Louis Vuitton is facing a fresh challenge in China after a legal dispute with local tea company Molly Tea triggered a strong backlash among consumers and contributed to a sharp decline in sales.
The luxury fashion giant won its trademark case against Molly Tea, but the court victory appears to have come at a significant commercial cost.
The dispute over a floral logo has sparked anger on Chinese social media, with some consumers accusing the French luxury house of targeting a smaller local business.
According to estimates from market research firm JL Warren Capital, Louis Vuitton’s sales in China fell by about 30 per cent in July and remained under pressure in August, when sales were estimated to have declined by between 20 and 25 per cent.
The estimates come as the luxury industry is already dealing with weaker demand from Chinese consumers. Cinco Días
The controversy began over the logo used by Molly Tea, a Chinese tea company whose four-petal floral design was found by a Chinese court to infringe seven registered Louis Vuitton trademarks.
On July 2, 2026, the Suzhou Intermediate People’s Court ruled in favour of Louis Vuitton.
Molly Tea was ordered to pay 10.3 million yuan, equivalent to about $1.5 million, according to reports. The tea company is expected to appeal the ruling.
While Louis Vuitton secured a legal victory, the reaction outside the courtroom was very different.
The case quickly became a subject of discussion across Chinese social media platforms.
Some users criticised Louis Vuitton for pursuing a legal battle against a local tea company, particularly because the two businesses operate in very different industries.
Others defended Molly Tea’s design, arguing that the floral pattern was connected to traditional Chinese artistic motifs, including the baoxiang flower associated with the Tang dynasty.
The criticism developed into what analysts described as a patriotic backlash against the French luxury brand.
DDM News reports that the situation demonstrates how a legal victory can still create unexpected business risks for international brands operating in China.
For years, China has been one of the most important markets for global luxury companies.
Rising incomes and growing demand for designer products helped brands such as Louis Vuitton, Gucci and Hermès achieve significant growth in the country.
However, that environment has changed.
China’s economic slowdown, weaker consumer confidence and government efforts to discourage excessive luxury consumption have already affected demand across the sector.
The controversy surrounding Molly Tea has added another layer of difficulty for Louis Vuitton at a particularly challenging time.
Louis Vuitton is one of the most important brands within LVMH, the luxury group controlled by Bernard Arnault.
Although LVMH does not publish financial results for Louis Vuitton separately, analysts estimate that the brand generates a substantial share of the group’s sales and profits. Chinese consumers are also estimated to account for a significant portion of LVMH’s overall luxury sales. Cinco Días
The decline in Louis Vuitton sales has therefore attracted considerable attention from investors and luxury analysts.
The company was already experiencing difficulties in China before the Molly Tea controversy emerged. Competitors have also recorded weaker performance in the market.
JL Warren estimated that Gucci sales in China fell by around 20 per cent in July and 10 per cent in August, while Hermès experienced smaller declines during the same period.
This suggests that Louis Vuitton’s problems are partly connected to a broader slowdown in luxury spending, although analysts believe the Molly Tea dispute made the situation worse. Cinco Días
The timing of the controversy was particularly damaging because August is an important month for luxury retailers in China.
China’s Qixi Festival, often described as the Chinese Valentine’s Day, took place on August 19 this year.
The occasion is traditionally an important period for gift purchases, including luxury products.
However, JL Warren reported that demand for Louis Vuitton gifts appeared weaker than usual during the celebration.
Junheng Li, chief executive and head of research at JL Warren Capital, said the company observed a visible contraction in demand at Louis Vuitton boutiques during the period.
The research firm bases its estimates on observations from luxury stores across shopping centres rather than official company sales figures. Cinco Días
The reaction also appeared to affect Louis Vuitton’s activity on Chinese social media.
At the height of the controversy, the brand’s accounts on platforms including Douyin, Weibo and Xiaohongshu reportedly became unusually quiet.
Louis Vuitton has more than 11 million followers on Weibo, making the silence particularly noticeable among Chinese consumers and fashion followers. Cinco Días
For an international luxury company, maintaining a strong relationship with Chinese consumers is crucial.
Chinese shoppers have historically played a major role in the global luxury market, purchasing handbags, clothing, jewellery, watches and other high-end products both inside China and while travelling abroad.
But consumer attitudes are changing.
Local identity and cultural sensitivity have become increasingly important, particularly when international companies become involved in disputes with Chinese businesses or are perceived as disrespecting local culture.
This is not the first time a Western brand has faced a consumer backlash in China.
Companies including Nike, Adidas and H&M have previously experienced major controversies involving Chinese consumers.
Luxury brand Dolce & Gabbana also suffered a severe backlash after a 2018 advertising campaign was criticised as culturally insensitive. Cinco Días
Louis Vuitton, however, has maintained that protecting its intellectual property remains important to its business.
LVMH Chief Financial Officer Cécile Cabanis defended the company’s approach during an analyst call, emphasising that intellectual property is a key asset and that the group has a responsibility to protect its trademarks.
From the company’s perspective, allowing another business to use a design considered too similar to its registered trademarks could potentially weaken the protection of one of its most valuable brand assets.
The challenge is that winning the legal argument did not necessarily mean winning the public relations battle.
Robert Wu, chief executive of Shanghai-based market research company Baiguan, described China as a complex market for foreign brands because businesses have to deal with several different stakeholders.
A company can win a court case and still struggle with public opinion. Cinco Días
The situation has reportedly attracted the attention of Louis Vuitton’s senior management.
Louis Vuitton chief executive Pietro Beccari and deputy chief executive Damien Bertrand travelled to China in late July to assess the situation, according to sources cited in reports.
The trip came as the controversy was gaining momentum and sales were coming under increasing pressure. Cinco Días
The dispute has also created uncertainty around the brand’s planned management transition.
Bertrand was appointed deputy chief executive of Louis Vuitton last year and had been expected to eventually take over as the brand’s sole chief executive from Beccari.
Reports indicate that the current sales challenges could delay that transition.
Despite the setback, there are signs that the backlash may be losing some of its intensity.
Louis Vuitton recently continued with its retail activities in China, including the opening of a new store in Changchun.
Taiwanese singer Ouyang Nana and Chinese Olympic snowboard champion Su Yiming were among the personalities who attended the opening. Cinco Días
JL Warren has also estimated that Louis Vuitton’s sales decline in China could narrow to around 13 per cent in September, suggesting that the immediate impact of the controversy may gradually fade.
Analysts at HSBC similarly believe the social media backlash will probably be temporary, although they expect it to have a negative effect on Louis Vuitton’s performance in China during the third quarter of 2026. Cinco Días
For now, the Molly Tea dispute has become an important lesson for global luxury brands operating in China.
Louis Vuitton may have won its trademark battle in court, but the reaction from consumers shows that legal victories can sometimes create wider commercial consequences.
As Chinese consumers become increasingly sensitive to questions of culture, identity and how foreign companies interact with local businesses, luxury brands may have to consider not only whether they can win a legal case, but also how that victory will be received by the public.
DDM News understands that the controversy comes at a difficult moment for Louis Vuitton, with the brand already facing weaker luxury demand in one of its most important markets.
Whether the current sales decline proves temporary or develops into a longer-term challenge will depend on how quickly consumer confidence returns and how effectively Louis Vuitton manages its relationship with Chinese shoppers.
For a brand built on exclusivity, heritage and global influence, the Molly Tea dispute has shown that maintaining consumer goodwill can be just as important as protecting a trademark.
