In recent years, the rise of the Guochao trend (国潮 – “National Tide”) has marked a profound transformation in Chinese consumer behavior, fueled by a growing sense of national identity and a renewed appreciation for domestic brands. The term "Made in China," though still carrying some negative connotations, is quickly evolving into a symbol of pride. With the top 100 Chinese brands valued at a staggering $968.5 billion, as highlighted by the 2024 Kantar BrandZ Most Valuable Chinese Brands Ranking, it is clear that Chinese brands are not just growing—they are ready to leap from excellence to extraordinary. To counteract this shift, global players like Louis Vuitton have begun incorporating local culture into their strategies in the hopes of building a deeper relationship with the community.

While these efforts are to be praised, the legendary French luxury house can breathe a sigh of relief: heritage brands that hold a dominant position in the eyes of Chinese consumers seem to be relatively immune to the impact of the Guochao Wave. That said, other international names are facing the challenges that come from the absence of a proper localization plan. Luxury brands Hugo Boss and Richemont, to name a few, are slowly losing appeal among Chinese consumers and experiencing significant sales decline in China. The renowned British fashion house Burberry, which has recently found itself in troubled waters since its removal from the U.K.'s FTSE 100 stock market index, is now dealing with the cold reception that Chinese netizens are showing towards its Weibo announcement revealing actress Tang Wei as its new beauty ambassador. While the actress's lack of a strong online presence certainly played a part, the decision not to share the news on the much more popular platform Xiaohongshu delivered the final blow.

Chinese brands are setting a new standard by implementing cutting-edge technology, forming meaningful collaborations with KOLs and treating consumers as the top priority, thus creating tailored experiences that deeply resonate with them. In contrast, many foreign brands continue to rely heavily on advertising and promotions, unintentionally adding to brand fatigue in the Chinese market.

The harsh reality in today’s competitive landscape is that, for global brands to survive, merely pushing products is no longer enough—they must adopt customer-centric strategies and innovation-driven approaches or risk becoming irrelevant to China’s increasingly selective consumers.

Too many international brands fall into the trap of copying their global strategies in China, often to their detriment. What they usually fail to comprehend is that China’s market is far too diverse for a one-size-fits-all approach; a deep cultural understanding is one, if not the most, important factor to avoid communication errors that could irreparably damage a brand’s reputation.

Another common mistake is segmenting Chinese consumers solely by age and gender – quite a limiting way to categorize them, considering how much of an impact city tiers, diverse lifestyles and regional dialects also have on customers’ choices. The growth of China’s luxury market, with nearly half now coming from tier 2 and 3 cities, is further proof of how localization is progressively becoming a key element for achieving success.

One of the main reasons foreign luxury brands are losing ground in China is their struggle to fully understand Generation Z, the primary driver behind shifting consumer preferences. Chinese Gen Z expects more than just a luxury product; they demand immersive digital experiences, authentic brand narratives rooted in local culture, and a solid commitment to social responsibility. According to Kantar’s latest Sustainability Sector Index, Chinese consumers rank among the top three in the world for environmental consciousness, making sustainability a crucial aspect in brand choice. Additionally, Gen Zers are not only especially vulnerable to the influence of local celebrities, but they also crave personalized, exclusive offerings that reflect their individuality—areas where many Western brands fall short. To regain their standing in China’s rapidly evolving market, foreign luxury brands are called upon to go beyond their traditional approaches and deeply align with Chinese Gen Zers’ values, culture, and expectations.

Foreign fashion and luxury brands can still have a chance to thrive in the Chinese market —if they’re bold enough to adapt. By embracing innovation, harmonizing with local culture, and understanding the values of Gen Z, global players can reclaim their relevance. The key lies in moving past outdated strategies and meet Chinese consumers where they are: digitally engaged, socially committed, and fiercely proud of their local identity.