Dupe culture: The new threat to China's luxury sector

Luxury brands are facing a new landscape: the rise of dupes and the changing purchasing behaviours of Chinese consumers. As the Chinese economy transforms, consumer behaviour is also undergoing a significant shift. The rise of counterfeit products and the decline in demand for luxury products illustrate a broader paradigm shift.

The rise of counterfeit products

The popularity of ‘dupes’ – affordable alternatives that are often indistinguishable from the originals – has grown exponentially in recent years. The trend, particularly evident among Gen Z consumers who are increasingly price-conscious and less inclined to spend money on luxury items, poses a growing threat to the luxury market in China. A phenomenon that has been largely amplified by social media, with influencers promoting ‘perfect dupes’ to appeal to an audience increasingly seeking affordable products.

Changing consumer behaviour in China and challenges for luxury brands

China represents around 35 percent of global luxury sales, a crucial market for groups such as LVMH. However, in 2023, the conglomerate recorded a slowdown in sales in this country, mainly due to a difficult economic situation following the pandemic and fluctuations in domestic consumption. The slowdown in the Chinese economy has led to a drop in consumer confidence and a contraction in spending, particularly as a result of the decline in disposable income. The unemployment rate, which is particularly high among young people, is also putting pressure on family budgets, limiting their ability to buy luxury products.

Furthermore, another important factor explaining the decline in sales of luxury brands in China could be the rise of national brands. National brands such as Shanghai Tang have managed to gain a prominent place on the international luxury chessboard. Others, such as Saint Joy, a Chinese high-end brand, have been very successful by adopting the ‘New Chinese Style’, a style that combines traditional Chinese models with contemporary cuts and is becoming increasingly popular.

Chinese consumers are also increasingly turning to local brands that offer high-quality products at competitive prices. Brands such as Urban Revivo, now a multinational brand, embody this trend, offering collections worldwide at more accessible prices. In addition, China is investing heavily in developing local talent and encouraging the training of national designers, as evidenced by the strong presence of Chinese designers at the latest edition of the CHIC Shanghai trade fair, an important platform for promoting the Chinese textile industry.

Impact on luxury brands

The trend towards counterfeiting has a significant impact on luxury brands. Counterfeiting in the luxury industry is estimated to cost around 50 to 60 billion euros per year worldwide, according to studies by the Organisation for Economic Co-operation and Development (OECD). This particularly affects luxury brands in fashion, accessories and perfumes.

The luxury sector, in turn, represents about 60 percent of the global counterfeit market, with products imitating brands such as Louis Vuitton, Gucci and Chanel.

Government measures

In response to the economic slowdown, the Chinese government has taken a series of measures to stimulate growth, including interest rate cuts and reductions in the reserve requirements for banks. However, it will take several months to assess the real impact of these measures on consumer confidence.

This article originally appeared on FashionUnited.FR. Translation via AI and edit by Rachel Douglass.