With the economy slowing, consumer confidence waning, and local rivals gaining ground, global giants such as BMW, IKEA, Nike, and Uniqlo are being forced to rethink their long-term strategies. Many are shifting focus toward affordability, deeper localisation, and innovation as they navigate what industry insiders are calling China’s “new normal.”
“We need to find smarter ways of producing so prices become even more competitive, and we need to learn to be more relevant for the Chinese market,” said Jon Abrahamsson Ring, CEO of IKEA franchisor Inter IKEA, acknowledging that weak consumer confidence remains a major hurdle.
Tough Climate for Global Automakers and Retailers
Carmakers have been among the hardest hit. BMW, Mercedes-Benz, and Porsche have all reported declining sales in China, the world’s largest auto market, where price wars and home-grown electric vehicle brands such as BYD and Nio are dominating the landscape.
Meanwhile, consumer goods giants like Nestlé and ASML have warned of falling Chinese demand. Nestlé admitted it had focused too heavily on distribution and was now shifting its attention to building consumer engagement. Semiconductor equipment maker ASML also described its sales drop in China as part of an ongoing “normalization.”
Retailers are feeling the pinch as shoppers turn to discount platforms like Alibaba’s Taobao. At Fast Retailing, the parent company of Uniqlo, Chinese sales and profits fell even as its North American operations grew 24%. Similarly, Nike reported its fifth consecutive quarterly decline in Greater China sales despite marketing efforts that included visits by U.S. basketball stars LeBron James and Ja Morant.
The shift has also hit the premium drinks market. Australia’s Treasury Wine Estates withdrew its 2026 earnings guidance due to weak demand for its Penfolds label, while France’s Pernod Ricard said sales in China plunged 27% amid changing alcohol habits and fewer large social gatherings.
Bright Spots in Luxury, But Risks Remain
A rare exception is the luxury sector, where brands like LVMH are still drawing Chinese consumers through innovative retail experiences. LVMH’s CFO Cécile Cabanis said the group’s third-quarter sales exceeded expectations thanks to “retail disruption initiatives” such as Louis Vuitton’s ship-shaped boutique in Shanghai that reignited shopper enthusiasm.
Despite this resilience, analysts caution that even luxury demand may soften if deflationary pressures and consumer caution persist, with China’s GDP and retail data expected to offer further clues about economic health in the coming weeks.
Rise of Local Champions
Perhaps the biggest challenge for global firms is the meteoric rise of Chinese brands across nearly every consumer segment — from cars to coffee and cosmetics.
Chinese automakers now account for 69% of total car sales, up from 38% in 2020. Brands like Luckin Coffee, Mixue Ice Cream, Proya, and Chando are capturing massive market share by offering quality at lower prices — a latte from Luckin costs just 9.9 yuan ($1.40), less than one-third the price at Starbucks.
In the beauty market, domestic brands are expected to overtake foreign labels for the first time in 2025, reaching 50.4% market share, according to Frost & Sullivan.
Among China’s new retail stars is Laopu Gold, dubbed the “Hermès of gold”, whose stock has surged 214% this year by blending luxury craftsmanship with deep Chinese cultural motifs. Research shows over 77% of Laopu’s customers also shop at Western luxury houses like Louis Vuitton and Cartier — a sign that even wealthy consumers are gravitating toward brands rooted in local identity.
Global Firms Reassess Strategies
Multinationals are now learning that success in China requires more than scale — it demands local relevance, affordability, and innovation. Nestlé’s CFO Anna Manz summed up the recalibration underway:
“What you see in China is us correcting that — consolidating our distribution and making it more efficient, while we build real consumer demand.”
As China’s economy continues to cool and domestic players grow stronger, analysts say the message for global brands is clear: the era of easy profits in China is over, and the competition to stay relevant in the market has only just begun.