Luxury sales plunge in China as tax push hits rich shoppers

The sales drop adds uncertainty to the outlook in one of the luxury brands’ most important markets.

BEIJING – Global luxury brands are facing a deepening sales slump in China, as the country’s campaign to tax offshore wealth sends ripples from stock markets to casino floors and dampens spending by the country’s richest consumers.

Sales at the 25 biggest luxury labels in China dropped more than 10 per cent in July, according to three research firms surveyed by Bloomberg that track industry data. That was worse than the slowdown witnessed in June, and marked a sharp reversal from the brisk business seen earlier in 2026.

LVMH’s Louis Vuitton and Dior, as well as Kering’s Gucci, Bottega Veneta and Balenciaga all recorded double-digit sales drops, while Hermes swung from gains to declines. Growth for Chanel and Prada also decelerated significantly.

For global luxury giants, the declines add uncertainty to the outlook in one of their most important markets.

China was once the engine of decades of luxury growth, but competition for the wealthiest shoppers has intensified, and middle-class consumers have cut back on their spending amid the country’s economic downturn.

The slump coincides with China’s sweeping efforts to stem capital outflows and reclaim tax revenues, including tighter controls on cross-border stock trading and demands for citizens to pay billions of dollars in levies on offshore assets and investment gains.

The measures have dampened the spending appetite of wealthy Chinese, threatening to unravel a luxury recovery that began less than a year ago on the back of an AI-fuelled stock market boom.

“Operators are beginning to report more caution among their VIP clients against the waning wealth effect and a tighter tax environment for high-income consumers,” said Jacques Roizen, co-founder of Shanghai-based consultancy Foresight Performance Partners. “There’s legitimate concern among luxury executives when looking at July’s performance.”

China’s new measures amount to the biggest shake-up of its cross-border financial system in a decade, further restricting channels long used by affluent households to preserve and diversify their wealth.

The clampdown has contributed to erasing a 28.3 per cent rally in 2025 in the MSCI China Index, which is down 8.9 per cent in 2026, one of the worst performers among major global markets. Hong Kong’s Hang Seng Index has also lost steam after strong gains in 2025.

Shares of LVMH declined 2.8 per cent, hitting the lowest price in nearly two months, on Euronext on Aug 20. Kering shares fell 3.6 per cent, and Hermes dropped 2.1 per cent.