<p class="ingestion featured-caption">Demand for luxury goods in China is slowing. Hermes; Louis Vuitton; Getty Images; Chelsea Jia Feng/BI</p><ul class="summary-list"><li>Demand for luxury goods in mainland China is falling.</li><li>The country's economy is slowing down, and some shoppers are rethinking their luxury purchases.</li></ul><p>China, with its sheer population size and <a target="_blank" class href="https://www.businessinsider.com/china-xi-jinping-recession-economy-american-companies-profits-trade-war-2024-9">once-meteoric economic growth</a>, has been heralded as a reliable cash cow of luxury brands for decades.</p><p>This peaked in the wake of the COVID-19 pandemic as ultra-high-net-worth and aspirational consumers amassed excess cash to spend on luxury goods.</p><p>But the <a target="_blank" href="https://www.businessinsider.com/luxury-sales-plummet-china-consumers-cut-back-spending-earnings-kering-2024-7">golden days of luxury shopping in China seem to be fading</a> for many luxury brands — though there are <a target="_blank" href="https://www.businessinsider.com/hermes-outperforms-peers-asia-amid-chinas-luxury-market-slump-birkin-2024-7">exceptions</a>.</p><p>An ongoing property crisis, geopolitical tensions, and high youth unemployment rates have weakened China's economy and weighed on consumer confidence.</p><p>While the government is <a target="_blank" href="https://www.businessinsider.com/china-economy-stimulus-package-push-wont-reverse-property-market-crisis-2024-9">implementing stimulus packages to address</a> the country's faltering economy, it's unclear whether these will give consumers the confidence to start spending again.</p><p>LVMH kicked off luxury earnings season this week, reporting a <a target="_blank" class href="https://www.businessinsider.com/lvmh-luxury-louis-vuitton-struggles-china-slowdown-2024">16% decline in third-quarter sales</a> in the Asia region, excluding Japan, compared to the third quarter of 2023.</p><p>In 2021, the Asia region, excluding Japan, was responsible for 35% of LVMH's total revenue. Fast-forward three years, and this has dipped by 6%.</p><p>Its rival Kering, the parent company of Gucci and Balenciaga, is due to report Q3 results later this month. In July, it reported a "deceleration" in Asia-Pacific for the first half of the year.</p><p>Asia Pacific, excluding Japan, contributed 38% of its revenue in 2021. In the first half of 2024, this dropped to 32%.</p><p>It's a similar story at other luxury brands. Hugo Boss, Burberry, Richemont, and Swatch all called out slumping sales in China last earnings season as consumers cut back.</p><p>But investors are now wondering if slowing demand is entirely due to weaker economic conditions or if there are other structural factors at play:</p>