Editor's Note: (Shaun Rein is the managing director of China Market Research Group and the author of The End of Cheap China and The End of Copycat China. He appears as a guest on the latest episode of "On China" on CNN International. The opinions expressed here are solely his. )
Shanghai(CNN) Over the past decade, Chinese consumers have been the largest buyers of luxury products in the world, accounting for around a third of all luxury purchases.
With a new billionaire minted every week in the past six months, and a doubling to over one million millionaires since 2010, many expected the luxury boom to continue in China.
Yet the exact opposite has happened.
Chinese luxury spending growth has actually declined in the past twelve months with growth expected to drop 2% in 2015, according to an estimate by my company China Market Research Group.
Prada announced a 44% profit drop in the second quarter of 2015 due to slowing China sales, and French luxury group Kering, which owns Gucci, Alexander McQueen and Stella McCartney, saw sales drop 10% in the first quarter in Asia-Pacific.
Sales of Louis Vuitton have also been struggling
Many analysts point to President Xi Jinping's corruption crackdown for the profitability decline. Are they right?
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Corruption has played a part but the sales drop is not due solely to the corruption crackdown -- the drop is a product of changing Chinese consumer tastes as people shift from buying tangible items to experiences.
Brands need to adjust to this new reality.
For example, my firm interviewed several dozen wealthy Chinese worth $12 million each this past year.
Respondents said they no longer gain status by buying expensive handbags.
Rather, they gain status by buying a third or a fourth home overseas in places like California or Sydney or by going on a once-in-a-lifetime, exotic trip -- like wine tasting in France.
Sharing these experiences with friends on social media site WeChat is the new status symbol in China, not buying the latest Louis Vuitton luxury bag.
The first area expected to see major growth is international travel. Chinese want to go where other Chinese have never been before.
Last year, I interviewed a billionaire at a six-star hotel in Dubai.
Despite the splendor of the hotel, the woman looked depressed and glum. When I asked her why, she told me that there were "too many Chinese around."
She wanted to go to a place that few Chinese had ever been before so she could share that experience with her friends on WeChat.
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Chinese are now actively pursuing once-in-a-lifetime adventures. They go on safaris in Africa and stay at ultra high-end lodges like Singita.
They even travel to Antarctica. In fact, China is becoming one of the fastest growing markets for tourism there, with more than 2,300 tourists having traveled to the Antarctic Circle from mainland China during November 2011 to March 2012.
Chinese are also the single biggest per capita spenders on tourism in the U.S., and they were the biggest spenders during the 2012 Olympics in London.
In addition to travel, Chinese are looking to buy items that are one of a kind.
For instance, Chinese currently drive the high-end art market sale globally. Wang Jianlin, the richest man in Asia with a fortune worth more than $35 billion, recently bought a Picasso painting for $28.2 million at auction.
Wang Zhongjun, who founded Huayi Brothers with his brother Wang Zhonglei, bought a Van Gogh masterpiece for $62 million.
Chinese are no longer buying items just to show off. It is more about a mix of investment and showing off, and they are concerned about lifestyle.
Wealthy Chinese now spend money on experiences and unique items rather than luxury products.
Many people blame the corruption crackdown, but the decline in profitability of sales of luxury items is really about consumers becoming more sophisticated.
Brands need to understand these recent trends in Chinese consumer tastes and adjust their strategy accordingly.