Gucci’s China shock reverberates : The luxury goods business has long been worried that Chinese consumers may cut back on their spending. A prominent participant in the fashion industry, Gucci, has encountered this problem head-on.

The market value of French giant Kering SA plummeted by $9 billion after the company revealed a precipitous drop in sales of Gucci products in China for the current quarter. A number other subsets of the luxury market are starting to mirror this downturn, not only Gucci.

A different analysis found that shipments of Swiss watches to China, a major market for luxury watches, had dropped significantly. Luxury goods consumption in China is expected to remain low in the months ahead, according to analysts.

It is clear from this avalanche of bad news that the expected increase in spending by wealthy Chinese customers after the relaxation of stringent COVID restrictions did not happen. Consumer confidence is being eroded in one of the world’s biggest luxury marketplaces due to economic issues like increasing unemployment, a property market slowdown, and deflationary pressures.

Increasingly, Chinese consumers have higher expectations for the brands they buy from, and they are becoming pickier about where their money goes. The online sales of Gucci products in China have dropped significantly during the past several months, for instance. Many high-end companies, especially those with strong ties to the Chinese market, are finding this change in customer behavior to be an enormous obstacle.

After a string of ostentatious designs from its former creative directors, Sabato De Sarno has brought a more understated style to Gucci’s creations. Even while De Sarno’s designs seem to be well-received thus far, there are many who think they are too similar to Valentino, Prada, and Celine, and lack any real originality.

Demands for new strategies have surfaced in response to the unexpected decline in Gucci sales, which has shaken Kering to its core. Investors still don’t believe that Gucci can be profitably led by the present leadership, despite Kering’s best attempts to reinvigorate the brand.

Gucci isn’t the only luxury brand suffering from China’s slowdown; other brands are too, but to a lesser degree. Exports of Swiss watches to China have fallen precipitously, reflecting a larger pattern impacting the luxury goods industry worldwide.

Some high-end companies are looking to expand into other markets, such the Middle East, India, and Southeast Asia, to reduce their exposure to the dangers of being too dependent on the Chinese market. The change in approach is a result of realizing that in order to survive the unpredictable global luxury market, diversity is key.