Chinese Buyers' Impact on the Global Luxury Market

August 11, 2023
China's high-end consumers once dominated spending for luxury products. How quickly they return could shape industry's outlook and provide hints into China's recovery.

Jewelry, designer handbags and clothing, cosmetics and other luxury goods flew off the shelves in China earlier this year, as consumers there emerged from yearslong pandemic shutdowns. In May, retail sales of gold and silver jewelry alone increased by 31.5% over the previous year, according to China's National Bureau of Statistics.

Some economic observers saw this surge as possible evidence that high-end Chinese consumers—a force in the global luxury goods market—could once again exert influence over this sector. Indeed, shares of companies such as LVMH, Estée Lauder, Movado Group, and Christian Dior did rally—only to flatten by summer. Was it too soon to break out the bubbly?

"Many luxury stocks went up a lot in early 2023 in expectation of this Chinese rebound, and then faltered a little," says Michelle Gibley, director of international research at the Schwab Center for Financial Research. "There's a lot of hope already in those stocks."

The importance of China

Generally, luxury firms thrived between 2010 and 2019 as wealthy Chinese consumers chased expensive U.S. and European goods. Though these buyers typically spent money abroad to avoid their own country's tariffs and taxes, brands like Rolex, Louis Vuitton, and Tiffany & Co. increasingly invested in marketing to these consumers, who over a decade became vital to global sales. Tourists, many from China, were responsible for more than half of 2019 spending in Europe's then-€89 billion luxury market.1

Then the pandemic and worsening geopolitical relations dulled tourism. By 2022, Chinese spending on luxury goods in Europe had fallen to less than half its 2019 level, according to a recent report on global luxury demand from management consulting firm Bain & Company.

"Everyone had super-high expectations, but the Chinese luxury market recovery is coming in waves," notes Adam Lynch, a senior quantitative analyst for Schwab Equity Ratings. "Phase 1 was getting the restrictions over with, and Phase 2 is people starting to travel. We haven't seen much of that yet, but the expectation is it's coming."

Reasons for optimism

Adam continues, "Improving consumer confidence, along with supply chain issues becoming less of a concern, could be positive signs for the luxury industry." Companies in the luxury space "have come out with some positive comments, and it seems like the high-end Chinese consumer is doing better," Michelle adds.

  • Luxury brands enjoyed improved demand from Chinese customers in the second quarter of 2023, according to company earnings reports. Luxury fashion house Burberry Group reported a 46% year-over-year rise in second-quarter mainland China sales, while luxury company Richemont saw greater China sales rise 20%.
  • LVMH, a conglomerate that manages brands including Tiffany and Louis Vuitton, saw organic sales in Asia excluding Japan soar 34% in the second quarter, up from 14% in the first quarter.
  • Tapestry, a U.S. luxury company with brands such as Kate Spade and Coach, said that Greater China sales increased 20% in the most recent quarter.
  • Industries with a peripheral relationship to luxury goods makers are also getting more traffic. Visits to Las Vegas Sands' Macao resort—a popular destination for high-end Chinese customers—accelerated in June.

Reasons for pessimism

In what may be a speed bump for luxury companies, more Chinese customers are staying home rather than winging to Europe or North America to buy their watches and bracelets.

"This partly reflects geopolitics, but, more importantly, the prices of goods in China have decreased. The government is making a big push to keep the high-end customer shopping domestically," Adam says. "Luxury companies could feel some margin compression because of that."

Asked on LVMH's July earnings call to describe Chinese tourism in Europe, CFO Jean-Jacques Guiony replied, "It's very, very small. I mean, we have no groups. We have only individual travelers, and they are only a fraction of the total clients we used to have in Europe."

Researching investments

  • To search for China-related mutual funds and exchange-traded funds (ETFs), log in to the ETF Screener ( and in the Criteria menu, select Fund Exposure, then Regional Exposure: Asia Emerging, and set to >50%.
  • You can also log in to Thematic Stock Lists ( to view our investing themes that zero in on industries with exposure to China, such as China Internet.

Implications for investing in China

The question is whether home cooking means better days for China's own economy, which Bain expects to grow 5.3% this year. While luxury spending is only a tiny fraction of gross domestic product, an improvement in this category as stimulus takes effect could suggest the government's efforts are lifting spirits.

Remember, China is an emerging market. Make sure you carefully plan any exposure to stocks there.

"You need to have a long-term time horizon on anything related to China, because stocks will be very volatile," Michelle says. "China tends to have a bear market about once a year and had one in the first half of 2023. Policymakers have shifted to stimulus mode and stocks are off the lows. The rally could have legs, but how long it lasts will depend on the amount of follow-through and details of stimulus implementation. For an investor with a long-term horizon who can stomach a lot of volatility, it may be a good time."

Ultimately, the return of high-end Chinese buyers could help luxury companies and signal improved fortunes for the Chinese economy and its battered stock market. However, this could take some time—and share prices may not rise much further. Investors with long horizons should consider patiently monitoring Chinese luxury demand before making a move.

1Bain-Altagamma Luxury Goods Worldwide Market Study, Spring 2023,

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