Can European luxury brands still count on China for growth?

Calling China a growth engine means expecting Chinese shoppers to provide a major share of future sales increases for European luxury brands. It is more than being an important market. It means China helps propel overall business growth when consumers are willing and able to spend more.

China once played that role because its shoppers accounted for around a third of worldwide luxury spending. Firms such as LVMH and Hermès earned billions from this demand. But spending habits are changing. Consumers increasingly seek better deals, second-hand products, or homegrown brands instead of buying new European labels.

The market is still important, but its direction has weakened. Mainland China’s personal luxury goods market contracted by 3–5% in 2025, after falling 18–20% in 2024. Bank of America’s Chen Luo said China may not be a growth engine in two to three years, although luxury spending could rebound with economic recovery.

Chinese shoppers have been one of the most important customer groups in global luxury. They accounted for around a third of worldwide spending, so changes in their buying habits can affect sales far beyond China. Their importance made the country central to the strategies of European fashion houses.

The spending helped global companies build substantial businesses. The article names LVMH and Hermès as firms that earned billions from Chinese consumers. These shoppers were especially valuable when buying new handbags, clothing, jewellery, and other luxury products as status symbols.

That role is now under pressure. Mainland China’s personal luxury goods market fell 18–20% in 2024 and contracted another 3–5% in 2025, according to Bain & Company. China remains vital, but Chen Luo of Bank of America says it may not be a growth engine for the global luxury industry over the next two to three years.

Consumers are changing what luxury means to them. Spending more once signalled status, but shoppers now compare who found the better deal and spent less. They also want self-identity, distinction, experience, quality, emotional value, and cultural relevance rather than relying only on a famous foreign logo.

The shift is visible among younger shoppers. Phoebe Ma said Louis Vuitton’s monogram feels dated and suits her mother’s generation, while Gen Z may prefer trendy Korean brands. Other consumers buy second-hand luxury because it offers access to recognisable products at better prices. Digital and social media also shape China’s distinctive retail environment.

Economic pressure strengthens these preferences. China’s domestic demand remains weak, while the economy grew 4.5% year on year in the third quarter. Bain estimates the second-hand luxury market grew 15–20% in 2025, even as the mainland personal luxury market contracted. European brands must work harder to remain relevant.

The shift reduces demand for new products from European luxury houses. It also forces brands to reconsider their store networks, marketing, products, and cultural strategies. A market once expected to power growth now presents weaker sales and tougher competition from resale businesses and domestic brands.

LVMH recently blamed a “slowdown in demand in China” for a drop in third-quarter organic sales in its fashion and leather goods unit. Louis Vuitton closed five mainland China stores in two years, including a Shanghai chocolate boutique. Galeries Lafayette also shut its Beijing flagship in May. These closures show how companies are adjusting to softer demand.

Brands must now stay relevant in a digital, social-media-driven retail landscape. They also face cultural and legal friction. Louis Vuitton’s trademark lawsuit against Molly Tea caused an online backlash, and LVMH admitted the controversy had a negative impact. China remains important, but future growth is less certain.

The second-hand market creates value by offering luxury goods at prices shoppers consider better deals. It can make handbags, belts, and jewellery more accessible while preserving the appeal of recognised products. The purchase still carries style, quality, or emotional value, but the shopper avoids paying full new-product prices.

That changes the social meaning of luxury. Dance teacher Yuan said people once compared who had spent more. Now they compare who found the better deal and spent less. At Shanghai’s Super Zhuanzhuan, shoppers browse second-hand luxury in a warehouse-style store, wearing black gloves to protect the products from greasy fingers.

The market’s growth shows that resale is more than a niche alternative. Bain estimates China’s second-hand luxury market expanded 15–20% in 2025, while Insight & Info Consulting put total sales at 38.4 billion yuan. It forecasts sales could exceed 100 billion yuan by 2030, increasing pressure on new-product sellers.

Luxury goods are especially exposed when people become careful with money. If domestic demand is weak, consumers may delay expensive purchases, seek discounts, or choose alternatives. Slower economic growth can reinforce that caution by making households less confident about income and future spending.

China’s economy grew 4.5% year on year in the third quarter, but the article says weak domestic demand continues to weigh on the economy. Against that backdrop, shoppers are turning to second-hand goods and homegrown brands. The focus has shifted from spending more as a status symbol to finding better value.

The market figures show the effect. Mainland China’s personal luxury goods market plunged 18–20% in 2024 and contracted 3–5% in 2025. Chen Luo said luxury spending usually rebounds in sync with the economy because wealthy people are often among the first to benefit from recovery. Until then, luxury brands face restrained demand.

A luxury brand’s economic value comes from more than the materials in a product. Design can make an item recognisable, reputation can suggest prestige, and cultural relevance can make it meaningful to current shoppers. Together, these features encourage customers to choose a branded product and accept its higher price.

Trademarks help protect those signals from imitation. Louis Vuitton successfully sued Molly Tea over a four-petal floral pattern that resembled its monogram. LVMH called its intellectual property an “absolute key asset.” Yet Chinese internet users and state media argued that the pattern came from ancient Chinese traditions, creating a backlash.

The episode shows both the power and limits of brand assets. A trademark can support legal protection, but it cannot guarantee public approval. LVMH admitted the furore had a negative impact. Brands must therefore combine protection of design and reputation with local cultural understanding and relevance in China’s digital retail environment.