French chic still reigns supreme

Expanding presence

Besides revising the overall sales strategy, the market decline has not stopped the French brands from investing heavily in expanding their retail presence, and planning more aggressive marketing campaigns in China.

After debuting in China last year, the fashion house Christian Dior is continuing to keep the luxury market in a tizzy. This month, the company released its first collection for Chinese customers designed by its art director Raf Simons in Shanghai.

Another French couturier, Chanel, is also making similar moves to cater to the Chinese market. In 2009, Karl Lagerfeld, designer and creative director for the fashion house, brought Chanel's first "demi-couture" pre-fall collection to Shanghai and has since frequently visited China to meet private clients, according to the Business of Fashion website.

Though there is a lull in the Chinese luxury market, it does not mean that interest in luxury products is tapering off, experts said.

"Many Chinese consumers are buying big luxury brand products while traveling overseas. More than half of the customers in a French luxury flagship store nowadays are from China," said Zhao Qian, a fashion consultant and CEO of the Beijing-based Inlife International Group.

Cavender said: "The reason behind this is not only the cost advantage associated with purchasing in Europe versus China, but also because customers are shifting spending toward leisure and are making many more trips than they have in the past."

The report issued by Hurun shows that Europe is slowly emerging as the most sought-after luxury destination and accounts for more than half of the top 10 destinations. France undoubtedly is the leader of the pack.

"The peak time for the Chinese luxury products market is still far away. French luxury brands that have managed to get a toehold in China will not give up that easily. Instead, they will adjust their strategy to shift some of their focus to the market outside China," Zhao said.

"Most of these brands may contemplate adding Chinese-speaking sales personnel in their global outlets to offer Chinese customers a unique buying experience," she said.

Wang Wen and Xu Junqian contributed to this story.