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For western producers of expensive drinks, clothes and handbags, doing business in China is no longer a life of luxury.Although its spirits sales in China were down 2 per cent in the last financial year, that was a significant improvement on the previous year's 23 per cent drop.But Pernod's drink brands are by no means the only luxury goods to experience rapidly falling Chinese sales. Swiss watch exports to the country have wound down sharply – by 40 per cent in July, compared with the same month last year. Global luxury goods companies have become heavily reliant on Chinese big spenders, who account for 30 per cent of worldwide spend in the sector, up from 3 per cent just a decade ago.Last week's move by the Chinese central bank to devalue the renminbi has also added to the sector's woes, by making luxury imports more expensive.Others to suffer share price falls were Switzerland's Richemont, down 11.7 per cent, and the UK's Burberry, down 11.9 per cent.Luxury companies also point out that whatever the short-term pain, the demographic and luxury spending outlook in China is still highly favorable.
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