Even LVMH Moet Hennessy Louis Vuitton SE, the world’s most resilient luxury conglomerate, is feeling the chill. And as so often, the wind is blowing from the East.

The Paris-headquartered owner of Louis Vuitton and Dior reported a 1 percent increase in sales in the second quarter which, except for the early days of the pandemic, is the lowest level of growth since the depths of the Global Financial Crisis in 2009. Its operating margin fell.

A yen so weak that even a nominal end to negative rates hasn’t stopped its slide was cited as the main culprit. Wealthy Chinese, the mainstay of luxury fashion, have been on a shopping spree in Japan to take advantage of the favourable currency exchange and lifted sales there by 57 percent, while creating a slump at home. Other luxury firms, such as Swiss-based Compagnie Financiere Richemont SA, whose stable includes Cartier and Van Cleef & Arpels, also reported abnormal growth there. For European fashion, strong sales in Japan are not a blessing. Yen-denominated revenue erodes their top line as well as profitability because their cost base is in European currencies.

Prices in Japan are indeed much lower. According to Bernstein Research, Tiffany, Bulgari and Chanel are roughly one-sixth cheaper there than in China. While the Chinese have 26 percent share of the global luxury market, more than one-third of that is spent overseas. It’s a double whammy, since less is being spent domestically where these companies have invested a lot into a struggling economy.

But the weaker yen isn’t the root cause of global luxury’s woes. There’s a much more worrying Japanification factor: Consumers in China are starting to behave like Japanese did in the 1990s. They’re becoming patient, rational shoppers as their economy goes through a painful housing market correction. Cue up Tokyo after the ‘80s economic bubble burst.

Japan’s consumers could no longer afford to dress from head to toe in luxury brands as they had during a boom when the US, to say nothing of Europe, seemed to be falling behind. In this humbled climate, they embraced the concept of value for money, thus giving room for local brands to blossom. In 1998, Uniqlo sprang to prominence with a fleece launch priced at a fraction to Patagonia’s. Fashionistas were also playing with mix-and-match. They would wear inexpensive Uniqlo or Muji with a luxury handbag, which can be carried every day for many years. The share of handbags within total import fashion sales went up from 26 percent in 1994 to 43 percent in 2004, according to JPMorgan Chase & Co.

This kind of styling is welcomed by Chinese, too. On Xiaohongshu, a part-Instagram, part-Pinterest platform popular among young, well-off women, video bloggers teach users how to dress like the Japanese, who look like a million bucks but without a lot of money in the bank. The lessons? Hairdo, skin care and details matter. Combining a flashy Versace dress with Chanel handbag, on the other hand, only makes one look like a da ma, a derogatory term for older wealthy women who don’t have any fashion sense.

Social media and e-commerce are propelling the value-for-money concept to a whole new level. Since European fashion is still a sign of economic success, influencers and fashionistas have taken to ordering items online, showing them off for Instagram-worthy pictures or an evening out, and then returning them at no cost. Richemont’s luxury e-commerce platform Yoox Net-A-Porter pulled out of China recently as the online retail industry is being hit by a soaring number of returned luxury goods.

And good luck to brands such as Burberry and Versace that send unsold items to discounted channels, including private sales and outlet stores. They’ll have a very hard time convincing Chinese consumers to buy at full price.

Even Uniqlo, whose well-priced items earned it millions of fans and more than 900 stores on the mainland, isn’t immune to the onslaught from savvy influencers. Owner Fast Retailing Co. saw a “large profit fall” in the three months ending May, and that consumers were switching to more “affordable alternatives.” One possible reason? Shoppers complained that Uniqlo’s once-frequent sales promotions were disappearing. They then gave out online tips on how to find similar but cheaper items elsewhere.

It’s pretty common to hear executives in the luxury industry complain about how China’s economic slowdown, President Xi Jinping’s crackdown on hedonistic lifestyles, and sharp currency movements are affecting sales. Unfortunately, these grievances have become as tiring as Gucci’s Mickey Mouse sneakers.

Rather, the Chinese have been buying European luxury for two decades. The bar to entice them to spend has risen. Just like a previous generation in Japan, consumers in China have found their own sense and sensibility.

By Shuli Ren