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China’s luxury market weakened further in July after tighter offshore tax enforcement affected spending among wealthy consumers. Sales across the country’s 25 largest luxury brands fell more than 10%, according to three research firms surveyed by Bloomberg.
The decline accelerated from June and reversed the stronger demand recorded earlier this year. Meanwhile, falling stock prices, weak property values and slower economic growth reduced consumer confidence across several high-value spending categories.
Louis Vuitton, Dior, Gucci, Bottega Veneta and Balenciaga recorded double-digit sales declines during July. Hermès moved from growth into contraction, while Chanel and Prada reported much slower sales growth.
The results create fresh pressure for international luxury companies operating in China. The country once drove much of the sector’s global expansion. However, competition for wealthy customers has increased, while middle-class shoppers have reduced discretionary purchases.
LVMH, Kering, Hermès, Chanel and Prada did not immediately comment on the reported sales figures. Their shares also fell during Thursday’s European trading session. LVMH dropped 2.8%, while Kering lost 3.6%. Hermès declined 2.1%.
Several other conditions affected store traffic during July. Extreme heat, heavy rainfall and increased overseas travel reduced domestic shopping activity during the summer holiday period. LVMH also faced criticism on Chinese social media after a trademark dispute involving local beverage company Molly Tea.
China has tightened controls covering cross-border stock trading, offshore assets and overseas investment income. Authorities have also demanded billions of dollars in unpaid taxes from citizens holding wealth outside the country.
The measures form part of China’s largest overhaul of its cross-border financial system in a decade. They seek to limit capital outflows and recover tax revenue. Consequently, some wealthy households have become more cautious about luxury purchases and other discretionary spending.
“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 Foresight Performance Partners. “There’s legitimate concern among luxury executives when looking at July’s performance.”
The MSCI China Index has lost 8.9% this year, erasing its 28.3% gain from last year. Hong Kong’s Hang Seng Index has also weakened after recording strong growth in 2025.
Macau casinos reported sharper-than-expected revenue declines during June and July. High-value gamblers reduced both their visits and betting activity, showing broader caution among affluent consumers.
China’s property downturn previously reduced household wealth. Wealthy investors then moved more money into shares and other financial assets. That shift left their spending decisions more exposed to stock market movements.
“We observe some correlation between the capital market performance and luxury sales in the last two years,” said Robert Wu, chief executive of Shanghai research company Baiguan. “In the past, such correlation was less obvious because a lot of wealth was stored in real estate.”
Shanghai financial product salesperson Stella Lin said losses in her stock portfolio stopped her recent luxury purchases. Stocks account for more than half of her invested capital. She previously spent at least $15,000 each year on designer clothing and handbags.
“I’m already in a money-losing mood,” Lin said. “I haven’t felt like shopping in any fancy stores in the past two months.”
China’s wider retail sector also showed weaker demand. Retail sales grew only 0.6% last month, while sales of jewelry, cars and other expensive products fell more than 10%.
Luxury companies will now monitor spending during Chinese Valentine’s Day, traditionally a strong sales period. Roizen said failure to record growth during the event would provide further evidence of a broader market slowdown.
