As China gears up to celebrate the Mid-Autumn Festival on September 19, President Xi Jinping’s recent crackdown on official spending on extravagant mooncakes is making international headlines.
The crackdown on boxes of these traditional treats, which can run from a few hundred renminbi per box into the thousands, is part of the newly minted president’s overall strategy to curb corruption among government ranks. Though mooncakes may seem like a harmless gift, in China they are largely seen as instruments of graft, part of a gifting culture that lines the pockets of officials in return for favors. Boxes of mooncakes are often re-gifted, or returned to a store in exchange for cash, while high-end mooncake boxes approach the ostentatious. Last year, the state-run news agency Xinhua reported on a department store in the popular shopping district of Wangfujing selling boxes of solid gold mooncakes for ¥42,900 each, a price that translated to ¥429 per gram.
What does the crackdown mean for the mooncake market? That depends on which end of the market is being considered. “The average person isn’t buying at China World Hotel, they’re buying at the supermarket,” says Beijing-based Sienna Parulis-Cook, who wrote her dissertation for the London University School of Oriental and African Studies on mooncakes and the culture of gift-giving in China. Mooncake makers such as Daoxiangcun, a popular, time-honored mooncake brand that retails in supermarkets around the country for ¥48 to ¥260 per box, or Haagen-Dazs, whose ice-cream filled cakes sell for a few hundred renminbi per box, appeal to individual buyers who are looking to treat friends or family to a gift and engage in a cultural tradition, and aren’t likely to be much affected by the crackdown, she says.
At the Peninsula Beijing, this year’s mooncake sales are “similar” to those of last year, says director of public relations, Cathie Yang. Yang predicts the Peninsula, the bulk of whose mooncake customers are corporate, will sell out of all pre-ordered 5,460 boxes, which cost between ¥308-980 each. The predicted total is 490 boxes short of last year’s sales. But the Peninsula’s mooncake prices are solidly mid-range. “It’s the five star hotels that have been hit in overall spending,” says Parulis-Cook. “The luxury ones face the biggest challenge.”
High-end mooncake retailers will feel the pinch more immediately and longer-term than their mid-range counterparts, she says, noting that the hardest hit will be upper-tier mooncake retailers hawking expensive, elaborate boxes that are obvious cases of conspicuous consumption. Since the beginning of the corruption crackdown earlier this year, hotels around Beijing have been losing money due to loss of official spending on luxurious banquets, an indicator of what likely lays in store for mooncake sales, she says. “Banqueting is another form of gift-giving. If all the hotels have lost money from official spending, I’m sure they’ll be losing money on their mooncake sales, too.”
The long-term effects of the ongoing corruption crackdown on the mooncake market reflect a larger shift in the way the rich are consuming luxury items in China, says Shaun Rein, founder of China Market Research, a Shanghai-based consultancy that focuses on the buying habits of China’s wealthy class. “The culture of gift-giving is still there,” he says. “They’re just giving different types of gifts.”
As officials continue to be investigated for graft, fear of being suspected of giving or taking bribes is moving the culture of gift giving away from showy items, such as Louis Vuitton bags or gold foil wrapped mooncake boxes. “Mooncakes are obvious,” says Rein. “Everyone sees mooncakes as a corrupt gift.” Instead, market trends are moving towards items that can be used or consumed in the home and are not so easy to appraise at a glance, such as massage chairs or health supplements, he says. And the flow goes both ways. As officials are increasingly hamstrung in bestowing favors at will, those looking for favors are hedging their bets with less expensive gifts. “A couple of years ago, if you gave someone a ¥5,000 watch, it was almost quid pro quo the official could help you with anything,” says Rein. “Now, when they give a gift, it’s only ¥1,000, because they know the official might not be able to help them now.”