THE EUROPEAN LUXURY brand Chanel recently announced that it was reducing the prices of three handbags in China by 20 percent while increasing them in Europe by 20 percent; some of its branches in Beijing have already made the adjustment. This is the first time Chanel has cut its prices in the past five years. Comments:

Even after the adjustment, the handbags in China are still five percent higher than the same products in Europe. How have Chanel shops in China survived in the past and why have so many Chinese been willing to pay the high prices for luxury goods? The answer lies in corruption. When the majority of buyers purchased luxuries as gifts for officials, they would expect the prices to be higher. Worse, most of the buyers were government officials who used taxpayers' money for bribes and so they didn't care about the higher prices.

Beijing Youth Daily, March 20