Arya News - China’s luxury market is facing a sharp slowdown as major international brands close stores and wealthy consumers cut spending.
NEW DELHI – China’s once-strong luxury market is facing a sharp slowdown as international brands shut stores in major cities and wealthy consumers reduce their spending, according to a report by Uganda-based Nile Post.
The report said brands including Louis Vuitton, Gucci, Balenciaga and Rolex are closing stores in China as demand falls amid weakness in the middle class and a prolonged property market crisis. Luxury boutiques that once attracted customers willing to spend heavily are now seeing fewer shoppers.
Luxury Spending Falls As Consumers Cut Costs
According to the IANS report, high-net-worth individuals plan to reduce their spending on luxury goods by 10 per cent this year. The report linked the decline to tighter tax checks, unstable financial markets and continued weakness in the property sector.
It said upper-middle-class families are also under financial pressure due to mortgages, car loans and education costs. Some have been selling luxury goods in the second-hand market to raise money. However, demand in that market has also weakened, with the report saying Rolex watches and Louis Vuitton handbags have lost thousands in value.
The middle class is also facing rising unemployment, lower savings and growing debt. Shopping malls and commercial areas that were once busy have increasingly become deserted, the report said.
Property Crisis Hits Everyday Spending
The decline in property prices has further weakened consumer confidence, leaving many families with heavy debt and less money for non-essential spending.
The report said coffee shops, restaurants and fresh food markets are also shutting down as middle-class consumers struggle to maintain their usual spending levels.
It also criticised the Chinese government’s response, saying subsidies for credit card repayments were being used to support consumption instead of expanding social safety nets. The publication described the measure as a short-term solution that could prolong economic weakness.
The report said luxury brands have remained relatively resilient in Europe, the US and Japan, while the decline in China points to deeper problems in its economy.
China’s slowdown is also affecting several other sectors, from premium liquor and tobacco to everyday retail and dining, according to the report.