When Bernard Arnault, one of the world’s richest men and chairman of LVMH, dropped by Shanghai last month, many assumed his itinerary would be routine: check in on Louis Vuitton, Dior and the rest of his empire’s boutiques in China’s most prestigious malls. Instead, Arnault did something unexpected — he went shopping for Chinese brands.
At the new-age luxury shopping mall Qiantan Taikoo Li in Shanghai, Arnault stopped by Songmont, a minimalist leather goods label. There, he bought two handbags, said people familiar with the situation who asked not to be named discussing a private matter.
He also went to another high-end mall and wandered into Laopu Gold, a homegrown jeweler that opened a store a few doors down from Cartier and Van Cleef & Arpels. He reportedly lingered for half an hour, muttering words such as “exquisite” and “interesting.”
It was a small gesture with big symbolism. Arnault, whose companies helped define modern luxury, was browsing in boutiques that might represent its next chapter, at least in China.
The anecdote reflects how China’s US$49 billion luxury market is changing fast. As the economy cools, spending on foreign premium brands has stalled. Instead, when Chinese consumers do splash out, they are turning to homegrown labels. Their rise is redrawing the map of one of the world’s top luxury markets and forcing global players to take note.
Online retail platforms have been key to their growth. Five domestic prestige brands in handbags, apparel, fragrance, cosmetics and jewelry have outpaced seven foreign rivals in sales growth over the past two years, according to data compiled by BigOne Lab and analyzed by Bloomberg News.
E-commerce sales at Laopu Gold have surged more than 1,000 percent during the first three quarters of this year compared with two years ago, while Songmont’s online bag sales have soared about 90 percent.
By contrast, Gucci’s online bag sales in China have slumped more than 50 percent and Michael Kors’ has dropped about 40 percent. Other Chinese labels — makeup brand Mao Geping Cosmetics, perfumier To Summer and luxury clothing label ICICLE — have pulled off similar feats in their categories.
On Tmall, the country’s largest online retailer, revenues for some Chinese brands are on par or even higher than overseas ones: Laopu sold US$630 million in its Tmall store over 12 months through last month, compared with US$57 million for Van Cleef & Arpels, industry consultant Hangzhou Zhiyi Tech said.
Mao Geping’s revenue was US$125 million, more than doubling Bobbi Brown’s sales. For Laopu Gold, sales for online and in-store jumped 250 percent in the first half of this year, after doubling in 2023 and last year, according to its financial results.
Mao Geping Cosmetics, a homegrown beauty label named after its celebrity founder, reported double-digit percentage revenue growth so far this year as well as last year.
Meanwhile, Bain & Co estimated that China’s luxury market, which is dominated by European giants such as LVMH Moet Hennessy Louis Vuitton, Kering SA and Burberry Group PLC, shrank by as much as 20 percent last year, its steepest decline since at least 2011.
Although there have been glimmers of recovery, executives talk about “caution” and “uncertainty.”
China’s worsening economy has wrecked the appetite for global luxury brands. Demand that was supposed to return after the lifting of strict COVID-19 restrictions has instead slumped for overseas firms. That disappointment has helped erase shares at key luxury houses, with LVMH down about 30 percent from their 2023 peak, while Kering has plunged about 60 percent since its high in 2021 in Paris.
In the US, Estee Lauder Companies Inc shares are about 76 percent off their high in 2021. After spiking following the easing of COVID-19 lockdowns in 2021, consumer spending in China has largely flatlined.
Representatives at LVMH, Kering, Chanel, Richemont, Estee Lauder, Max Mara and Capri did not respond to requests for comment.
That is leading shoppers to turn to domestic brands with their lower pricing. ICICLE’s cashmere and wool Aircoat is priced about US$1,123 to US$2,808. Max Mara’s 101801 coat, often highlighted as comparable by Chinese consumers, costs more than US$4,200. Songmont’s bucket bags, described by social media users as a dupe for Hermes’ Picotin Lock bags, sell for about US$421, while the latter costs US$5,054 to US$8,016.
It is not just a China phenomenon. Shoppers globally have become more discerning, with consumers turning to labels that look premium at lower price points as they grow increasingly weary of spending on big name brands that keep raising prices.
What is more surprising is that the price tag alone is not the deciding factor, said Jacques Roizen, managing director of China consulting at Digital Luxury Group.
“Contrary to common perception, Chinese beauty brands aren’t competing on price — they’re building rich brand universes and prioritizing storytelling,” Roizen said. “For Western prestige beauty brands, the rise of local competitors should serve as both a wake-up call and a warning.”
That story is rooted in craft and cultural pride, and is resonating with younger Chinese shoppers who no longer see Western logos as tickets to sophistication. Instead, modern shoppers are hunting for items that feel more tailored to them, and many Chinese brands have turned that shift into their core identity.
Labels such as To Summer and Songmont draw deeply from local history, art and everyday life. The message: Modern luxury can be proudly Chinese.
Songmont’s philosophy emphasizes “Eastern aesthetics,” with the designs of its stores reflecting Chinese calligraphy. To Summer builds scents around traditional ingredients such as tea, osmanthus and preserved orange peel, and uses porcelain made in Jingdezhen, China’s most important ceramics production center. ICICLE draws on the Confucian ideal of harmony and restraint.
It is a concept that Songmont’s founder Fu Song (付嵩) consciously designed from the start.
“We’ve positioned ourselves as a Chinese brand rooted in local culture,” she said. “In the global fashion conversation, there are still too few Chinese voices.”
The strategy works especially well online, with the marketing more attuned to local consumers.
Songmont launched its own podcast focusing on the lives of urban women, which is resonating for its celebration of self-worth and diverse life values rather than social status, said BigOne partner Amber Zhang (張安博).
The campaign struck deeper than those from global brands, she said.
For shoppers such as Wan Yihuan, a 30-year-old Shanghai finance worker, that message hits home. Once a self-described Hermes and Tom Ford addict, she now carries a US$210 Songmont hobo bag and wears Mao Geping makeup.
“I fell into the trap of consumerism when I was younger,” she said. “Now I just want things I truly like.”
Among the new Chinese players, Laopu Gold stands out for its more than 100 percent revenue growth in physical stores since early last year, where Tiffany and Bulgari have seen double-digit percentage declines, BigOne data showed.
At Beijing’s exclusive SKP mall, Laopu Gold’s sales rose more than 200 percent in the first half of the year, said a person familiar with the figure who declined to be named discussing a private matter.
It last month opened a store in Plaza 66, a glass-clad cathedral of luxury long dominated by European names, becoming the first domestic brand to establish a presence in all 10 of China’s top-tier malls.
It might seem strange to associate “Made in China” with luxury, for a country where low-cost manufacturing helped drive its economy to the world No. 2 spot.
However, these domestic premium brands are challenging that perception with a slower and more premium manufacturing process that is relayed to consumers through localized marketing campaigns.
In 2013, ICICLE bought a garment factory that manufactures for Max Mara in China’s eastern Jiangsu Province. Songmont uses full-grain top-layer cowhide and gold-plated hardware, crafted by artisans with decades of traditional sewing and craftsmanship experience from the founder’s hometown.
Laopu Gold incorporates elaborate filigreed shapes and enamel glazes into its jewelry. Mao Geping, China’s answer to America’s Bobbi Brown, teaches makeup application on local models to millions of fans online.
Their popularity is spreading outside China’s border. In London, 16-year-old Naomi Jiang looks beyond marquee labels when buying handbags. Finding designer brands such as Hermes overpriced, she chose Songmont for its design and value instead.
“We’re getting a more diverse, higher quality selection of clothing,” she said.
“Chinese premium brands now have the design talent, the manufacturing muscle, and the marketing intelligence,” said Leng Yun, a Shanghai-based apparel consultant. “They’re no longer chasing the West. They’re becoming what the West once was.”
Executives at the Chinese brands, including Songmont, To Summer and Mao Geping, said they want to expand globally. The brands have not disclosed their overseas sales yet, but analysts’ consensus is that the amount is likely still small.
“Chinese brands must look beyond China,” To Summer founder and chief executive officer Elvis Liu (?惠璞) said. “Why are global brands often better positioned in their competition against Chinese brands? Because they are backed by the global market. If you only have the Chinese market, it’s like you are a local brand and this will put you at a very disadvantageous position amid the competition.”
Still, obstacles loom. Few domestic brands have crossed the 10 billion yuan (US$1.41 billion) annual revenue mark, Goldman Sachs Group Inc retail analyst Michelle Cheng (鄭絜雲) said.
“China’s market is huge, so you can hit 1 billion yuan with hot products, or even 3 to 5 billion,” she said. “But further growth depends on having a strong management team, talented staff and long-term vision.”
The high sales growth figures also stem from a low base: The top 10 best-selling brands in China’s personal luxury segment are all Western brands, accounting for 63 percent, or about US$31 billion, in sales last year, Euromonitor International data showed.
In contrast, no Chinese brands have more than 0.5 percent of the market share, the data showed.
The bigger risk might be psychological, with the same economic malaise that led to European brands’ sales waning potentially spreading to domestic brands, too, Cheng said.
“For luxury to truly grow, you need rising wages and a growing middle class, both of which are being challenged by ongoing economic headwinds,” she said.
Take Guo Wenjun, who once spent more than US$70,000 in a shopping spree — Rolex, Chanel, even a toddler-sized Armani jacket. Now, the 37-year old has a child in an expensive international school and feels job uncertainties are mounting.
She has turned to buying US$7 tote bags and US$4 T-shirts from budget shopping site 1688.com.
“Luxury used to make me feel like a queen,” she said. “Now it no longer has that magic.”
With assistance from Haze Fan.
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