government. Hu believed sending money directly to the minister of finance was not a wise way to earn his support, so instead he chose a painting named "Watching the Spring and Listening to the Wind" (one of the famous works of Tang Yin, a Chinese scholar, painter, calligrapher and poet of the Ming Dynasty(1368-1644)), which helped Hu achieve his goal of currying favor with the minister.

Such a cultural practice has been handed down from generation to generation. Currently in China, giving gifts on special occasions and festivals is a common behavior among the populace, and also an important part of the business culture.

The gift industry

During this year's holiday from January 22 to 28, brands such as Louis Vuitton, Hermes and Maotai, as well as dealers of gold and jewelry, came under heavy demand from the Chinese. Sales of gold, silver and jewelry rose 57.6 percent at Caibai, one of Beijing's best-known gold retailers, according to data released by the Ministry of Commerce (MOC).

Under such circumstances, the gift industry continues to develop rapidly and on a large scale. Yet some compare it to nothing more than an annual fattening of red envelopes, a cash-obsessed tradition that often empties the pockets of urban workers during Spring Festival.

Now, various gifts are, in most cases, related to profit. Sometimes this is reflected directly in big returns, while at other times it is quite similar to the effect of debt, where receivers of gifts are saddled with an obligation to return the favor. As such, the courtesy of gift exchanging tends to be overshadowed by motives of self interest.

In 2011, Lang Huadong, an art investor from Lin'an of East China's Zhejiang Province, bid on a number of artworks with more than 10 billion yuan at a Beijing auction, among which most were ancient paintings and scripts, according to China Economic Weekly.

Lang said he comes to Beijing once a month, because there are more auctions in the capital than in Zhejiang. He revealed that most businessmen in Zhejiang choose ancient artworks as gifts when they need support from their connections, and a businessman will usually invest up to 1 million yuan (US$158,400) on this practice every year.

Gifts are in the first place merchandise, so they keep changing with social development, said Zhang Xiaopeng, director of the China Gift Industry Research Institute. In recent years, the division of the industrial chain has become finer, with manufacturers, distributors, terminal service providers, purchasers, receivers and repurchasing agents, added Zhang.

More and more companies are engaging in the business of gift customization, ranging from gold and silver merchandise, to reusable prepaid gift cards. Meanwhile, an increasing number of people are eyeing windfall profits by repurchasing gifts and reselling them to other customers. For example, they might repurchase a prepaid gift card for 85 percent of its face value, and then sell it for 90 percent.

Currently in Chinese business culture, giving gifts is considered bribery or an illegal act, especially when it involves government officials. But as personal wealth keeps rising, the practice of giving gifts is still very popular among friends and relatives. And with their deepening love for luxury goods and ancient art, the sales boom is unlikely to slow down any time soon.