Louis Vuitton is now a 'brand for secretaries' in China

China's elite have become too savvy for Louis Vuitton, which has exploded in popularity in the middle class.

"I don't see anybody carrying a Gucci or Louis Vuitton bag," Sara Jane Ho, the founder of the elite Chinese etiquette school Institute Sarita, told Business Insider. "My clients are sophisticated. My students are the people who were buying an Hermes bag 10 years ago and holding themselves to higher standards."

As HSBC managing director Ewan Rambourg explains in "The Bling Dynasty: Why the Reign of Chinese Luxury Shoppers Has Only Just Begun," Louis Vuitton has been a big deal in China since around 2003, when sales peaked in Japan. While Japan's elite were less concerned about the brand hitting the mainstream, however, China's elite have a different attitude toward luxury.

"Japanese people used to purchase luxury products to fit in whereas Chinese are buying the goods to stand out," Rambourg writes, paraphrasing Swarovski executive Francis Belin.

Now China's very high-end consumers are abandoning the label for even more expensive brands or bespoke goods. A typical Chinese luxury shopper, he claims, might think, "I can't buy Vuitton, I've seen it too much, it's a brand for secretaries."

"Louis Vuitton has become too ordinary," a billionaire woman told China Market Research Group managing director Shaun Rein in 2011. "Everyone has it. You see it in every restaurant in Beijing. I prefer Chanel or Bottega Veneta now. They are more exclusive."

It hasn't helped that there are so many counterfeit Louis Vuitton handbags in China and around the world.

Louis Vuitton sells plenty of goods in China - around half of global sales - but now the core consumers include young office workers with spending money who save up to buy the status symbol. Indeed, China's middle class may be the biggest growth market there is.

The problem now will be holding onto those core consumers while continuing to strive for the affluent customers who have left them.

To succeed, Louis Vuitton may need to move away from its monogrammed, label-heavy image and become a more nuanced luxury company.

"Wealthy Chinese want to make a statement about their social status and what they wear, but they're getting a little more subtle," Hansi Men, an investment immigration lawyer at Streit & Su law firm, told Business Insider. "They want you to know it's Louis Vuitton, but they don't like the big characters on their shirt. They still want you to know that it's Louis Vuitton without really knowing."

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