Chongqing - When Canada-based fashion photographer Xudafu Li returned to his hometown of Chongqing this month, his first purchase wasn't from Paris or Milan, but from Chinese designer brand Songmont. "My partner in Canada, who works in fashion, strongly recommended it," Li said on November 6.

Xudafu Li with his Songmont bag. (Photo/Xudafu Li)

"Before receiving the bag, I was already impressed by its design. When it arrived, the quality exceeded expectations - the packaging, dust bag, and materials were on par with global luxury standards," said Li.

Having lived in Paris for years, Li said his decision reflects a broader consumer trend toward seeking high-quality, well-priced luxury products. He added that recent reports of LVMH chairman Bernard Arnault visiting Songmont's Shanghai store sparked talk of a possible investment. 

"If that happens, prices will rise," Li said. "So I bought before the big players move."

Visits reflect China's luxury clout

During his third visit to China since 2023, in September, Arnault’s itinerary included stops at Louis Vuitton and Dior stores, as well as visits to two emerging Chinese brands, Lao Pu Gold and Songmont.

Louis Vuitton boutique at Chongqing IFS. (Photo/Zheng Ran)

According to eyewitnesses, Arnault and his delegation spent about 30 minutes at Lao Pu Gold’s boutique, where he reportedly described the jewelry as “delicate and interesting.” He later visited Songmont’s store at Shanghai’s Taikoo Li Qiantan, speaking with staff and examining the brand’s handbags.

Customers line up outside the Lao Pu Gold boutique at Shanghai IFC Mall. (Photo/Zheng Ran)

Analysts say the visits signal growing recognition of China's rising luxury sector. Lao Pu Gold reported 123.5 billion yuan (about 17.3 billion U.S. dollars) in revenue for the first half of 2025, a 251% year-on-year increase. Its profit rose 285.8% to 2.27 billion yuan, with an average store generating nearly 500 million yuan in sales.

Research by Frost & Sullivan, cited in the company's financial report, found that Lao Pu Gold's consumer overlap with five major international luxury brands—Louis Vuitton, Hermès, Cartier, Bulgari, and Tiffany—averaged 77.3%, underscoring how Chinese labels are attracting similar customer bases.

By contrast, LVMH's fashion and leather goods division, which includes LV and Dior, saw sales fall 8% year-on-year to €19.1 billion in the first half of 2025, with Asia-Pacific revenues (including China) dropping from 33% to 30% of total sales.

Dior boutique at Chongqing IFS. (Photo/Zheng Ran)

Global luxury slows, China's shoppers shift

According to the Spring 2025 Global Luxury Market Study by Bain & Company and Altagamma, the global luxury sector, valued at €1.5 trillion, is experiencing its first substantive slowdown since 2009. The personal luxury goods market shrank from €369 billion in 2023 to €364 billion in 2024.

Both the United States and China, traditionally the twin engines of luxury growth, recorded six consecutive quarters of negative growth. European and Japanese markets have also cooled, while emerging markets in the Middle East, Latin America, and Southeast Asia have shown resilience due to the expansion of middle-class populations.

Bain forecasts that 2025 revenues may decline by 2% to 5%, though it remains optimistic for the long term. "Over the next five years, more than 300 million new luxury consumers will emerge - half of them from Generation Z and Generation Alpha," said Bain partner Claudia D'Arpizio. "Luxury brands must shift from growth-driven to value-driven strategies."

The shift in consumption habits is being felt throughout China's retail sector. A veteran manager at a Shanghai luxury mall, who asked not to be named, recalled that sales at leading shopping centers had jumped by as much as 60% during the post-pandemic rebound. "We used to boost brands through subsidies and marketing, but consumers aren't responding anymore- and some brands blame the malls," she said. "Now our budgets go straight to social media influencers to reach shoppers directly."

Major groups, such as LVMH and Kering, have scaled back operations, with Gucci reportedly closing 18 stores in China during the first half of the year. Commercial property analysts say malls are now subsidizing tenants with rent reductions and promotional support. "It has become a tenants' market," said Zino Helmlinger, head of retail leasing at CBRE China. "When a major brand leaves, it can trigger a chain reaction that reduces overall foot traffic."

Zhu Jianhui, head of retail research at JLL China, noted that the traditional rental model—a base rent plus a sales commission—means mall owners' income falls when luxury sales decline. To retain key brands, he said, malls have started offering marketing resources, loyalty programs, and exclusive experiences to maintain sales momentum.

The future of luxury: from exclusivity to cultural relevance

A longtime Shanghai real estate insider said consumer boundaries are fading fast. "Hermès buyers, Lao Pu Gold fans, even fast-fashion shoppers are all buying Labubu now," he noted. "With profiles so blurred, malls must stay agile- and developers are already adjusting."

"Luxury is no longer defined solely by price or exclusivity," said Weber Wai Pak Lo, CEO of Hang Lung Properties, which operates several high-end malls in China. "Content, cultural relevance, and emotional connection now matter more."

As a result, shopping centers are diversifying their offerings. Some have introduced high-end sports, pop culture, or dining experiences to attract younger audiences.

One of the most notable shifts is the rapid expansion of Lao Pu Gold, which opened four new stores across Shanghai this year. Its latest location at Plaza 66 sparked long lines before dawn on opening day, October 25. Industry experts view this as a positive trend- hot brands bring traffic and business.

But according to Zhu, maintaining a high ratio of ultra-luxury brands can be risky in today's climate, especially in non-tier-one markets. He notes that adding trendy sportswear, collectibles, specialty dining, and immersive experiences can help malls stay relevant and attract younger crowds.