SHANGHAI, Nov 17 — A changing of the guard is underway in China’s US$49 billion (RM203 billion) luxury market.

As an economic slowdown batters the sales of global giants like Gucci and LVMH, a new wave of confident, culturally-attuned home-grown brands is surging to fill the void. 

Labels like jeweller Laopu Gold and handbag maker Songmont are posting triple-digit sales growth by offering a compelling new vision: modern luxury that is proudly and authentically Chinese, Bloomberg reported.

This shift is so significant that even Bernard Arnault, the chairman of LVMH, was recently spotted browsing — and buying — from these upstart local brands during a visit to Shanghai.

The numbers tell a stark story. According to data compiled by BigOne Lab, e-commerce sales at Laopu Gold have surged over 1,000 per cent in the first three quarters of this year compared to two years ago, while online bag sales for Songmont have grown 90 per cent. 

By contrast, Gucci’s online bag sales in China have slumped more than 50 per cent.

The disappointment has battered shares of global luxury houses, with LVMH down about 30 per cent from its 2023 peak and Kering plunging roughly 60 per cent since its 2021 high.

More than just price

Domestic brands often offer a lower price point. For instance, a Songmont bag described as a "dupe" for an Hermès Picotin costs around US$421 versus over US$8,000 for the latter, but analysts say the price tag alone is not the deciding factor. 

The real advantage is a story rooted in craft and cultural pride that resonates deeply with a new generation of Chinese shoppers.

“Contrary to common perception, Chinese beauty brands aren’t competing on price – they’re building rich brand universes and prioritising storytelling,” said Jacques Roizen, managing director at Digital Luxury Group.

Labels like perfumer To Summer and clothing brand ICICLE draw from local history, art, and philosophy. 

To Summer builds scents around traditional ingredients like tea and osmanthus, while Songmont’s store designs reflect Chinese calligraphy. 

For shoppers like 30-year-old Wan Yihuan, that message hits home. Once a self-described Hermès and Tom Ford addict, she now carries a US$210 Songmont bag. 

“I fell into the trap of consumerism when I was younger,” she said. “Now I just want things I truly like.”

These domestic brands are also challenging the old "low-cost manufacturing" stereotype by investing in quality craftsmanship. ICICLE bought a factory that produces for Max Mara, Songmont uses full-grain cowhide and gold-plated hardware, and Laopu Gold incorporates elaborate traditional filigree techniques into its jewellery.

Their popularity is even spreading beyond China. In London, 16-year-old Naomi Jiang recently chose a Songmont bag, finding designer brands like Hermès overpriced. 

“We're getting a more diverse, higher quality selection,” she said.

The road ahead

While many of these brands have global ambitions, major obstacles remain. Few have crossed the US$1.4 billion annual revenue mark, and the top 10 best-selling luxury brands in China are still all Western, accounting for 63 per cent of the market.

The bigger risk may be psychological. The same economic malaise that has dampened enthusiasm for Western luxury could eventually spread to domestic brands as well. 

As one former luxury spender, Guo Wenjun, put it after trading her Rolex and Chanel for budget e-commerce finds: “Luxury used to make me feel like a queen. Now it no longer has that magic.”