Weak China Demand Slows Growth for Global Luxury Brands
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Global luxury brands are facing a slowdown in revenue growth as weakening demand from China—a key market for high-end goods—continues to impact sales performance amid broader economic uncertainties and shifting consumer preferences.
Several leading companies, including LVMH, Kering, and Richemont, reported disappointing quarterly earnings this week, attributing lower-than-expected sales primarily to subdued activity in China’s tier-1 and tier-2 cities. The region accounts for nearly 40% of luxury brand revenues worldwide.
“China remains critical to the luxury sector’s growth story, but the current economic environment and changing consumer behaviors are dampening momentum,” said Sophie Liang, senior market analyst at LuxeInsights.
Contributing factors include ongoing COVID-19 policy hangovers, stricter government controls on luxury spending, and an increased focus on domestic brands. Additionally, China’s younger consumers are displaying a growing preference for experiences over material goods, impacting traditional luxury categories.
Luxury e-commerce platforms like Tmall and JD.com have reported slower growth in luxury item sales compared to previous years, highlighting challenges in online luxury retailing as well.
Despite the challenges, brands are adapting by diversifying product offerings, increasing emphasis on sustainability, and expanding presence in emerging Asian markets such as Southeast Asia and India. Some companies are also investing in immersive retail experiences to capture shifting consumer interest.
Outside China, luxury markets in the United States and Europe have remained resilient, driven by strong tourism rebounds and growing wealth concentrations.
Analysts warn, however, that a sustained slowdown in Chinese demand could have ripple effects across supply chains, marketing budgets, and capital expenditures in the luxury sector.
“Brands must balance short-term headwinds with long-term strategies focused on innovation and localization,” Liang added.
The coming months will be critical as luxury companies release mid-year results and update guidance amid evolving geopolitical and economic conditions.
