Photo by Lisi Niesner/Reuters
According to three research firms surveyed by Bloomberg, the July decline affected the 25 largest luxury brands. Sales at LVMH-owned Louis Vuitton and Dior, as well as Kering Group’s Gucci, Bottega Veneta, and Balenciaga, declined by double-digit percentages. Hermès shifted from growth to decline, while growth rates at Chanel and Prada slowed significantly.
Experts cite tighter tax controls and capital controls as one of the reasons. Chinese authorities are tightening controls over cross-border financial transactions and ensuring that taxes are paid on offshore assets and investment income. For affluent consumers, this means greater caution in spending.
The stock market also influences the sentiment of affluent consumers. After strong growth in Chinese stocks last year, prices began to fall in 2026. For wealthy Chinese, this directly affects their sense of personal wealth: when the value of their investment portfolios declines, they become more cautious about spending money on expensive purchases.
“We are seeing a correlation between capital market trends and luxury goods sales,” noted Robert Wu, head of the Shanghai-based research firm Baiguan.
The market’s weakness is already evident beyond the luxury segment. In July, retail sales growth in China slowed to 0.6%, while sales of jewelry and automobiles fell by more than 10%.
Additional factors included the July heat wave, torrential rains, and an increase in the number of Chinese travelers going abroad. Now the industry is pinning its hopes on August: China’s Valentine’s Day traditionally marks one of the busiest periods for luxury goods purchases.
If demand does not recover during this period, it will be further evidence that the problems facing the Chinese luxury market are not temporary but more deeply rooted.
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