Louis Vuitton China sales plunge after trademark win sparks patriotic backlash

Louis Vuitton won a trademark lawsuit against a small Chinese tea brand — and lost millions in sales as a result. A patriotic backlash on Chinese social media over the legal fight has deepened an already painful slump for LVMH's most profitable label in the world's largest luxury market.

A Legal Win That Backfired

The Suzhou Intermediate People's Court in Jiangsu Province ruled in July that Chinese tea brand Molly Tea (also known as Molity) must pay 10.3 million yuan ($1.5 million) in damages after finding its four-petal floral logo too similar to Louis Vuitton's iconic monogram. But the ruling ignited a firestorm online. Chinese social media users rallied behind the tea brand, arguing that its design resembles the baoxianghua, a traditional floral pattern from the Tang Dynasty. Others called it "cheap" for a luxury giant to sue a small, local tea chain that is not a direct competitor.sedaily+1

Molly Tea's founder announced plans to appeal and changed the brand mark's color as a remedial measure. At the peak of the controversy, Louis Vuitton's accounts on Chinese platforms including Douyin, Weibo, and Xiaohongshu fell silent, with the brand making no official announcement of an event in Shanghai in late July.fashionnetwork+1

Sales Take a Hit

The backlash has shown up in the numbers. Research firm JL Warren Capital estimated that Louis Vuitton's China sales fell roughly 30% in July and another 20% to 25% in August. "The lawsuit in July triggered an escalating cultural-ownership controversy that appears to have materially affected the brand's performance," said Junheng Li, JL Warren's chief executive.sedaily+1

Other luxury brands are also struggling in China amid the country's economic slowdown, but Louis Vuitton's decline was the steepest. JL Warren estimates Gucci-owner Kering's flagship brand saw China sales fall 20% in July and 10% in August, while Hermès ↗ 0.54% dropped about 5% and 13% over the same months. UBS ↘ 1.51% estimates Chinese consumers account for about 30% of LVMH's total revenue.fashionnetwork+1

Executives Scramble to Respond

Louis Vuitton CEO Pietro Beccari and Deputy CEO Damien Bertrand traveled to China at the end of July to assess the situation on the ground, according to Bloomberg. The planned handover from Beccari to Bertrand as sole CEO of the brand will likely be delayed as a result of the turmoil, people familiar with the matter told Bloomberg.bloomberg+1

There are tentative signs the storm may be easing. JL Warren estimates September sales will show further improvement, projecting a 13% decline — still negative but narrower than prior months. HSBC ↘ 1.34% analysts downgraded LVMH to hold this week, calling the social media impact "short term in nature" but acknowledging it will weigh on third-quarter results.fashionnetwork

The episode echoes earlier patriotic consumer campaigns in China that have hit Western brands. Nike ↘ 1.95%, Adidas, H&M, and Dolce & Gabbana have all endured prolonged boycotts. "You may win in a court, and you may have the government's seal of approval, but the court of public opinion is also strong and may deviate from the official line," said Robert Wu, CEO of Shanghai-based research firm Baiguan.sedaily+1