by ZHU Yongling

China's luxury market showed clearer signs of stabilizing in the third quarter as more shoppers bought at home and global brands reported firmer demand — a shift closely watched by European luxury groups that rely heavily on Chinese spending. The market has been weak since late 2023, but recent data suggest the slide may be bottoming out.

Richemont reported a 7% rise in Greater China sales, led by jewelry at Cartier. Burberry grew 3% after stronger summer holiday demand. Hermès said all Asian markets excluding Japan expanded, with Greater China performing well. LVMH's fashion and leather-goods division also returned to growth in mainland China.

High-end mall operators reported similar trends. Swire Properties said retail sales across its mainland malls picked up in the first nine months, with previously weaker locations back to year-on-year gains. Hang Lung said a three-day campaign at its flagship Shanghai mall in November lifted tenant sales by nearly 50%.

The improvement comes as more Chinese luxury spending remains onshore. LVMH said domestic purchases by Chinese customers rose at a mid-to-high single-digit pace in the third quarter, while their overseas spending fell by double digits. Overall global spending by Chinese clients was "very close to stable." Luxury brands also saw stronger demand during China's Singles Day shopping festival, with Alibaba's Tmall platform posting double-digit growth. Data shared with Jiemian News showed Balenciaga, Burberry and Moncler among the strongest performers in the opening phase of the event.

Stabilization has coincided with a sharp rebound in mainland equities. The Shenzhen Component Index jumped 29.25% in the third quarter, the strongest among major global benchmarks, while the Shanghai Composite and Hang Seng also logged their best quarterly gains in years. Equity gains tend to lift discretionary spending among higher-income households.

Luca Solca, Bernstein's head of global luxury research, said the equities rebound has been the primary force behind the recent pickup in China's luxury demand. A survey by the Cheung Kong Graduate School of Business found retail investors more willing to spend as A-shares climbed. Solca added that expectations of a property-market bottom are also helping sentiment. Rising transaction volumes in major cities offer early signs of stabilization, while lower-tier markets remain weak.

Still, global brands remain cautious. Kering, owner of Gucci, said Asia-Pacific sales fell 10% in the quarter despite narrowing declines, and spending by Chinese customers worldwide was still down by double digits. LVMH said a broader recovery in China "will take time," even as third-quarter momentum improved. Field checks in Shenzhen showed steady traffic at major boutiques but quieter activity elsewhere.

Luxury houses expect China to enter a more mature phase after a decade of rapid expansion. Prada said its mainland business has reached a plateau but reaffirmed its long-term strategy. Executives say Chinese consumers are becoming more selective, pushing brands to compete more on product quality and creative design. A McKinsey survey of ultra-high-net-worth consumers in China, the UK and the US found Chinese respondents place greater emphasis on exclusivity, scarcity and innovation.

Creative shifts may influence demand in upcoming seasons. Chanel, Dior and Gucci all appointed new creative directors this year, though commercial impact typically appears after a delay.

Policy changes may also keep more spending onshore. China will extend duty-free privileges in Hainan from Dec. 18 as the island moves to a new customs regime aimed at keeping high-end purchases at home. Geopolitical tensions have likewise nudged some Chinese travelers toward domestic or regional destinations rather than Europe's luxury hubs.

For now, China's luxury sector has moved from contraction to early stabilization. Whether it turns into a sustained recovery — and how much support it provides to Europe's luxury majors — will depend on wealth effects, property sentiment and brands' ability to adapt to a more selective consumer base.