European luxury brands are facing increasing headwinds in China, a critical market for the sector, as Chinese consumers demand greater respect, fairness, and cultural sensitivity. While the industry had hoped for a robust rebound in the world’s second-largest economy, a confluence of factors – including rising domestic brands, concerns over pricing discrepancies, and perceived cultural insensitivity – are challenging the long-held dominance of European labels.
The shift in consumer sentiment is becoming increasingly visible. Once eager to display their affluence with Western luxury goods, Chinese shoppers are now more inclined to support local brands and question the value proposition offered by European houses. This trend is particularly pronounced among younger consumers, who are more nationalistic and digitally savvy, and who readily share their opinions – and grievances – on social media platforms like Douyin (TikTok).
Recent campaigns by brands like Louis Vuitton and Dior, intended to celebrate Lunar New Year, were met with criticism online, with consumers accusing the companies of using clichéd symbols and demonstrating a lack of understanding of Chinese culture. saw a surge in online commentary criticizing what many perceived as a dismissive attitude towards Chinese buyers. State-affiliated news outlets have also amplified these concerns, adding further pressure on the luxury giants.
Pricing discrepancies are another major point of contention. Consumers have highlighted significant price differences for the same products sold in China compared to Europe, with some items costing 20% to 40%
more in the Chinese market. A viral video circulating on Douyin showcased the disparity in the price of a Hermès bag, priced at €8,000 in Paris but selling for over ¥85,000 in Shanghai, sparking widespread debate about luxury price discrimination
.
The backlash is occurring at a time when China is actively promoting domestic brands and encouraging consumers to support homegrown labels
. This government-led initiative is gaining traction, providing a competitive advantage to Chinese companies and further eroding the market share of European brands. The rise of local alternatives, offering comparable quality and design at more accessible price points, is proving particularly appealing to a growing segment of the Chinese population.
The situation is further complicated by broader economic factors. A weakening global economy and slowing demand in China are impacting the luxury sector as a whole. According to reports, the luxury industry, which historically grew at twice the rate of GDP, is now in its second year of sales decline. This downturn is forcing even the most exclusive brands to compete fiercely for a shrinking pool of discretionary spending.
The United States is also presenting a shifting landscape for European luxury groups. Web search results indicate that US shoppers are increasingly purchasing luxury goods at home, rather than during trips to Europe, as the dollar weakens. This trend suggests a potential weakening of the traditional reliance on tourism-driven sales for these brands.
However, the picture isn’t entirely bleak for European luxury. While challenges remain, the sector is showing signs of resilience. An upbeat earnings season suggests that some brands are successfully navigating the complexities of the Chinese market. But continued weakness in China and the looming threat of U.S. Tariffs could still leave even the most established brands vying for a smaller share of consumer wallets.
The evolving expectations of Chinese consumers are forcing European brands to reassess their strategies. Adapting to local cultural nuances, addressing pricing concerns, and providing superior customer service are no longer optional – they are essential for survival. The era of Western luxury brands coasting on reputation alone
in China appears to be coming to an end. Brands must demonstrate a genuine commitment to engaging with Chinese culture and values if they hope to maintain their relevance and market share.
The situation highlights a broader trend in the luxury market: a loss of cultural cachet
. Consumers are questioning the value proposition of luxury goods, particularly in light of perceived arrogance and a disconnect from reality. As one former fashion executive noted, the experience of luxury shopping has become gross and boring
, with unnecessary barriers to entry and inflated prices that are not justified by improvements in quality or design.
The future of European luxury in China hinges on its ability to adapt and respond to these changing dynamics. The brands that can successfully navigate this complex landscape – by demonstrating respect, fairness, and a genuine understanding of Chinese culture – will be best positioned to thrive in one of the world’s most influential luxury markets. Those that fail to do so risk losing ground to both domestic competitors and a more discerning, empowered consumer base.
