Luxury sales plunge in China as tax push hits rich shoppers

Global luxury brands are experiencing a significant sales decline in China, as a push to tax offshore wealth impacts wealthy consumers. July sales at the 25 largest luxury labels in China decreased by over 10%, marking a sharper decline than the previous month and a reversal from earlier in the year. LVMH's Louis Vuitton and Dior, as well as Kering's Gucci, Bottega Veneta and Balenciaga all saw double-digit sales drops, while Hermes shifted from gains to declines.

Even Chanel and Prada saw their growth slow substantially. This slump highlights the challenges faced by global luxury giants in one of their most crucial markets, as competition for wealthy shoppers has increased and middle-class consumers are cutting back amid the country's economic downturn. The decline follows China's measures to curb capital outflows and recover tax revenues, including stricter controls on cross-border stock trading and demands for citizens to pay levies on offshore assets and investment gains.

These measures have dampened the spending power of wealthy Chinese, threatening the luxury recovery that began in 2025 with an AI-fueled stock market boom. Luxury executives are now more cautious, as July's performance has raised concerns about the weakened wealth effect and a tougher tax environment for high-income consumers.